The U.S. Defense budget for the next fiscal year (beginning this October) will be $428 billion. That includes $50 billion for combat operations in Iraq and Afghanistan. About 40 percent of that amount goes for operations and maintenance (O&M), about 20 percent for pay and benefits, 20 percent for procurement and 20 percent for research and development (R&D). About 40 percent of all military spending on the planet is American. The O&M, procurement and R&D expenses are what make U.S. military spending the largest in the world. No other nations spends as lavishly (as a fraction of its defense budget) in these areas as does the U.S. The O&M is about 25 percent larger than usual because of the war, but even in peacetime, American troops go out and use their equipment a lot. This gives U.S. troops a big edge in experience, especially when it comes to using expensive equipment like aircraft, ships and armored vehicles. These things are very expensive to operate, especially with the cost of fuel being what it is these days. The large procurement and R&D spending means that American troops have the most modern weapons and equipment. This provides an edge that is intensified by the large O&M spending. It's a successful formula, but a very expensive one.