How to analyze a complex sentence with multiple conjunctions (because and if)

The defense spending would have that effect because the U.S. balance of payments and national debt would be improved if defense spending were significantly reduced.

I think "if" is the first level, the main clause is "The defense spending would have that effect because the U.S. balance of payments and national debt would be improved," and the subordinate clause is "if defense spending were significantly reduced."

But another says that "because" is the first level, the main clause is "The defense spending would have that effect," and the subordinate clause is "the U.S. balance of payments and national debt would be improved if defense spending were significantly reduced."

Which structure is correct? How do we analyze such long sentences?

Both conjunctions introduce subordinate clauses (but different types). Two conjunctions means 3 clauses, and each is subordinate to the one that went before it.

Main clause (statement)
├── "The defense spending would have that effect"
└── Because clause (the reason for the main clause)
    ├── "the U.S. balance of payments and national debt would be improved"
    └── If clause (condition)
        └── "defense spending were significantly reduced"

Because it is a 'hierarchy' of clauses, the conditional clause is part of the reason (the 'because' clause) for the main clause.

Something you may find helpful is to imagine "because" is actually the question "why?" and what follows is the answer. When you understand that a sentence could be rephrased that way, there is no mistaking that any subordinate of the reason could be part of the main clause.

The defense spending would have that effect.

Why?

The U.S. balance of payments and national debt would be improved if defense spending were significantly reduced.