Budgeting for Strategy, Investing for Jobs

February 16, 2012

Military leaders emphasized this week that the military budget unveiled Monday is “what’s best for America” – they helped craft that budget based on our national security needs. The reductions in spending are modest, and they flow from the Budget Control Act, which was passed by Congress in a bipartisan fashion. Reducing the growth of defense spending acknowledges that everything must be on the table when it comes to reducing the deficit. Finally, as we consider the implications of budget decisions on weapons makers and local communities, budget experts remind us that the military budget is not a jobs program, and money spent on other sectors creates 50 to 140 percent more jobs.

Military leaders say the current budget plan is “what’s best for America,” because they helped craft it and the strategy behind it. This week Joint Chiefs Chairman General Martin Dempsey appeared before both houses of Congress to express the military’s support for this budget. As the AP reports, “Dempsey acknowledged the inherent risks of a smaller budget, but told the Senate Armed Services Committee, ‘we’re very confident, because we’ve worked this collaboratively, that we can mitigate risks by adapting lessons from the last 10 years of war, new emerging capabilities.’The cuts, Dempsey said, ‘will not lead to a military in decline. Rather, this budget will maintain our military’s decisive edge and help sustain America’s global leadership.’”  Last month, in a speech at Duke University, Dempsey emphasized the military’s backing of these strategy-based reductions, saying, “I want to make sure you know we’re not being victimized by this. This is something that we, the Joint Chiefs, have embraced as what’s best for America.” [Martin Dempsey via AP, 2/15/12. Martin Dempsey, 1/12/12]

Modest reductions flow from last summer’s bipartisan agreement. Critics of the president’s budget argue that it makes massive cuts to the military and that those cuts were made over conservative opposition, but as the AP notes, the size of the budget stems from the bipartisan Budget Control Act: “The overall spending was dictated by the budget agreement that Obama and congressional Republicans reached last August that calls for defense cuts of $487 billion over a decade. More troubling to Panetta and lawmakers is the likelihood that automatic, across-the-board cuts will kick in January unless Congress can come up with at least $1.2 trillion in savings.” As Lawrence Korb and his coauthors at the Center for American Progress explain, “At first glance, nearly half a trillion dollars in reductions might sound like a huge cut. But in reality, if Secretary Panetta’s reductions survive Congress, the baseline defense budget will fall by just 1 percent, or $5 billion, next year and resume its growth thereafter. Because these ‘cuts’ come from projected increases in defense spending, the Pentagon’s budget will continue to grow at about the same rate as inflation.” [AP, 2/15/12. Lawrence Korb, Alex Rothman and Max Hoffman, 2/13/12]

Military leaders, budget hawks detail how military spending contributes to the deficit. Opponents of reducing the growth of military spending argue that defense spending does not drive the deficit. However, as the Sustainable Defense Task Force report noted two years ago, “There is no doubt that defense expenditure has contributed significantly to our current fiscal burden. This is true even aside from war costs. Today, annual discretionary spending is $583 billion above the level set in 2001. Overall, the rise in defense spending accounts for almost 65% of this increase. Non-war defense spending is responsible for 37%. These portions are much greater than any other category of discretionary spending.” As Republican budget guru Bruce Bartlett, who worked in the Reagan and George H.W. Bush administrations, has written, “No one is saying the defense budget is the sole source of the deficit, but the fact is that it has risen from 3 percent of the gross domestic product in fiscal year 2001 to 4.7 percent this year. That additional 1.7 percent of GDP amounts to $250 billion in spending — almost 20 percent of this year’s budget deficit. And according to a recent Congressional Research Service report, the cost of wars in Iraq and Afghanistan alone accounted for 23 percent of the combined budget deficits between fiscal years 2003 and 2010.” The military understands this as well. As Joint Chiefs Chairman Dempsey noted earlier this year, “We clearly have a role to play, all of us as citizens, in helping the nation address this economic crisis… We understand that for the nation to overcome its debt crisis and some of the other economic challenges it has, we have to get a hold of costs. And we will.” [Sustainable Defense Task Force, 6/11/10. Bruce Bartlett, 10/8/10. Martin Dempsey, 1/12/12]

Defense spending can’t be viewed as a jobs engine – money spent on other sectors creates 50 to 140 percent more jobs than military spending. As Robert Pollin and Heidi Garrett-Peltier of the University of Massachusetts, Amherst’s Political Economy Research Institute found, “In terms of assessing the employment effects of military spending on the economy, the most important question is not the absolute number of jobs that are created by spending, for example, $1 billion. It is rather whether spending $1 billion on the military creates a greater or lesser number of jobs relative to spending the same $1 billion on alternative public purposes, such as education, health care or the green economy, or having consumers spend that amount of money in any way they choose. As we show, in comparison to these alternative uses of funds, spending on  the  military  is  a  relatively poor source of job creation. Indeed, our research finds that $1 billion in spending on the military will generate about 11,200 jobs. By contrast, the employment effects of spending in alternative areas will be 15,100 for household consumption, 16,800 for the green economy, 17,200 for health care, and 26,700 for education. That is, investments in the green economy, health care and education will produce between about 50–140 percent more jobs than if the same amount of money were spent by the Pentagon.” As Sen. Lindsey Graham (R-SC) said earlier this week, defense manufacturing cannot primarily be “a job creator for America.” [Robert Pollin and Heidi Garrett-Peltier, 12/11. Lindsey Graham via MSNBC, 2/14/12]

What We’re Reading

China announced it would send a senior diplomatic envoy to Syria in a bid to negotiate an end to the violence that is engulfing the country.

EU High Representative Catherine Ashton received a letter from Iran’s top nuclear negotiator suggesting a readiness to return to negotiations.

Afghanistan’s former spy chief said the government wants the country to get a fair deal in peace negotiations with the Taliban, and not give up personal freedoms.

Amnesty International claims Libyan militias are committing human rights violations with impunity and threaten to destabilize the country.

The new president of the Maldives announced he was open to calling an early election following the ousting of the former president in a coup.

Ethnic Serbs in northern Kosovo voted to reject ethnic Albanian control from the capital Pristina.

A senior al Qaeda leader was killed in Yemen in an apparent family feud that killed 16 other militants as well.

Gunmen attacked and freed nearly 200 prisoners in the central Nigerian city of Koton-Karifi.

A Thai police official concluded that Israeli diplomats were the target of explosions in Bangkok.

U.S. officials claim Sunni extremists, including fighters linked to al Qaeda’s franchise in Iraq, likely masterminded two recent, large-scale bombings in the Syrian capital and in Aleppo.

Commentary of the Day

Mustafa Alani examines the Iranian nuclear standoff from the Arab Gulf’s perspective.

Mary Dudziak believes Guantanamo should close as the U.S.’s decade-plus of war comes to a close.

Aladdin Elaasar says that Egyptians resent the Military Council’s oppressive rule since Mubarak’s ouster.

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