No, Cutting Defense Won’t Harm the Economy or ‘National Security’

John Glaser, July 05, 2012

There are two doomsday scenarios Washington and their welfare recipients in the war industry are predicting if defense budgets get cut. The first is that the defense corporations will have to lay off workers and unemployment will increase massively, sending the country into another deep recession. The second is that we will be less safe. Both are completely untrue.

Politicians from both parties have been harping about perverse economic consequences of budget cuts for a while now. They want to keep giving out goodies to their local corporations and fear any dip in employment. But defense corporations are now joining in the public relations campaign. One recent study, “commissioned by a top defense and aerospace trade association” – namely, the Aerospace Industries Association and the International Association of Machinists and Aerospace Workers – found that “a new batch of planned Pentagon spending cut would cause 1 million jobs to be lost next year.” The National Association of Manufacturers, another lobby group, repeated this finding, adding that proposed cuts would “increase unemployment by 0.7 percent, and decrease gross domestic product by almost 1 percent.”

But, as Lawrence Korb et al have just written, these lobby groups kind of fibbed up their numbers:

Most of these jobs, however, would not come from the defense industry itself. To maximize their findings (and their political impact), both studies assessed the effects of defense sequestration on every sector of the economy that could be hit by “induced effects,” including secondary and tertiary effects like reduced consumer spending. As a result, the “1 million jobs” figure includes jobs in industries as distant from defense as “retail trade” and “leisure and hospitality services.”

And besides, Korb points out, “defense spending is not a jobs program.” At least, it’s not supposed to be. And the jobs that these rent-seeking defense corporations maintain only show what big business can do with diverted (read: stolen and redistributed to less productive sectors) wealth. As Cato’s Chris Preble wrote this week, “It’s easy to focus exclusively on the companies and individuals hurt by the cuts and forget that the taxed wealth that funded them is being employed elsewhere.”

US News and World Report:

Gordon Adams, who over saw defense budgeting for the Clinton administration, says the industry-commissioned study fails to account for “a whole bunch of other things.”

For instance, if the new cuts occur, Washington would be spending about $55 billion less than planned each year on the military.

“That’s $55 billion that wouldn’t just disappear into the ether,” says Adams. “There would be other economic benefits from borrowing $55 billion for defense.”

And finally, the proposed cuts to defense budgets (sequestration) are, frankly, puny. Overall defense industry profits have skyrocketed since 9/11 and the harshest scenario for defense cuts would put budgets back at about the 2007 level. But only after some time; after all, we’re talking here about a decrease in the rate of growth in projected defense spending. So budgets will still be growing. Just less fast.

The minuscule defense cuts being contemplated could easily target areas of waste. As a recent report from the Center for Strategic and Budgetary Assessments found, while the source of growth in annual defense budgets since 2001 has been mostly (54%) due to the wars in Iraq and Afghanistan, much of the rest has been spent on wasteful superfluous weapons technology, bloated salaries and benefits plans, and expensive peacetime operating costs for the 900-plus military bases in 130-plus countries around the world.

So, not only will these puny cuts not harm the economy, but the whole system of state-subsidized industry making bombs to kill hordes of nameless, faceless people abroad will be upheld. But will we be less safe? Defense Secretary Leon Panetta, by far the loudest money-grabbing warmonger of all, has described the sequestration cuts as a “doomsday mechanism.” I’m tempted to simply say that US foreign policy, and the economic system that sustains it, is constantly making us less safe by creating new enemies. But to take the argument more seriously on its own terms, the truth is that the US could cut defense spending by half and still outspend every other country in the world.

Panetta and others have voiced concern that any decrease in spending would make it harder to face threats from the likes of Iran and North Korea, two countries with comparatively pathetic defense budgets and which present no credible threat. The cost of waging a covert U.S. campaign of cyber-terrorism, commercial sabotage, targeted assassinations, and proxy wars in Iran is probably costing a pretty penny. And all it’s doing is increasing the threat environment for Iran, which will do anything but make them give up their nuclear program (which all available evidence suggests is still entirely civilian in nature).

Probably referring to China, Panetta has also mentioned the responsibility “to project our power in the world in order to make sure rising powers understand that the United States still has a strong defense.” This adheres closely to imperial grand strategy, which insists on a foreign policy actively militarist enough so as to prevent military competitors and keep all the world’s nation’s dependent on the U.S. as military superpower. Clearly, this has nothing to do with defending the country and wasting hundreds of billions of dollars on it every year is what is putting the country at risk. Not, as Washington would have you believe, making trivial cuts in the rate at which the war machine expands.

This scrambling to avoid defense cuts – which could very well be successful, by the way – should not be surprising. There are huge profits to be gained and vital bureaucratic interests at stake. As Micah Zenko of the Council on Foreign Relations wrote in Foreign Affairs recently, “Warnings about a dangerous world also benefit powerful bureaucratic interests. The specter of looming dangers sustains and justifies the massive budgets of the military and the intelligence agencies, along with the national security infrastructure that exists outside government — defense contractors, lobbying groups, think tanks, and academic departments.”

In other words, the politicians and the defense corporations are fighting for their own self interests, not for the sake of the American people to keep their factory jobs and be safe from foreign attack.




8 Responses to “No, Cutting Defense Won’t Harm the Economy or ‘National Security’”

  1. What always gets me is that your typical government "leech" or statist-loving fool, talk about the billions stolen from us though they just magically appear and then must be spent. Listen, they were stolen from someone and just because you CAN steal doesn't mean you NEED to. How about not stealing it in the first place and letting truly productive people produce productive things by the virtue of their own two hands. That way the money exists outside of the grasp of leviathan and does some real good.

  2. Never mind the depraved rationalization of war – death and destruction – being ‘good for the economy’.

  3. Post is very well created and it contains many insights to me. I am delighted to find your awesome way of creating to publish. Now it becomes possible for me to understand and use the concept. Thanks for talking about to publish.

  4. Broken window fallacy is alive and well.

  5. Wanna cut "defense" spending? Retire about 100 3- & 4-star flag officers. Period. But, no: the sad fact is that a round of "defense" (really? Commands in Europe are "defense?") cuts would mean discharging 150K troops but retaining all regional commands & the generals that head them. Just like 20+ yr ago after the Gulf War.

  6. If the basic theory is right, i.e., that reducing military spending and terminating jobs causes recessions, then why did the US not fall right back into the Depression when World War II ended and thousands of armed-forces personnel were permanently laid off ?

  7. The second is that we will be less safe. Both are completely untrue.Lurline

  8. I think the government is just sugar coating this cutting defense because it would affect the economy and the property valuations in Perth. It won't hurt if they'd be more honest but I think that's just the way it is. They don't reveal the truth and just try to do the best they can to solve the problem.