D. Dowd Muska


The DOD Needs Sequestration’s Tough Love

October 25, 2012

Forget November 6th. Big Government Cipher vs. Big Government Boy Scout has been a boring contest. And no matter who wins, the Republic loses.

January 2nd is a far more interesting date. If Congress and the administration fail to act, the new year brings the Sequestrationocalypse.

The solipsists in the nation’s capital are obsessing over the automatic -- if paltry -- rollback of non-entitlement expenditures mandated by the failure of 2011’s “Supercommittee.” But give the War Party credit for drawing the bulk of the attention to sequestration’s impact on its community’s stakeholders.

For nearly a year, Americans have been subjected to grisly scenarios over a cut to the Department of Defense’s budget. Pratt & Whitney President David Hess spoke of a “a reduced ability to respond to emergent needs.” “The United States,” warned Aerospace Industries Association (AIA) President Marion Blakey, “truly could be reduced to a regional power.” Sequestration, DOD boss Leon Panetta believes, would do “catastrophic damage” to his bureaucracy’s “ability to protect this country.”

“America undefended” is a monotonously recurring theme. But in 2012, the notion that the Pentagon is undermanned and underequipped is easily dispatched. Of the 15 nations with the costliest militaries, the top-slotted U.S. spends as much as the next 14, combined. George W. Bush was the best thing to happen to defense contractors since NSC-68. The first decade of the 21st century saw all categories of DOD outlays, adjusted for inflation, rise from $397 billion to $716 billion.

Neocon think-tankers, K Street hired guns, and reelection-insecure fedpols know that the impending-danger meme isn’t worth much, so they’ve wisely shifted to a pecuniary sales pitch. Cut the Pentagon, the argument goes, and economic calamity is sure to follow.

Walking point on the PR assault is Blakey’s AIA. The trade association built an entire website devoted to sequestration. Among other factoids, visitors learn that the expenditure whack will put over 2 million jobs “at risk,” and will cause a “$215 billion reduction in growth of GDP in 2013.”

Terrifying numbers. But as economics, the AIA’s findings fall short. In an August analysis for the libertarian Cato Institute, Benjamin Zycher concluded that “real changes in the growth rate of real defense outlays have little or no effect on changes in GDP growth.”

A look at recent history is instructive. In the 1980s, military spending swelled by more than 50 percent -- from $378 billion to $569 billion. The following decade, the end of the Cold War produced a sustained, honest-to-gosh decline, from $532 billion to $383 billion.

Two decades, two dramatically different approaches to national security. Yet the economic results were the same. In the ‘80s, real, average GDP growth was 3.1 percent. The comparable figure for the ‘90s was 3.2 percent.

Closer to today, the Pentagon’s Bush-induced windfall occurred during a decade when GDP growth averaged an unimpressive 1.7 percent. (Job creation soared during the ‘80s and ‘90s. In the ‘10s, it stagnated.)

There it is. The linkage between military “investment” and economic output isn’t tenuous. It’s nonexistent.

What about laid-off workers? There are abundant reasons to believe that those threatened by DOD cuts have many options awaiting them in other industries. It’s called the “skills gap,” and it’s real. Manufacturers and hydrocarbon drillers aver that competent applicants are in short supply. IT professionals, skilled tradesmen, and engineers are in particular demand. In May, McClatchy Newspapers reported: “Employers complain that they can’t find workers with the skills to calibrate machinery, do simple math and even more troubling, simply show up to work.”

A missile technician’s knowledge and experience may not be immediately applicable to hydraulic fracturing. A shipyard welder might not be able to quickly convert to employment in heavy-equipment assembly. But workers retrain. (And relocate.) As Zycher explained, structural unemployment “is a fundamental feature of any dynamic economy driven by constant changes in individual preferences, individual choices, technological shifts, and a myriad of other factors.”

Many of the apologists for the Pentagon’s bloated expenditures lack the self-awareness to realize that they’re suffering from a peculiar type of hypocrisy. Barney Frank calls it “weaponized Keynesianism.” The retiring Massachusetts fedpol defined the term as the belief “that government spending doesn’t create jobs -- unless it is for the military.”

The national-security argument for retaining a ravenous DOD is absurd on its face. The economic case is hollow, too. The taxpaying citizenry should join advocates of America First in hoping that sequestration is merely the opening salvo in a crusade for much deeper cuts to a reckless defense budget.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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