Press for the Politically Unthinkable: Toward an 80% Decrease in Defense Spending

[HamdenRice]

I find it distressing that in any discussion of the federal debt – now to include a $700 billion to $1 trillion bailout of the mortgage market– it is assumed that any solution has to assume that defense spending continue at its current rate.

Defense spending and the bailout, I should point out, are two different kinds of spending. Once you buy an aircraft carrier or a cruise missile, you will never resell it. It's purely in the expense column of the government's financial statement. If we are to believe Rep. Barney Frank, however, the bailout is more like a risky loan and assuming proper valuation, the mortgage backed securities purchased, unbundled and rebundled will be assets on the federal balance sheet balancing against the debt, meaning no overall increase in total indebtedness, and when they are resold, the Treasury will reap the proceeds.

To get our fiscal house really in order we need to get the most pointless pure spending under control -- and that means defense spending. If we have "them" over a barrel as the price to remedy their greed and stupidity -- having nationalized the largest mortgage and insurance companies in the world, and probably having forced them to disgorge equity positions in investment banks -- why not now go after the big enchillada, defense spending?

Conservatives argue it has to continue at the current rate because of external threats, but many liberals argue that it even if the threats are exaggerated, defense spending is needed as some kind of economic stimulus or safety net and that only a slow partial decrease in defense spending is possible. I find that that many arguments in favor of a slow transition from defense spending I think are not well founded.

First of all, we need to think about (1) what is the proper amount of defense spending for the US, considering the potential threats. Only then, should we ask the other questions which, if I understand them, are twofold: (2) is some higher level needed to prop up demand in either the labor, commodity, manufacturing, high tech, or any other markets? and (3) what are the costs of rapid transition and if they are high, how much should we pay for a slower transition.

I think when you disaggregate these questions, the idea that we need to keep defense spending higher than say $200 billion (20% of $1 trillion -- and I would go even further down) simply doesn't have much logical support in macro economic theory.

So as to the first question, here is one typical estimate of global defense spending, mostly taken from around 2004:

World Wide Military Expenditures
Country Military expenditures - dollar figure

World $1100 billion

Rest-of-World (non US) $500 billion

United States $623 billion
China $65.0 billion
Russia $50.0 billion
France $45.0 billion
United Kingdom $42.8 billion
Japan $41.75 billion
Germany $35.1 billion
Italy $28.2 billion
South Korea $21.1 billion
India $19.0 billion
Saudi Arabia $18.0 billion Australia $16.9 billion
Turkey $12.2 billion
Brazil $9.9 billion
Spain $9.9 billion
Canada $9.8 billion
Israel $9.4 billion
Netherlands $9.4 billion
Taiwan $7.9 billion
Mexico $6.1 billion
Greece $5.9 billion
Singapore $5.6 billion
Sweden $5.5 billion
North Korea $5.0 billion
Iran $4.3 billion
Pakistan $4.3 billion
Belgium $4.0 billion
Norway $4.0 billion

(deleted the remainder of the list)

The only countries that could conceivably be deemed short or medium term threats are China, Russia, North Korea and Iran. On the other hand, almost all the other expenditures, by the UK, France, Germany, Japan, etc., can for all intents and purposes be aggregated with ours as NATO and allied defense in case of a real threat to peace or stability.

Even the so-called threats of China and Russia have virtually no regional ambitions outside of a few renegade "provinces" that have little strategic value to the rest of the world. Diplomacy and nice words (which are cheap) could easily ensure that neither is a threat of any kind.

The only definition of "defense" that would justify anything close to our current budget would include our need to seize and control other countries' resources -- such as we are doing in Iraq. This is ironic considering the greatest accomplishment of international political culture of the last few decades was persuading countries like China to compete over resources using markets; they are the ones signing up long term oil contracts all over the world while we fruitlessly try to seize them by force.

I find it hard to justify a defense budget over $200 billion, but frankly, with alliances it could easily be less than $100 billion.

If you agree with that premise, then the only questions are the second ones: is there some reason to use defense spending to generate demand; and is there some reason that rapid demobilization and transition to civilian economy are too expensive or unachievable in the short term?
As for the latter, before World War II, the answer had always been in this country that near instant demobilization was possible. Why this is suddenly not possible needs an explanation. (My father was in WWII, and the attitude among draftees as soon as Germany and Japan were defeated was, "we ain't stayin in Europe, and we ain't liftin' a rifle no more" and there were demobilization riots in Paris, which speeded up the process.) Near instant demobilization is possible given political will and the willingness to spend the kinds of resources we currently spend on the military. For example, rather than worrying about what jobs soldiers will have, we could just give them vouchers to go to college (like the GI Bill). For those depressed towns and rural areas that depended on military employment, we can create make work programs -- after all, that's pretty much what the military is anyway. It is only an irrational militarized political culture that makes us think it's OK to pay someone to sit in a barracks, but not OK to have them repair roads until the employment market adjusts.

As for industry, it took little time for industry to adjust to civilian purposes in the past. We have the capacity to create a targetted transition of contractors to civilian ends; it's militaristic political culture that makes us think you can't take a contractor making jet fighter "skins" and have them make bullet train "skins" within a few months. We have that capacity.

As for the demand question, there simply is no justification in economic theory that demand has to be maintained through military spending. One blogger mentioned a possible collapse in aluminum demand. If the military instantly ended its demand for aluminum, then the price for aluminum would fall and other industries would increase their use of it. If not, more aluminum would stay in the ground for future consumption. Either way, there is no reasoned explanation for why it has to be used on military aircraft as opposed to some other use.

With all these questions we always have to remember the guns/butter question: yes these aspects of demobilization are expensive, but it's always even more expensive not to do them.

[Phoebe Loosinhouse]

1. Yes! Yes! Yes! and Yes! K&R

[Roland99]

2. And leave us vulnerable to the turrists? And cease the most egregious of welfare programs??

Are you mad?!?!



;)

[seasat]

3. Spending should go to things that enhance US productivity

I agree. Spending a $1 on infrastructure like a rail system, scientific research, and education goes a lot further towards benefiting our economy than buying a new fighter plane. The irony is that if we cut defense spending like you suggest and then invested a portion of that in programs and items that enhanced domestic productivity, we probably would see an increase in government revenue that would reduce deficits and provide more federal revenue for things like defense.

[rhett o rick]

6. You must be one of those.....those socialist. Horrors.

:sarcasm:

[HamdenRice]

7. It's amazing that anyone can say "we don't have the money to do X"

whether it's green energy or infrastructure. We have the money and more. But through the mainstream media, they have imprinted on the public that the defense budget is untouchable.

Well, it may not be up to us, but to the t-bill market, the IMF and the Chinese State Administration of Foreign Currency.

[Tierra_y_Libertad]

4. But..but.. the Bogeyman will get us!!

“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.” H.L. Mencken

[barbtries]

5. Yeah!

let's wage peace for awhile, and grow the economy by taking care of everyone, updating the infrastructure, making sure education if freely available to everyone, alternative energies. green. peace.

[mmonk]

8. That's how members of congress finance their campaigns

and make money when they leave office. Little chance.

[High Plains]

9. Now we're talking!

[Oak2004]

10. Now that sounds like a great way to pay for the givawa- er, "bailout" n/t

[RedEarth]

11. I agree.........

[Freddie Stubbs]

12. Reality check: The Democratic Platform call for an increase in the size of the military

Expand the Armed Forces

We support plans to increase the size of the Army by 65,000 troops and the Marines by
27,000 troops. Increasing our end strength will help units retrain and re-equip properly between
deployments and decrease the strain on military families.

http://s3.amazonaws.com/apache.3cdn.net/8a738445026d1d5f0f_bcm6b5l7a.pdf

[norepubsin08]

13. The Ten Percent Solution

in 1988 in Tacoma Washington a group called the Sixth District Legislative Project began a campaign to force an advisory initiative on the Tacoma city ballot in Nov of 1989. We had asked that 10% of the military budget be reduced and apply those savings equally to deficit reduction and social services and infrastructure rebuilding. We were told that not only would we most likely be unable to get on the ballot, but Tacoma, being a military town, we would get slaughtered at the ballot box.

I was the chair of that campaign and all during the year, we worked at this project and not only achieved ballot status, but won with 64% of the vote. More than any other candidate or ballot issue. We were endorsed by the National Conference of Mayors and also worked through many church groups and agencies as a matter of justice. We showed what those military dollars could do for people if put elsewhere.

We need to do this nationally again!

In Solidarity,

Mike Collier
The MICAH Project-First United Methodist Church