Military spending as “weaponized Keynesianism”

The inimitable Barney Frank had it about right when he allowed that he “would be very happy if there was some way to make it a misdemeanor for people to talk about reducing the budget without including a recommendation that we substantially cut military spending.”[i]

The Massachusetts Congressman’s wishful thinking came to mind when President Barak Obama warned in his health care speech to a joint session of Congress that if nothing is done “to slow [their] skyrocketing costs, we will eventually be spending more on Medicare and Medicaid than every other government program combined.  Put simply, our health care problem is our deficit problem.  Nothing else even comes close.”[ii]

But, given the “skyrocketing” costs of the US security establishment and its wars in Afghanistan and Iraq, there actually is something that comes close.

At the moment the annual rate of US Defence spending, $726 billion (including costs of the wars in Iraq and Afghanistan), is well ahead of the $687 billion for Medicare and Medicaid, but the President is right inasmuch as federal US health spending is projected to grow at almost four times the rate of defence spending. US Government budgetary projections see defence growth of 25% by 2019, compared with a projected 40% growth over the same period in overall federal government spending and a whopping 95% jump in Medicare and Medicaid spending.[iii]

There seems little doubt that US health care costs require attention, but that ought not to suggest business as usual at the Pentagon. The comparatively modest 25% projected rise in US defence spending over the next 10 years (substantially lower than the rate of overall government spending increases) is misleading because it is calculated on a base year that comes at the end of eight years of extraordinary defence spending increases.

As US defence analyst William Hartung of the New America Foundation put it in testimony to the US House Armed Services Committee:

“The Pentagon’s baseline budget rose by 82% between FY 2002 and FY 2009, after adjusting for inflation. Add to that the costs of the wars, and we are now spending more in real terms than we have spent at any time since World War II – more than at the height of the Vietnam War, more than at the height of the Korean War, and more than at the peak of the Reagan buildup of the 1980s. In light of the current economic crisis and the competing demands to fund health care, alternative energy, civilian infrastructure, more robust diplomacy, and other domestic and foreign policy priorities, these levels of military spending are no longer sustainable.”[iv]

The Stockholm International Peace Research institute also reports and confirms that current US defence spending outstrips all the excesses of the Cold War and is at its highest level (in real terms adjusted for inflation) since World War II.[v] So not only do the next 10 years not promise a retreat from the extreme heights of the Bush global war on terrorism, but the expectation is that the extreme will grow by a quarter.

Of course, the defence lobby, or to use Dwight Eisenhower’s more descriptive phrase, the military-industrial-complex, insists that defence spending ought to be regarded, not as an economic burden but as an economic stimulus. As Barney Frank sums it up, it is a kind of “weaponized Keynesianism that says military spending is important because it provides jobs and boosts the economy.”

In Canada military Keynesiansim has an enthusiastic advocate in Senator Colin Kenny: “If the Harper government wants to create jobs, it would be far better off to invest more in Canadian Forces….By honouring [the] promise [to modernize the Canadian Forces], the government could go a long way toward solving the jobs crisis it is currently faced with”[vi] (emphasis added!).

Happily, more sober voices are available. A 2007 University of Massachusetts paper found that while $1 billion in US defence spending generates 8,555 jobs, the same amount spent on mass transit and education generates 19,795 and 17,687 jobs respectively – in other words, more than twice as many jobs could be created by cutting defence spending and using the money on civilian programs that would return a long-term benefit to society.[vii]

The Massachusetts study[viii] concludes:

“…[T]here is a great deal at stake as policy makers and voters establish public policy spending priorities….[B]y addressing social needs in the areas of health care, education, mass transit, home weatherization and infrastructure repairs, we would…create more jobs and, depending on the specifics of how such a reallocation is pursued, both an overall higher level of compensation for working people in the US and a better average quality of jobs.”

Another study compares spending on environmental cleanup and combating global warming, routinely understood as drains on an economy, with spending on the Iraq war and military spending generally.[ix] The measured conclusion is:

“The long-run effects of increased military spending are likely to have a comparable impact on the economy as similar sized spending increases devoted to environmental purposes. One important difference is that the environmental spending may have the character of investment. For example, if increased insulation leads to reduced demand for energy at some future point, then this will mean that spending on energy will drain less money from the economy. This will free up money to be spent on other purposes, which should mean that the economy will be stronger than would otherwise be the case. There is no comparable economic dividend from military spending. (It is possible that both environmental and military spending will lead to spin-off inventions that could have substantial economic benefits for other sectors, but there is no reason in general to expect more such spin-offs with one type of spending than the other.)”

In the case of Canada, SIPRI’s 2009 Yearbook still ranks this country as the 13^th highest military spender on the planet, and the current level of military spending at about $20 billion is more than 60% higher (after inflation)[x] than it was in 2001. Of course, US military spending is a few, make that many, orders of magnitude beyond Canadian spending, but both the US and Canada face unsustainable budgetary deficits – so here’s hoping that, in both cases, budget reductions will follow a Barney Frank formula rather than that of the military Kenyesians.

eregehr@ploughshares.ca

Notes

[i] Barney Frank, “Cut the Military Budget,” The Nation, 2 March 2009.http://www.thenation.com/doc/20090302/frank.

[ii] Remarks by the President to a joint session of Congress on Health Care. U.S. Capitol, Washington, 9 September 2009. http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-to-a-Joint-Session-of-Congress-on-Health-Care/.

[iii] Updated Summary Tables May 2009. Budget of the US Government, Fiscal Year 2010. Table S-3. Baseline Projection of Current Policy by Category.http://www.gpoaccess.gov/USbudget/fy10/pdf/summary.pdf.

[iv] William D. Hartung, Congressional Testimony, 2 April 2009 (House Armed Services Committee Subcommittee on Terrorism, Unconventional Threats and Capabilities.http://www.newamerica.net/publications/resources/2009/terrorism_and_new_age_irregular_warfare_challenges_and_opportunities.

[v] SIPRI Yearbook 2009: Armaments, Disarmament and International Security,  Stockholm International Peace Research Institute and Oxford University Press, 2009), p. 184.

[vi] Colin Kenny, “Don’t touch defence spending,” Canwest, 14 November 2008.http://www.liberalsenateforum.ca/In-The-Senate/Publication/1928_Dont-touch-defence-spending.

[vii] Reported by Winslow T. Wheeler, a longtime security affairs analyst on Capitol Hill, in “Save the Economy by Cutting the Defense Budget,” counterpunch, 27 January 2009.http://www.counterpunch.org/wheeler01272009.html.

[viii] Robert Pollin and Heidi Garrett-Peltier, The U.S. Employment Effects of Military and Domestic Spending Priorities, Department of Economics and Political Economy Research Institute, University of Massachusetts, Amherst, October 2007.http://www.peri.umass.edu/fileadmin/pdf/other_publication_types/PERI_IPS_WAND_study.pdf.

[ix] Dean Baker, The Economic Impact of the Iraq War and Higher Military Spending, Center for Economic and Policy Research, Washington, May 2007.http://www.cepr.net/documents/publications/military_spending_2007_05.pdf.

[x] Government of Canada, Department of Finance, Fiscal Reference Tables. http://www.fin.gc.ca/frt-trf/2008/frt08_e.pdf.