Pentagon budget cuts will not make the US economy bomb | Michael Cohen

Belt-tightening at the Defense Department won’t cause recession but scare tactics camouflage where real spending casualties are

Since the devastating across-the-board spending cuts – including the billions in reductions to the Pentagon budget – known as sequestration became the law of the land, the US military has deployed a host of arguments for why this an enormous threat to US national security – which, as I wrote a few weeks ago, it really isn’t.

In Monday’s Washington Post, Zachary Goldfarb takes up the cause by identifying a new reason to be concerned about the implications of military sequestration: the economic impact. According to Goldfarb, it is the left that is really feeling the bite:

“Liberals are increasingly facing a conundrum as the Pentagon experiences the deepest cuts in a generation. The significant reductions in military spending that they have long sought are also taking a huge bite out of economic growth.”

There a few problems with this argument.

First, as William Hartung of the Center for International Policy notes, not only are job losses related to sequestration overstated, but Pentagon spending is the worst possible stimulus (compared to education, health care, infrastructure, most other government expenditures). The big companies are doing fine, running at near record revenues and profits, based on their backlogs and money the Pentagon had in the pipeline for them. According to Hartung, it’s “possible some among the Boeing and Lockheed Martin are sitting on some cash to see how the budget plays out the rest of the year. That would have some effect, but not enough to tank the economy.”

Moreover, as Wes Bush commented:

“The defense industry should never be looked at as a jobs program.”

Who is Wes Bush? He’s president and COO of Northrop Grumman and 2013 chairman of the Aerospace Industries Association (AIA).

In addition, many of the big-ticket spending projects on the Pentagon’s wishlist will be unaffected. Most of the budgetary pain will be taken by the Defense Department’s operation and maintenance budgets. This will clearly have some economic impact, but rest easy, America, your military will continue to spend billions of dollars on military hardware. Some of it the military doesn’t want, and some is designed to guard against “potential” threats that don’t actually exist.

Beyond the overstated talk of economic losses, many liberals – and indeed, most Americans, if public opinion is to be believed – would be fine with cuts to the Pentagon budget if the money saved was spent on infrastructure projects or hiring teachers, or any number of stimulus measures. The real hit from the sequester is not coming from cuts in the military budget, but rather reductions in spending for the Headstart program, for cancer clinics, for public housing and meals on wheels.

The problem with sequestration is not that defense cuts are short-circuiting the economic recovery; it’s that our fiscal priorities are so askew that little attention is being paid to the devastating impact of those cuts. The Pentagon will be just fine. The estimated 70,000 kids who will lose access to Headstart, or the 140,000 low-income families affected by cuts to public housing benefits … well, that’s a different story. © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds


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