By Titus Levi
The U.S. budget is bleeding red ink by the buckets. Given the rate of the economic slowdown and the potential economic pain that Americans are likely to experience during a steep and protracted economic slump, substantial deficit spending makes sense as a way of stimulating economic activity. Still, deficits create economic problems; they drive up the cost of capital in the short run while locking in spending on debt servicing for years. So even as we take on deficits and debts, we should look for places to trim the budget. The incoming administration should start by rolling back the Bush tax cuts for those making over $250,000 a year and by putting the ax to the most sacred of sacred cows in the federal budget: the Department of Defense.
For fiscal year 2008, mandatory spending accounted for about 62 percent of the federal budget. These allocations include Social Security, Medicare, Medicaid, the State Children’s Health Insurance Program, unemployment aid, various welfare payments and interest payments. Of the remaining 38 percent of the budget, or $1.114 trillion, defense spending accounts for the single largest chunk, at $481.4 billion. However, this figure dramatically underestimates actual military spending since it omits the ongoing costs of the wars in Afghanistan and Iraq, which total over $150 billion for the year, and “emergency and supplementary spending,” which tacks on more than $100 billion. Moreover, a number of defense and security expenditures fall outside of the DoD budget: various homeland security expenditures, Department of Energy outlays for nuclear weapons, services for veterans, and spending directed toward private security firms like Blackwater, which operate with little accountability and virtually no transparency. All told, this year we spent over $750 billion on military goods and services.
For 2010, the first budget that the incoming administration will craft, the total outlay on military and security spending will hover around $1 trillion, with baseline spending intended to be about $610 billion.
Since military expenditures make up most of the discretionary spending in the federal budget, any meaningful effort to reduce the deficit would require DoD cutbacks. This may strike many as counterintuitive, as we’re in the midst of two wars. Even so, do we actually need to spend almost $1 trillion on “defense”? Do we have that many enemies? Are we that afraid of what’s out there in the rest of the world? Aren’t we supposed to be the home of the brave? Fine, then let’s act like it.
While xenophobes, military contractors and many members of Congress will scream bloody murder at the prospect, cutting the military budget and redirecting these funds to other projects and deficit reduction make economic sense. Not only would we save money in the short run, we would deploy resources to more productive purposes in the midterm to long term. For example, putting a group of smart engineers on a project to make a 500-pound bomb land another few hundred feet closer to a target may present an interesting technical challenge, but putting these same minds onto building more efficient engines and motors produces an ongoing stream of benefits long after the initial technical breakthrough. In short, military spending produces a smaller multiplier effect and fewer spillover benefits in our economy. Cutting military spending does not rob Peter to pay Paul.
Tightening the DoD’s budget would help to snap the Pentagon and its contractors to attention on a variety of management issues. Too many systems run far over budget, require too much downtime for maintenance and underperform in the field. The DoD routinely wastes and misallocates resources largely because it has gotten a “blank check” from Congress; simply put, oversight has failed. While the DoD should conduct internal reviews to sort out this mess, we can hardly expect it to overcome decades of sloppiness without outside prodding and real enforcement from Congress. Therefore, Barack Obama as president should create a commission to assess the state of the military, including the efficiency of spending, and to investigate and even prosecute cases of fraud, corruption and other violations related to military spending. The DoD, Congress and contracting corporations would come under scrutiny. The commission might include a special prosecutor with subpoena powers and the authority to arrest individuals. Mechanisms to protect whistle-blowers could be developed and enforced by the commission. Such a commission should coordinate with the Office of Management and Budget, in particular its Federal Enterprise Architecture initiative.
The commission should include high-powered people with the moral authority and expertise necessary to get the job done, including former presidents, senators, representatives, diplomats, defense secretaries, judge advocate generals (JAG), governors, flag-rank military officers, academics, military historians and industrial leaders. By starting this work soon after the inauguration, the group could have a report on the president’s desk by late 2009. This timing would have two benefits: Input could influence midterm elections, and findings could be integrated into the next Quadrennial Defense Review, due out in 2010.
These adjustments would provide a solid rationale for beating swords into plowshares. However, more important, the need for cutting military spending is indicated by a more fundamental reason: The military instrument may well have outlived much of its usefulness.
I’m not a historian, but warfare’s last 60 years paints a damning picture of military effectiveness. This goes way beyond the DoD; this is a worldwide matter. Since the Red Army swept the Kuomintang army off the Chinese mainland, decisive and stable military victories have been scarce.
Postwar U.S. military engagements certainly fit the pattern of murky and unsatisfying results. The Korean War, which cost over 2 million lives, ended in a stalemate. The Vietnam War ended in an American retreat after more than 3 million lives had been sacrificed. Although the Persian Gulf War, which cost upward of 100,000 lives, was widely hailed as a military triumph at the time, continued instability in the region afterward dulled the luster of victory. The follow-up Iraq war has resulted in at least 90,000 deaths, and again the extent of political and resource gains is highly debatable. Smaller American incursions around the world have cost thousands of additional lives and untold injuries and familial and personal disruptions, with little benefit for the U.S.
Other nations have hardly fared better, and many much worse. Civil and border wars in Africa, such as those in Angola, Darfur, southern Sudan and most of all Congo, have cost at least 5 million lives. The long Iran-Iraq war of the 1980s cost a million fatalities with no discernable gains on either side. Various civil conflicts in Latin America killed hundreds of thousands. Border skirmishes between China and Vietnam, as well as between India and Pakistan, have settled little. The spectacularly brutal wars involving the Soviet Union and, later, Russia—in particular the Afghanistan incursion and occupation and the Chechen war—accomplished next to nothing other than visiting abundant death, destruction and misery upon millions. This says nothing of the futures demolished and lands wrecked through war. The long trail of destruction and pain outweighs whatever glory victory once held; in fact, the very notion of wartime victory now seems more like a myth than a reality.
Certainly we can find exceptions. For instance, the Six-Day War concluded with Israel enjoying a stunningly lopsided victory. That country gained territory and seemingly improved its security. But over the 40 years since that war, the West Bank has become a rotting albatross around Israel’s neck. Israel’s relinquishing of much if not all of the territories seems likely, provided that a politically viable means for doing so can be identified and implemented.
In short, while we may quibble over the details of the military budget, cost overruns and effectiveness of the latest technology, we need to remain firmly focused on the elephant in the room: Traditional military spending fails any kind of serious cost-benefit analysis.
In spite of this, appeals for military cutbacks encounter howls of criticism. Those calling for a change in DoD budgeting get slapped with all sorts of invective: words such as naive, idealistic, unpatriotic and cowardly. But given the evidence, who is being naive about the value and possibilities of success that might be enjoyed from massive spending on military procurement?
Even though the military may fall short in effectiveness in the field, many claim that massive expenditures produce a worthwhile deterrent function. Being armed to the teeth certainly dissuades virtually any national power from conducting a frontal assault on the United States. However, the kinds of hit-and-run or suicide terror attacks that Americans experienced on Sept. 11, and before that at American embassies and military installations in Africa and the Middle East, continue to be effective. Traditional military spending, even massive amounts of it, will not deter such attacks.
The old head-to-head nation-state threats seem less compelling as well. The only nations regarded as serious potential opponents, China and Russia, seem unlikely to tangle with the U.S., even if we cut DoD expenditures. Despite overwrought rhetoric regarding tensions between the People’s Republic of China and Taiwan, the two countries have strengthened their ties, and the general trend has been toward greater cooperation and openness. This development militates against a full-scale U.S. military face-off with China, which in turn suggests that much of the hardware we build may not have a real use. China has very little motivation to engage the U.S. in direct conflict beyond the Taiwan Strait. Even Russia seems unlikely to find a compelling reason to get into a war with the U.S., even a U.S. with more limited forces. And provided that the problems plaguing the DoD can be ameliorated, a cut in expenditures may not result in a commensurate reduction in combat readiness.
The effect of cutting America’s expenditures can be softened by charging the Oval Office and key diplomats with the task of persuading other major powers to cut their military outlays in lock step with our cutbacks. Given the severity of the current economic crisis, this may be possible: Everyone wants to save money and to find ways of supporting fiscal stimulus plans. G-20 countries could implement an across-the-board cut of 25 percent on military spending, which falls in line with Rep. Barney Frank’s recommendation. This would yield savings of about $400 billion globally, with about $250 billion of the savings being enjoyed by the U.S. These savings could be used to cover some of the financial bailout’s costs and spending on fiscal stimulus packages in G-20 countries.
While a 25 percent cut might be considered too ambitious, a more modest cut of 10 percent across the G-20 countries would be more easily attained, although with a proportionately smaller impact on deficit reduction and fiscal stimulus. Savings for the U.S. would decline from over $250 billion to about $100 billion; the cut on baseline defense spending would decline to about $61 billion, down from $152.5 billion of savings under the 25 percent scenario.
Beyond the cost savings, why might other countries in the G-20 sign on for such a scheme? First of all, soon-to-be President Obama currently enjoys tremendous symbolic popularity around the world; a bold plan from the new president would probably have considerable sway with citizens in many countries. While I don’t expect other national leaders to simply roll over, they would respond to constituent pressure. Two possible exceptions stand out: the increasingly right-leaning and nationalistic Russians, and the Chinese, who see themselves as playing catch-up to the other great powers and would be reluctant to derail efforts that expand their military capabilities. Tough negotiations could yield substantive cutbacks. Given that we have a considerable cushion to work with, we could give up considerable allocations without injuring our military preparedness. Willingness to engage on spending would signal the world that we wish to cooperate and demonstrate global leadership on reducing military threats.
Creating a mechanism for sharing the benefits of cutbacks could provide an incentive for balanced multiparty cutbacks. This capital pool could be applied to producing global benefits that could jump-start productivity by improving green technologies and bringing them to market, expanding ecological preservation efforts, ensuring food and water supplies, improving global health delivery and providing real funding to the United Nations’ Millennium Development Goals. This would spread benefits widely. Although the G-20 is not directly beholden to U.N. directives, pressure from a large number of developing countries could prod larger countries to cooperate, especially if the U.S. supported such an effort through a strong commitment from a credible and effective ambassador to the U.N.
Global spending on development does not help the U.S. directly, but it would vastly improve labor productivity in the faster-growing developing economies. This would help to energize the global economy, which indirectly benefits the American economy. At the same time, living conditions for millions would improve. Taking these steps would not defang those most radically opposed to American policies, ideals and power, but it would probably erode the support and cover that such individuals and organizations rely upon for money, moral and ideological support, safe havens and so forth. In short, military cutbacks would not erode American security. We would still be the dominant power, but we would step away from being, as Colin Powell first put it in 1992, the “bully on the block.” It is high time to craft a new ethos to serve as our cynosure on military policy.
Cutbacks in spending could actually improve global security. In particular, putting a zero-nukes policy at the center of cuts could help to move civilization off the nuclear precipice. The North Koreans would have far less latitude for continuing their equivocations over nuclear weapons and energy development. A zero-nukes policy would back the Iranians into a corner that would undermine their rationale for wanting the bomb. It would also prod the Israelis to come clean on their nuclear weapons program, which would pick a thorn from the side of future efforts to negotiate in good faith over the Palestinian issue.
This still leaves the question of political considerations. Many Americans regard international policy as somewhat remote and uninteresting, so the strategic element seems unlikely to overcome the impact of cutbacks on jobs. Policymakers and Congress could solve this problem by redeploying military funds locally. That is, funds removed from a given military procurement project should remain in or near the district of that project, provided this didn’t fundamentally undermine productive efficiencies. Adding this wrinkle to a cutback in military spending would take pressure off congressional representatives to protect jobs. This turns the pork-barrel process on its head by working against ballooning military budgets.
In short, cutting the military budget makes sense, and for the first time since the start of the Cold War in 1947, we finally have the chance to push back against the military-industrial complex—or military-industrial-congressional complex, given the powerful effect of pork-barrel politics on the perpetuation of this system—which has been murderous and wasteful and is past due for being brought to heel. And while I’m no fan of Grover Norquist, I will borrow a turn of phrase from him here: I don’t want to destroy the military or the DoD, but I wouldn’t mind cutting it to the size where we can drown it in a bathtub one day. Now’s the time to get started.
Titus Levi, Ph.D., is an economist and media consultant. He is also an adjunct professor at the University of Southern California’s Annenberg School for Communications. He blogs at http://www.thatscapital.net.
AP photo / Gary C. Knapp
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