What Trump Is Actually Doing With 'Infrastructure' Spending
Other than shouting about building a wall on the U.S.-Mexico border, one of Donald Trump’s most frequently proclaimed promises on the 2016 campaign trail was the launching of a half-trillion-dollar plan to repair America’s crumbling infrastructure (employing large numbers of workers in the process). Eighteen months into his administration, no credible proposal for anything near that scale has been made. To the extent that the Trump administration has a plan at all for public investment, it involves pumping up Pentagon spending, not investing in roads, bridges, transportation, better Internet access, or other pressing needs of the civilian economy.
Not that President Trump hasn’t talked about investing in infrastructure. Last February, he even proposed a scheme that, he claimed, would boost the country’s infrastructure with $1.5 trillion in spending over the next decade. With a typical dose of hyperbole, he described it as “the biggest and boldest infrastructure investment in American history.”
Analysts from the Wharton School at the University of Pennsylvania — Trump’s alma mater — beg to differ. They note that the plan actually involves only $200 billion in direct federal investment, less than one-seventh of the total promised. According to Wharton’s experts, much of the extra spending, supposedly leveraged from the private sector as well as state and local governments, will never materialize. In addition, were such a plan launched, it would, they suggest, fall short of its goal by a cool trillion dollars. In the end, the spending levels Trump is proposing would have “little to no impact” on the nation’s gross domestic product. To add insult to injury, the president has exerted next to no effort to get even this anemic proposal through Congress, where it’s now dead in the water.
There is, however, one area of federal investment on which Trump and the Congress have worked overtime with remarkable unanimity to increase spending: the Pentagon, which is slated to receive more than $6 trillion over the next decade. This year alone increases will bring total spending on the Pentagon and related agencies (like the Department of Energy where work on nuclear warheads takes place) to $716 billion. That $6-trillion, 10-year figure represents more than 30 times as much direct spending as the president’s $200 billion infrastructure plan.
In reality, Pentagon spending is the Trump administration’s substitute for a true infrastructure program and it’s guaranteed to deliver public investments, but neglect just about every area of greatest civilian need from roads to water treatment facilities.
The Pentagon’s Covert Industrial Policy
One reason the Trump administration has chosen to pump money into the Pentagon is that it’s the path of least political resistance in Washington. A combination of fear, ideology, and influence peddling radically skews “debate” there in favor of military outlays above all else. Fear — whether of terrorism, Russia, China, Iran, or North Korea — provides one pillar of support for the habitual overfunding of the Pentagon and the rest of the national security state (which in these years has had a combined trillion-dollar annual budget). In addition, it’s generally accepted in Washington that being tagged “soft on defense” is the equivalent of political suicide, particularly for Democrats. Add to that the millions of dollars spent by the weapons industry on lobbying and campaign contributions, its routine practice of hiring former Pentagon and military officials, and the way it strategically places defense-related jobs in key states and districts, and it’s easy to see how the president and Congress might turn to arms spending as the basis for a covert industrial policy.
The Trump plan builds on the Pentagon’s already prominent role in the economy. By now, it’s the largest landowner in the country, the biggest institutional consumer of fossil fuels, the most significant source of funds for advanced government research and development, and a major investor in the manufacturing sector. As it happens, though, expanding the Pentagon’s economic role is the least efficient way to boost jobs, innovation, and economic growth.
Unfortunately, there is no organized lobby or accepted bipartisan rationale for domestic funding that can come close to matching the levers of influence that the Pentagon and the arms industry have at their command. This only increases the difficulty Congress has when it comes to investing in infrastructure, clean energy, education, or other direct paths toward increasing employment and economic growth.
Former congressman Barney Frank once labeled the penchant for using the Pentagon as the government’s main economic tool “weaponized Keynesianism” after economist John Maynard Keynes’s theory that government spending should pick up the slack in investment when private-sector spending is insufficient to support full employment. Currently, of course, the official unemployment rate is low by historical standards. However, key localities and constituencies, including the industrial Midwest, rural areas, and urban ones with significant numbers of black and Hispanic workers, have largely been left behind. In addition, millions of “discouraged workers” who want a job but have given up actively looking for one aren’t even counted in the official unemployment figures, wage growth has been stagnant for years, and the inequality gap between the 1% and the rest of America is already in Gilded Age territory.
Such economic distress was crucial to Donald Trump’s rise to power. In campaign 2016, of course, he endlessly denounced unfair trade agreements, immigrants, and corporate flight as key factors in the plight of what became a significant part of his political base: downwardly mobile and displaced industrial workers (or those who feared that this might be their future fate).
The Trump Difference
Although insufficient, increases in defense manufacturing and construction can help areas where employment in civilian manufacturing has been lagging. Even as it’s expanded, however, defense spending has come to play an ever-smaller role in the U.S. economy, falling from 8%-10% of the gross domestic product in the 1950s and 1960s to under 4% today. Still, it remains crucial to the economic base in defense-dependent locales like Southern California, Connecticut, Georgia, Massachusetts, Michigan, Missouri, Ohio, Pennsylvania, Texas, Virginia, and Washington state. Such places, in turn, play an outsized political role in Washington because their congressional representatives tend to cluster on the armed services, defense appropriations, and other key committees, and because of their significance on the electoral map.
A long-awaited Trump administration “defense industrial base” study should be considered a tip-off that the president and his key officials see Pentagon spending as the way to economically prime the pump. Note, as a start, that the study was overseen not by a defense official but by the president’s economics and trade czar, Peter Navarro, whose formal title is White House director of trade and industrial policy. A main aim of the study is to find a way to bolster smaller defense firms that subcontract to giants like Boeing, Raytheon, and Lockheed Martin.
Although Trump touted the study as a way to “rebuild” the U.S. military when he ordered it in May 2017, economic motives were clearly a crucial factor. Navarro typically cited the importance of a “healthy, growing economy and a resilient industrial base,” identifying weapons spending as a key element in achieving such goals. The CEO of the Aerospace Industries Association, one of the defense lobby’s most powerful trade groups, underscored Navarro’s point when, in July 2017, he insisted that “our industry’s contributions to U.S. national security and economic well-being can’t be taken for granted.” (He failed to explain how an industry that absorbs more than $300 billion per year in Pentagon contracts could ever be “taken for granted.”)
Trump’s defense-industrial-base policy tracks closely with proposals put forward by Daniel Goure of the military-contractor-funded Lexington Institute in a December 2016 article titled “How Trump Can Invest in Infrastructure and Make America Great Again.” Goure’s main point: that Trump should make military investments — like building naval shipyards and ammunition plants — part and parcel of his infrastructure plan. In doing so, he caught the essence of the arms industry’s case regarding the salutary effects of defense spending on the economy:
“Every major military activity, whether production of a new weapons system, sustainment of an existing one or support for the troops, is embedded in a web of economic activities and supports an array of businesses. These include not only major defense contractors such as Lockheed Martin, Boeing, General Dynamics, and Raytheon, but a host of middle-tier and even mom-and-pop businesses. Money spent at the top ripples through the economy. Most of it is spent not on unique defense items, but on products and services that have commercial markets too.”
What Goure’s analysis neglects, however, is not just that every government investment stimulates multiple sectors of the economy, but that virtually any other kind would have a greater ripple effect on employment and economic growth than military spending does. Underwritten by the defense industry, his analysis is yet another example of how the arms lobby has distorted economic policy and debate in this country.
These days, it seems as if there’s nothing the military won’t get involved in. Take another recent set of “security” expenditures in what has already become a billion-dollar-plus business: building and maintaining detention centers for children, mainly unaccompanied minors from Central America, caught up in the Trump administration’s brutal security crackdown on the U.S.-Mexico border. One company, Southwest Key, has already received a $955-million government contract to work on such facilities. Among the other beneficiaries is the major defense contractor General Dynamics, normally known for making tanks, ballistic-missile-firing submarines, and the like, not ordinarily ideal qualifications for taking care of children.
Last but not least, President Trump has worked overtime to tout his promotion of U.S. arms sales as a jobs program. In a May 2018 meeting with Saudi Crown Prince Mohammed bin Salman at the White House (with reporters in attendance), he typically brandished a map that laid out just where U.S. jobs from Saudi arms sales would be located. Not coincidentally, many of them would be in states like Pennsylvania, Michigan, Ohio, and Florida that had provided him with his margin of victory in the 2016 elections. Trump had already crowed about such Saudi deals as a source of “jobs, jobs, jobs” during his May 2017 visit to Riyadh, that country’s capital. And he claimed on one occasion — against all evidence — that his deals with the Saudi regime for arms and other equipment could create “millions of jobs.”
The Trump administration’s decision to blatantly put jobs and economic benefits for U.S. corporations above human rights considerations and strategic concerns is likely to have disastrous consequences. Its continued sales of bombs and other weapons to Saudi Arabia and the United Arab Emirates, for example, allows them to go on prosecuting a brutal war in Yemen that has already killed thousands of civilians and put millions more at risk of death from famine and disease. In addition to being morally reprehensible, such an approach could turn untold numbers of Yemenis and others across the Middle East into U.S. enemies — a high price to pay for a few thousand jobs in the arms sector.
Pentagon Spending Versus a Real Infrastructure Plan
While the Trump administration’s Pentagon spending will infuse new money into the economy, it’s certainly a misguided way to spur economic growth. As University of Massachusetts economist Heidi Garrett-Peltier has demonstrated, when it comes to creating jobs, military spending lags far behind investment in civilian infrastructure, clean energy, health care, or education. Nonetheless, the administration is moving full speed ahead with its military-driven planning.
In addition, Trump’s approach will prove hopeless when it comes to addressing the fast-multiplying problems of the country’s ailing infrastructure. The $683 billion extra that the administration proposes putting into Pentagon spending over the next 10 years pales in comparison to the trillions of dollars the American Society of Civil Engineers claims are needed to modernize U.S. infrastructure. Nor will all of that Pentagon increase even be directed toward construction or manufacturing activities (not to speak of basic infrastructural needs like roads and bridges). A significant chunk of it will, for instance, be dedicated to paying the salaries of the military’s massive cadre of civilian and military personnel or health care and other benefits.
In their study, the civil engineers suggest that failing to engage in a major infrastructure program could cost the economy $4 trillion and 2.5 million jobs by 2025, something no Pentagon pump-priming could begin to offset. In other words, using the Pentagon as America’s main conduit for public investment will prove a woeful approach when it comes to the health of the larger society.
One era in which government spending did directly stimulate increased growth, infrastructural development, and the creation of well-paying jobs was the 1950s, a period for which Donald Trump is visibly nostalgic. For him, those years were evidently the last in which America was truly “great.” Many things were deeply wrong with the country in the fifties — from rampant racism, sexism, and the denial of basic human rights to McCarthyite witch hunts — but on the economic front the government did indeed play a positive role.
In those years, public investment went far beyond Pentagon spending, which President Dwight Eisenhower (of “military-industrial complex” fame) actually tried to rein in. It was civilian investments — from the G.I. Bill to increased incentives for housing construction to the building of an interstate highway system — that contributed in crucial ways to the economic boom of that era. Whatever its failures and drawbacks, including the ways in which African-Americans and other minorities were grossly under-represented when it came to sharing the benefits, the Eisenhower investment strategy did boost the overall economy in a fashion the Trump plan never will.
The notion that the Pentagon can play a primary role in boosting employment to any significant degree is largely a myth that serves the needs of the military-industrial complex, not American workers or Donald Trump’s base. Until the political gridlock in Washington that prevents large-scale new civilian investments of just about any sort is broken, however, the Pentagon will continue to seem like the only game in town. And we will all pay a price for those skewed priorities, in both blood and treasure.