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Defense Spending as Economic Stimulus?

Tomorrow morning, Defense Secretary Robert Gates goes before the Senate Armed Services Committee to discuss “Challenges facing the Defense Department.” Let’s hope the hearing doesn’t degenerate into a debate about the Iraq withdrawal timeline. While that’s certainly an important topic, DOD faces real challenges, specifically on future strategy, force structure, weapons programs and budget, and it would be really nice to hear Gates’ lay out his ideas on how he hopes to address them.

Long time defense analyst and Center for Defense Information director, Winslow Wheeler, emailed a helpful list of some issues and questions the senators should discuss with Gates. In commentary that can be found here, Wheeler pushes back on the idea that defense spending can provide economic stimulus to the American economy. Tomorrow (Jan. 27) at 3:00 p.m. on sister site Defense Tech, Wheeler will be a guest for a live online interview. Be sure and check in. Some of Wheeler’s commentary:

Many questions are sure to be prefaced with statements asserting US armed forces as "the best in the world, if not in history." Such statements are little more than political fluff and steadfastly ignore the deterioration we have been experiencing. A more meaningful question is, how can we reverse the trends that over both Republican and Democratic administrations have made our forces smaller, older, and - most importantly - less effective at increasing cost?

Unavoidable questions that Gates will face will involve, not any problem - let alone reform - but instead the notion that spending more on the defense budget will help stimulate the economy. Heavily populated with habitual porkers, the committee is sure to witness Saxby Chambliss (R-GA) to seek more F-22s for Georgia, Susan Collins (R - ME) to look to fortify shipbuilding for Maine, and several others as well. Chambliss' F-22 and Collins' DDG-1000 do not help our defenses; they degrade them. The same counter-intuitive logic is true of economic stimulus. Spending more on complexities like the F-22 and DDG-1000 will not provide the economic stimulus sought. In fact, cutting, not expanding, the defense budget can result in real stimulus - but only if Congress does it right.

As the economic news darkens in the United States, the ideas for stimulating new jobs get worse. A sure-fire way to advance deeper into recession is now being spread around: spend even more on the Department of Defense (DoD). Doing that will not generate new jobs effectively and it will perpetuate serious problems in the Pentagon. The newly inaugurated President Barack Obama would be well advised to go in precisely the opposite direction.

For those who argue that defense spending is in fact simulative to the larger economy, I want to hear why the sharp increase in defense investment spending since 9-11 has not had a more noticeable impact on U.S. GDP.

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