Study: Federal Spending on Defense Doesn’t Create As Many Jobs As Education Spending

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Despite vast Republican opposition on federal spending to create jobs (“stimulus”), some Republicans (and, surprise!, defense contractors and defense contractor-funded consultant Loren Thompson) support federal spending on defense to create jobs or to support the ones that already exist, i.e. protecting the defense industrial base. For instance, CQ reported this week that Republican Rep. Todd Akin of Missouri said further reductions in defense spending “could also mean layoffs within the defense industrial base.” To be totally fair, many Democrats also argue for defense spending because of the jobs argument, they just also tend to support non-defense federal spending to create jobs too.

But if members of Congress want to create more jobs with federal spending you get a bigger bang for the buck by spending on areas other than defense. A 2009 University of Massachusetts study on the economics of federal spending found that more jobs are created from each federal dollar spent on education, health care, and clean energy compared to the number of jobs created from each federal dollar spent on defense.

“Contrary to the assertions of the arms industry, maintaining military spending at the expense of other forms of federal expenditures would actually result in a net loss of jobs,” according to defense expert William D. Hartung at the non-profit Center for International Policy. ” This is because military spending is less effective at creating jobs than virtually any other form of government activity.”

Hartung also explains, in a fact sheet, that “these other forms of expenditure create more decent-paying jobs (those paying $64,000 per year or more) than military spending does.”

He goes into some greater detail as well:

Part of the reason that military spending creates fewer jobs than other forms of expenditure is that a large share of that money is either spent overseas or spent on imported goods.  By contrast, most of the money generated by spending in areas like education is spent in the United States.

In addition, more of the military dollar goes to capital, as opposed to labor, than do the expenditures in the other job categories.  For example, only 1.5% of the price of each F-35 Joint Strike Fighter pays for the labor costs involved in “manufacturing, fabrication, and assembly” work at the plane’s main production facility in Fort Worth, Texas.  A full 85% of the F-35s costs go for overhead, not for jobs actually fabricating and assembling the aircraft.

To be clear: despite the hype, defense spending seems to be currently well insulated from any serious cuts according to recent assessments by former OMB Associate Director for National Security Gordon Adams here on Battleland, former Senate staffer Winslow Wheeler in an article in Salon, and Jake Sherman at Politico.

Some influential administration officials — Democrats I might add (who are often afraid of being “weak on national security”) — want to defend the defense industry because of they think that all hell will break loose if we don’t continue to shower them in money at the rate they’ve become accustomed.  For instance, Defense Secretary Leon Panetta has been busy lately bear hugging the defense industry even though revenue for the biggest defense contractors have reached record highs. At least there are some cooler heads within the Pentagon. “Paying companies to keep design teams employed is not a realistic prospect,” Air Force Chief of Staff Norton Schwartz remarked at a Sept. 20 news conference, according to Sandra Erwin of National Defense magazine in an article called “Air Force Chief: No Corporate Welfare for Defense Industry.” Such level of government intervention in the private sector, Schwartz added, “isn’t the American way of doing things.”

He’s right: It’s not the American way of doing things. The defense budget should not be a jobs program — the size of the defense budget should be based on a realistic assessment of threats and the needs of the force. I don’t think I’m going out on a limb as to why Republicans support federal spending on defense as a way to create to jobs, rather than federal spending on other things to create jobs, when I say it’s due to an uncritical embrace of the military. As former GOP congressional staffer Mike Lofgren recently wrote touching on many of the themes of this post:

…the economic justification for Pentagon spending is even more fallacious when one considers that the $700 billion annual DOD budget creates comparatively few jobs. The days of Rosie the Riveter are long gone; most weapons projects now require very little touch labor. Instead, a disproportionate share is siphoned off into high-cost research and development (from which the civilian economy benefits little); exorbitant management expenditures, overhead and out-and-out padding; and, of course, the money that flows back into the coffers of political campaigns. A million dollars appropriated for highway construction would create two to three times as many jobs as a million dollars appropriated for Pentagon weapons procurement, so the jobs argument is ultimately specious.

Take away the cash nexus and there still remains a psychological predisposition toward war and militarism on the part of the GOP. This undoubtedly arises from a neurotic need to demonstrate toughness and dovetails perfectly with the belligerent tough-guy pose one constantly hears on right-wing talk radio. Militarism springs from the same psychological deficit that requires an endless series of enemies, both foreign and domestic.

Efforts to blindly defend the currently massive defense budget, while clothed in the language of avoiding “devastating” cuts that would “hollow out” the force, are actually efforts to defend profligate spending (and the belief that America should be engaging in conflicts of which it has minimal national interest — no minor point, but one that will have to wait for a later day). But more Republicans, if they are truly interested in spending less while supporting national security, need to get much more critical of the national security establishment because the status quo at the Pentagon is not acceptable. For instance, as I pointed out in another post, an Army study released earlier this year found that the military is not spending money wisely:

Every year since 1996, the Army has spent more than $1 billion annually on programs that were ultimately cancelled. Since 2004, including FCS, $3.3B to $3.8B, or 35% to 42%, per year of Army DT&E funding has been lost to cancelled programs. The Army cannot afford to continue losing funds in this manner.

Some Republicans do get it. But they are too rare these days. An example of someone who understands that the Defense Department has a culture of waste is Republican Sen. John McCain of Arizona. He stated last week that the Defense Department has a:

…systemic tendency to spend the taxpayers’ money in a manner that is far too often disconnected from what the warfighter actually needs or what is in the taxpayers’ best interests.  Particularly over the last ten years, senior defense management has been inclined to lose sight of affordability as a goal and has just reached for more money as the solution to most problems.

Plus, to go back to the original point of this post, if you really want to create more jobs, which is something America really needs right now (and that’s a massive understatement), other kinds of federal spending are more effective.