Here's How to Make a Real Stimulus Take Flight
In all the talk of economic stimulus in the White House and on Capitol Hill, one element has been conspicuously absent: defense programs. Yet including $20 billion to $25 billion per year of increased defense spending in the stimulus -- a tiny amount in a total package of hundreds of billions -- would be both smart politics and sound policy.
Take the substantive argument first. During the transition, the Obama team advanced three principles about stimulus spending: It should be timely (putting dollars into economic circulation rapidly), targeted (of clear value to the nation) and temporary (not a new and permanent entitlement or long-term program that would make the government's finances even more problematic).
Defense programs more than meet these criteria, as many mainstream economists have pointed out. Compared with infrastructure programs that require lengthy planning, design and approval processes, extending efficient, already running defense procurements would have brief, as the military says, "flash-to-bang" times. And a dollar invested in such programs would not only circulate rapidly but would also have a multiplying effect, sustaining jobs not only among prime contractors but also among their suppliers.
Increasing the size of the armed forces would have an even more direct and immediate effect on employment: Almost all military spending on personnel occurs within the year of appropriation. There would also be a secondary effect as thousands of young men and women who currently possess no skills receive training. People in military service learn a lot -- not just technical and technological skills but also the valuable traits of personal discipline and leadership.
Defense spending could well be the most precisely targeted form of stimulus spending. The current legislation promises hundreds of billions of dollars in block grants to the states, and neither the White House nor Congress has a clear understanding of where that money is going to wind up being spent. By contrast, the federal government ultimately knows where defense dollars go. Moreover, big programs depend upon nationwide networks of suppliers; the components that go into an F-18 Hornet fighter, for example, are designed and built in 44 states.
Nor are defense programs a lifetime commitment. In the post-Cold War "drawdown," the active-duty military was reduced by 700,000, and weapons buys were cut by at least one-third -- that's what produced the so-called peace dividend of the 1990s. Continuing production of the F-18 and F-22 Raptor fighter jets for two or three years would, in essence, provide a bridge for the airplane industry until the F-35 Lightning is ready for full-scale production. Once it comes on line, the F-18 and F-22 lines could be terminated with minimum disruption to the workforce. These are truly temporary measures.
A closer look at some of the program details makes clear why a defense stimulus makes so much sense. Consider the F-22 Raptor procurement. The 2009 defense budget contains the last monies for buying this amazing airplane, which combines all the desired attributes of a fighter: stealth, speed, maneuverability, the ability to fly at great height and do so economically, without using too much fuel. It's intended to control the skies through the coming decades and is the centerpiece of how the U.S. Air Force intends to operate in the future.
The Air Force initially wanted to buy about 750 Raptors, but the program has been scaled back to 183 aircraft, which will have to last at least 30 years until a substitute can be planned, designed and built. The Bush administration agreed to defer a complete shutdown so that the new administration would have the option of continuing production. The law requires Obama to determine whether to do that; he serves not just as commander in chief of the armed forces but, quite literally in this case, as chief executive officer of the defense industry.
If he decides to terminate the F-22, Obama will, in effect, be firing the 25,000 people who directly work on the Raptor program (and the initial "stop-work" orders and layoffs would begin within months) and perhaps another 50,000 to 75,000 in the supplier base that supports it. His administration will also forgo any chance of selling the planes to allies -- Japan, Australia and Israel, among others -- and any additional return on the tens of billions of taxpayer dollars spent in developing this dominant fighter.
The F-22 program also illustrates how defense spending could build bipartisan support if it were included in the stimulus package. The push to postpone the decision until the new administration resulted from a congressional initiative led by Sen. Daniel K. Inouye (D-Hawaii) and Rep. John P. Murtha (D-Pa.), the heads of the defense appropriations subcommittees. A Jan. 20 letter to the president from Sens. Saxby Chambliss (the conservative Republican from Georgia, where the main production line for the F-22 is located) and Patty Murray (the fifth-ranking Senate Democrat, who is from Washington, the home of one of the program's main suppliers, Boeing) generated 44 co-signers. Compared with research on sexually transmitted diseases (now thankfully out of the stimulus package), this is spending that won't embarrass moderate Democrats and would appeal to conservative Republicans.
There is also the need to preserve a broad array of U.S. military capabilities; the United States has global security responsibilities beyond Iraq and Afghanistan, as the missile tests in Iran and North Korea remind us. This is what Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, means when he talks about the need to "balance" the force between the current emphasis on counterinsurgency and the need to fight different types of wars. In fact, in late 2008, Secretary of Defense Robert Gates directed Mullen and the Joint Chiefs to prepare an adjustment to the 2010 Pentagon budget request, adding about $57 billion to cover a range of shortfalls in our defenses.
However, the new director of the Office of Management and Budget, Peter Orszag, has just told the Defense Department to eliminate that adjustment. Substituting accounting discipline for military judgment is not just questionable strategy but incongruous when the Obama administration is furiously trying to stimulate the economy. Moreover, in ignoring defense needs, the president will be passing on an obvious route to bipartisanship -- pressing social-engineering liberals and green-eyeshade conservatives alike to focus on principled stimulus spending.