Defense Industry Scare Tactics Won’t Create Jobs

As indicated by the recent rollout of the House Republican budget strategy, the gloves are off in the battle to define the country’s spending priorities in the run-up to the November elections. But neither party adequately addresses the largest item in the discretionary budget: the Pentagon.

Secretary Panetta meets with the Aerospace Industries Association, which has substantially exaggerated potential job losses in the Defense industry. Photo by Department of Defense/Flickr.

Secretary Panetta meets with the Aerospace Industries Association, which has substantially exaggerated potential job losses in the Defense industry. Photo by Department of Defense/Flickr.

The Obama Administration’s approach to curbing runaway defense spending has been far too timid, while Republicans – from Paul Ryan to Mitt Romney – actually want to increase spending substantially beyond current levels.

A key player in this debate is the defense industry, which is pulling out all the stops to get the Pentagon a free pass from future budget cutting. The industry’s main trade group, the Aerospace Industries Association, has financed two studies raising the specter of a million jobs lost from planned Pentagon cuts.

But in fact, maintaining Pentagon spending at current high levels while pushing the burden of budget cuts on domestic programs would result in a net loss of jobs nationwide. That’s because arms spending produces substantially fewer jobs than virtually any other use of the same money, including a tax cut. Structured properly, Pentagon spending cuts could actually give a boost to the economy.

Cuts to state and local spending are already a major drag on the economy. Layoffs of police, firemen, teachers, nurses, construction workers and others who depend on state and local spending for employment have counterbalanced growth in private sector jobs, resulting in significantly higher unemployment than would otherwise have been the case. Further favoring the Pentagon over domestic public investments will simply exacerbate this process.

The latest of the AIA-funded studies, released this month, refers to “more than a million jobs at stake” in the fight to “avoid sequestration” (the current plan to cut $1.2 trillion from the budget over 10 years, $500 billion from the Pentagon.) This report kicked off a full court press of state-based “budget education” campaigns to continue through the election, forecasting economic disaster that these cuts will visit on congressional districts across the country.

There are big problems with this campaign. The first is the substantial exaggeration involved in the “more than a million jobs” claim. According to the Congressional Research Service, nearly two-thirds of the jobs in the aerospace industry come from building commercial planes. They don’t depend on Pentagon spending at all and are therefore not “at stake” in the budget fight.

The second problem with the AIA study is that it assumes jobs that are generated by Pentagon spending are made in a bubble. In fact, those savings will be put to use somewhere else – somewhere that is more effective at job creation. Economists at the University of Massachusetts have done a series of studies examining the job-creating effects of different possible ways of using the money: spending it on military contracting, on clean energy, health care, or education, or returning it to the private economy in the form of tax cuts. Each time they ran the numbers they found that Pentagon spending was the poorest job creator of the lot.

AIA is also trying to raise alarms about the “impact” of defense cuts on jobs that don’t now exist. Pentagon plans to build new nuclear bombers and new ballistic missile firing submarines, for example, are in their infancy. Stopping the programs now, or delaying production, will have almost no impact on current employment in the arms sector.

According to figures just released by the International Institute for Strategic Studies, the United States now account for 45% of the world’s military spending, dwarfing the budgets of Russia, China and other major players. Even the Pentagon admits that we shouldn’t be fighting any more Iraqs and Afghanistans, and many of the most urgent threats we face – from climate change to terrorism to nuclear proliferation – cannot be solved by military means. There is no military rationale for keeping the Pentagon budget at current high levels.

Instead of treating our national security budget as a jobs program, the aerospace industry can turn its attention to the civilian growth markets that create jobs making things the country actually needs.

Similarly, our elected officials are positioned to make informed and responsible decisions when it comes to the national budget. We cannot afford to fall victim to the defense lobby’s suspect studies; instead Congress must keep all programs on the table when it comes to budget cuts.

Miriam Pemberton is a Research Fellow at the Institute for Policy Studies. William D. Hartung is the Director of the Arms and Security Project at the Center for International Studies.