Close this Advertisement

Forward Observer

By Sean Gallagher

Blog archive
Sean Gallagher

Conservative think-tank suggests defense spending for stimulus

The American Enterprise Institute's resident fellow Thomas Donnelly is giving President Obama some advice on how to revive the economy – spend on defense. At the AEI's "State of the Union" event a week ago, Donnelly was pitching the idea that the new administration could spend most wisely on stimulus for the nation's industries by investing more in defense contracts.

His talking points, from an e-mail sent to me by AEI:

  • Defense investments will create thousands of American jobs across the 50 states, preserve jobs at risk from premature program terminations, promote American exports and create a secure environment for global economic recovery.
  • Defense will be key to any stimulus package: The security of worldwide commerce depends upon safe, cheap and uninterrupted flows of goods and service through a variety of “commons” – the seas, air, space and cyberspace – that are protected every day by U.S. military forces.
  • The gap in military spending of the past 15 years – more than $150 billion in deferred projects in the 1990s alone – has created a “defense deficit” that has resulted in a wholesale obsolescence in front-line systems: U.S. troops are still fighting with planes, ships and land combat vehicles designed in the late 1970s and purchased during the Reagan buildup.
  • There is a strong correlation between defense spending and past recoveries.
  • Defense manufacturing is among the most competitive elements in the U.S. manufacturing sector.
  • Defense programs more than meet the “shovel ready” threshold set for infrastructure projects in the stimulus package.

It seems doubtful that any money allocated under the banner of "economic stimulus" will find its way into the Defense budget. As incoming Deputy Secretary of Defense William Lynn has said, the White House is proceeding with the existing budget plan for the Defense Department for 2010 with minor modifications at best, based on the budget plan submitted by the Pentagon during the last administration, and that major changes will be deferred until the Quadrennial Defense Review is completed – and sets out the administration's strategy. But there may be a hint of Donnelly's argument thrown around in conversations about the major programs that the Obama administration needs to act on in the next few weeks and months: Future Combat Systems, the F-22 and the Joint Strike Fighter.

Posted by Sean Gallagher on Jan 20, 2009 at 8:12 AM


Reader Comments

Thu, Jan 22, 2009 cog_in_system

I'm not convinced this is such a good idea. If we want to stimulate the economy, funding Defense to produce Defense widgits is not any better than funding some other branch to produce some other kind of widgit. Real stimulus comes from doing things that create not just economic activity but an expansion of the wealth base. I'm looking for spinoffs that can be sold for a profit, new ideas that blossom into new technologies or improvements to old technologies, etc. If I were going to spend money in the Defense arena, I'd split it between R&D (i.e. DARPA) and maintenance / replacements for stuff expended overseas. I would focus a lot of $$$$ on making infrastructure secure (including especially IT security, where we as a nation really seem to lack). I'd focus attention on our computing and networking platforms and push for some quick changes of direction to improve both security and maintainability (our current systems really don't have either). I'd definitely put significant $$$ into real alternative energy (because if DoD is going to fight and win anywhere, they need to cut the oil rope as well). I would also spend some cash to begin figuring out how to make DoD procurement VERY LEAN, and how to dual-purpose / multi-purpose as much DoD expenditure as possible. The stimulus doesn't exist just to replenish the 401Ks of some shareholders or board members.

Thu, Jan 22, 2009

As an american citizen, retired military,federal employee and taxpayer. The new administration needs to review Defense spending very close and where those dollar will be used to create and distribute jobs. DoD has wasted so many dollars on projects going no where to benefit or secure the american citizens and this country. The money they waste is taxpayers' dollars and hard earning dollars. We as taxpayers' need to know these dollars are going to benefit the safety of the American citizens and their families, to provide homes, put food on their tables, provide an education for their children, health/medicial benefits and retirement plans. Not to benefit the wealthy or keep their friends in business. I'm for defense spending stimulus, if it benefit the American ecomony, work class american citizens and the security of this country. Defense department is well known for fraud, waste and abuse of taxpayers dollars. As a taxpayer I want to know that my hard earned dollars are not misused. The citizens of this country are tired of not having control over their tax dollars. But governments are quick to continue taxing the poor and so call mid-class citizens. The unfortunate citizens of this country need training tools and funding to provide them with an opportunity to qualify for these new created jobs. At least ensure the people can at least get jobs and secure their families financially. The greed must stop and in Defense spending there's a lot of greed that go unnotice and mismanagement of funding.

Wed, Jan 21, 2009 MAJ Schaffer MN

It does make sense on paper, but our recent experiences with DoD contractors, has shown alot of waste, conversion and overcharging etc. I would be for it, but the Government needs to have very careful and independent oversight or the result will be only a small sector of our economy will profit while the the majority continues to suffer. Any project the Gov spends on defense development or enhancement would ideally has a civilian spend-off application in the future..

Wed, Jan 21, 2009 Sub Contractor North Carolina

Thanks for bringing this to our attention, Sean. Any way you could get the WSJ, NYT or WP to pick this story up?

Wed, Jan 21, 2009 Charles Strasburger Maryland

This is the only intelligent, rational stimulus spending plan I have seen or heard of to date, and it would have far reaching implications...well beyond the things we keep hearing about in the media. Civilian infrastructure projects will create fewer jobs, mostly blue collar, would have little effect on the economy for years, and then end after a few years when projects are complete.. The other issue is creating jobs by growing government. That has never worked and is far too expensive and is totally out of line with reality. Too bad this idea will likely fall on deaf ears....because all they are concerned with are votes...not what is best for the economy...

Show All Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Your Name:(optional)
Your Email:(optional)
Your Location:(optional)
Comment:
Please type the letters/numbers you see above

Defense Systems eNewsletters

Webcast

  • Improving Performance Management and Project Control to Meet Cost/Schedule Milestones in DoD Procurement

    It can be nearly impossible to build annual budgets that consider forecasted project and program work plans along with detailed cost data, particularly when attempting to reconcile actual and projected program costs with actual schedule performance. In this webcast, a defense IT program manager will share best practices and hard-won lessons aligning critical data on project performance, cost systems and schedules for truly big picture program management insight. Read more