Defense spending a lifeline to Puget Sound economy
When I lived in San Diego and Lawton, Okla., the importance of the military to the economy was in your face and ears, from the aircraft carriers moored in San Diego Bay to the thunder of artillery in the Oklahoma night.
For all Seattle’s patina of peacenik, the Puget Sound region is another big military region. We’re home to sprawling Joint Base Lewis-McChord of the Army and Air Force in Tacoma.
Naval Base Kitsap is home port for one carrier, as well as for the fleet ballistic missile submarines in the Pacific which carry a large share of the nation’s nuclear deterrent. Another carrier is based at Naval Station Everett. And these are just the big ships.
Boeing is the nation’s second-largest defense contractor, after Lockheed Martin.
In total, the military accounts for $7.9 billion annually in Washington and 103,000 civilian and uniformed employees, according to a state estimate. That’s about 4 percent of the state’s gross domestic product — relatively small compared with commercial airplanes, software or agriculture, but still sizable, especially for areas such as Pierce County.
So how much are we at risk from defense-spending cuts that might come from falling off the “fiscal cliff” and are sure to arrive in some form even if a budget deal is reached?
Nobody knows for sure. But the region’s installations did well in previous base realignments.
Although Boeing has announced plans to shrink its defense work by $1.6 billion, a spokesman called the work here “very robust,“ including a new tanker for the Air Force and the P-8 anti-submarine plane. Engineering work for the tanker is being done in Seattle; the 767-based tankers will be built in Everett and outfitted there for their military mission. Boeing builds the P-8 in Renton and adds the military electronics near Boeing Field. In all, the company’s defense side employs 5,400 in this region.
Nationally, the potential drawdown has been subjected to hyperbole. Defense Secretary Leon Panetta called it ”a disaster” and Sen. John McCain said it would deal ”a crippling blow to our military.”
In fact, according to the Center for Strategic and International Studies, the reductions proposed under the sequester and Budget Control Act caps would be less than other shifts to peacetime.
For example, funding adjusted for inflation fell 43 percent after the Korean War, 33 percent after Vietnam and 36 percent after the Cold War. The current trajectory would lower defense spending by 31 percent.
Never has moving to a peacetime economy been met by more hysteria.
Part of that has to do with the lobbying of what President Eisenhower called the military-industrial complex, which is eager to protect profits. And these have been very good times.
After 9/11, a fire hose of new funding was directed to the Pentagon. This fiscal year, defense accounts for about $700 billion, the second-largest item in the federal budget after Social Security. In 2000, it was around $382 billion. And this doesn’t include additional related spending in the Department of Energy and Department of Homeland Security.
Together, they comprise easily $1 trillion a year when the U.S. is carrying $16 trillion in debt.
America spends more on the military than the next 13 nations combined, including China and Russia.
So much money has produced notorious waste. One example is the Joint Strike Fighter, intended to be an inexpensive “Chevrolet” that could also be exported. (America is the world’s largest arms exporter). Instead, it has turned into a Ferrari-priced program, behind schedule, with a host of problems.
Another is the modernization of the B-61 hydrogen bomb, each of which is on track to cost more than their weight in gold.
There’s lots of fat to cut.
A larger question becomes, who, with the war in Iraq over and Afghanistan winding down, is our enemy to justify such gigantic expenditures?
Iran looms large and China larger in the minds of hawks. President Obama’s “pivot to the Pacific” has telegraphed as much to Beijing.
To be sure, China is trying to modernize its military. It’s learning to use its first aircraft carrier, but I suspect our sailors have a nickname for this vessel: target practice.
Yet China prefers to build its economy, lend money to the U.S. and project soft power around the globe through economic development. The People’s Liberation Army is as much a corrupt industrial conglomerate as a modern military. And any Chinese-American war would devastate the world economy.
Anyway, would Washington really be willing to intervene to save Taiwan if it meant the incineration of Los Angeles or Seattle?
On a less apocalyptic note, the wars of the past decade have taken a terrible toll on national finances and priorities. We can’t afford an endless war footing.
The second reason for unease about a drawdown is that America lacks the civilian economy that cushioned previous transitions (and even these sometimes caused recessions).
Our biggest employer is no longer General Motors, which in 1962 paid $50 an hour in today’s dollars, including health care and pension. It is Wal-Mart, where the average employee earns less than $9 an hour and a third of the workforce doesn’t qualify for benefits.
In addition, 23 million people are officially unemployed, working part time but wanting full-time work or wanting to work but having given up looking.
Without the housing bubble as our last big factory, the military-industrial complex has become an employer of last resort, in other words Military Keynesianism.
But it would be healthier even for national security to rebuild a peacetime economy. A dollar spent on infrastructure, teachers’ pay or research would get us further than one thrown down the hole of a runaway Pentagon budget buster or more overseas adventures.
How to make that switch should be the national conversation.
You may reach Jon Talton at email@example.com
- Cascadia Center
- Economic Policy Institute
- Enterprise Seattle
- Harvard Business Review
- Open Secrets: Center for Responsive Politics
- Sightline Institute
- U.S. Bureau of Labor Statistics