?Somehow this madness must cease. We must stop now?.I speak for those whose land is being laid waste, whose homes are being destroyed, whose culture is being subverted. I speak for the poor of America who are paying the double price of smashed hopes and death and corruption in Vietnam. I speak as a citizen of the world, for the world as it stands aghast at the path we have taken? (Rev. Martin Luther King,
April 4, 1967).
The Historic Role of Military Spending
In his historic condemnation of the United States war in Vietnam, Dr. King drew the connections between the victims of war in other countries and those within the United States itself. While U.S. firepower destroyed people and land in Vietnam, the costs of that war destroyed the hopes and dreams also of poor and working people at home. Never again could politicians ignore the terrible consequences war and preparations for war had on the U.S. people.
Because the long standing outcry against war was stifled by the crusades for World Wars I and II and the ?struggle against communism? that followed, Vietnam era progressives reexamined for the first time in a long time the connections between war spending and economic growth.
For example, government data made it clear that the increased production to
meet the demand for war material brought the U.S. economy out of the Great Depression. By 1943, U.S. industrial productivity was two and one-half times greater than the 1930s. U.S. trade increased by four times between the late 1930s and the early post-war era. Not so positively, a select Senate Committee warned in 1946 that wartime military contracts were given to a handfull of the nation?s largest corporations and that after the war there was a qualitative increase in the power of these small number of corporations over the entire economy. One corporate CEO called for the continuation of a wartime economy during the peace. This economy he said should make permanent the relationships between government, the corporate sector, and the research institutes (universities) that had been vital to running a war economy.
Between 1945 and 1950, the anti-communist crusade was used by capital, especially those corporations engaged in military production, to generate new demand for their products. The aerospace industry, in conjunction with the U.S. Air Force and selected Congresspersons, raised the specter of a war with the Soviet Union within a period of months.
Even with the ?threat of communism,? the Truman Administration was forced to limit military spending because of pressures from fiscal conservatives. However, a critical Cold War document, National Security Council Document #68, was prepared in 1950 for the Secretary of State calling for an end to caps on military spending. NSC 68 called for unlimited military expenditures and that each subsequent administration allocate all the military needed before allocating resources for other than military purposes. The Korean War gave legitimacy to the proposals in NSC 68 and at the same time brought the U.S. economy out of a recession that had started in 1949.
In the late 1950s, advocates for dramatically increased military spending for anti-guerrilla fighters, conventional forces, battlefield nuclear weapons, and more missiles and nuclear weapons, called for another dramatic increase in military spending. The authors of two reports (Gaither and Rockefeller Reports) representing the capitalist class soon were in positions of influence in the new Kennedy Administration. Military spending again significantly increased both before and after the escalation of the war in Vietnam. By the time the U.S. was in a large land and air war in Vietnam, however, the costs of the war were threatening the Great Society domestic programs that the American people were promised. Dr. King pointed out how the domestic programs that offered education, health care, day care, legal aid, and other necessities were being squandered as bullets flew, napalm was dropped, and bombs were detonated over literally millions of Asians.
Ronald Reagan entered office in 1980 in the midst of a deep recession (unemployment rates above 7 percent) and during record levels of inflation (in excess of 10 percent). By the end of 1982, Reagan was able to fully rekindle the Cold War with the former Soviet Union and launch a military program that cost as much as at any time during the Cold War. Between 1981 and 1984 the increase in military expenditures of $140 billion were matched by an almost equal amount of program cuts in social services. Over the decade of the 1980s, the military budget ( coupled with enormous tax cuts for the rich) stimulated an economic recovery that occurred at the same time that workers experienced significant declines in real wages and massive layoffs due to plant closings and capital flight. During the Reagan era also there was a substantial ideological shift from the idea of positive government, government serving the human needs of its citizens, to negative government, government providing primarily military security and police protection while the private sector provides for all other human needs.
Today, the Bush Administration is requesting military expenditures in excess of $400 billion dollars (including an additional $87 billion package for Iraqi occupation and reconstruction), and like NSC 68, he claims that calls for more must remain unlimited because of the ?war on terrorism.? Even the ?communist? menace of the 1940s and 1950s had greater specificity as to place, people, ideology, government, and duration of the struggle. However, since the terrorist enemy is defined as the most elusive enemy in U.S. history, it is potentially everywhere and it is perpetual. What does expenditure for this war mean for the U.S. economy ? What are the probable impacts of unending military spending on workers and the poor?
Direct Economic Effects of Military Spending
In general, military spending will have a modest stimulative effect on the U.S. economy, but not quite as dramatic as in the 1950s, 1960s, or 1980s. Iraqi war costs include higher pay checks for troops and purchases of war supplies. Shifting war strategies to so-called Revolution in Military Affairs (RMA) high tech weapons systems mean allocation of resources for communications networks, robotic planes, smart bombs, and other instruments of automated warfare. James Cypher (Dollars and Sense, January/February 2002) expects that DOD investments in RMA weapons will require the construction of new production systems such that the $24 billion targeted for new weapons systems will require expenditures in excess of $100 billion. Cypher concludes that ??the jump in military spending will function as an industrial policy for the information technology and communications industries, boosting these hard-hit sectors of the U.S. economy.? At the same time economists argue that increased military spending alone will not facilitate recovery from a depressed economy. Military spending today will approach 4 percent of GDP whereas during the 1980s it reached 7 percent, in the late 1960s 11.8 percent and in the 1950s , 11 percent.
So while the impacts of military spending may modestly impact on the economy as a whole, the information technology sector, and privileged private contractors for services such as Bechtel, Haliburton, and other corporations with access to the Bush Administration gain disproportionately from total expenditures. One such company, Kellogg Brown and Root (KBR), which is a subsidiary of Haliburton, has contracts with the Army Corps of Engineers and the Agency for International Development to repair the petroleum infrastructure of Iraq with a predicted value of $7 billion. After Dick Cheney had been appointed Secretary of Defense in the administration of the first Bush administration, KBR won , or was handed, contracts to study the privatization of army jobs and later received contracts to provide worldwide logistics for the Army Corps of Engineers. When Dick Cheney left his Pentagon job to become CEO of Haliburton, KBR jumped from the 73rd ranked Pentagon contractor to the 18th spot.
In sum, military spending has before and can again provide a modest stimulus for economic recovery but the real financial beneficiaries of such spending are the specific production sectors that are asked to produce for the military, and most importantly individual multinational corporations who benefit from huge government contracts for products and services. The latter contracts usually go to the companies whose personnel are serving in government and/or the military. The connections between government, the military, and the corporate sector constitute what former President Eisenhower called the military/industrial complex and what Cypher more recently called ?the iron triangle.?
Indirect Effects of Military Spending
There are a variety of ?indirect? effects of military spending on the economy as a whole and on the lives of most Americans.
Military spending has always been ?capital intensive,? that is the investment of dollars in military goods and services requires less labor power to produce than the investment of comparable dollars in other sectors of the economy. While more soldiers receive wages during a war and occupation, less workers are needed to produce the new high technology equipment that characterize the new 21st century army. For example, the Congressional Budget Office estimated in 2002 that $10 billion in military spending generates 40,000 fewer jobs than those generated from $10 billion spent on civilian programs.
Further, military spending requires government to borrow money from private sources. The more money that is invested in government to cover deficits which are driven by military spending, the less money is available for investment in non-military sectors. Increased indebtedness due to growing military budgets may also drive up interest rates which dampens the ability of businesses to invest.In addition, to ?crowding out? investment dollars, expanding investments in military reduce the resources of society that can be allocated for the production of goods and services that have a use value. In the main, military spending constitutes waste in that the resources that go into armies, navies, air forces, and weapons of human destruction cannot be put to constructive use. According to economists such as Paul Sweezy and Harry Magdoff, capitalism always produces more surplus than it can absorb. Military waste is one of the few ways to overcome the tendency of the rate of surplus to rise under capitalism.
Perhaps the most important indirect economic consequence of military spending is its inevitable ?drying up? of non-military government spending. As President Eisenhower eloquently stated it, ?Every gun that is made, every warship launched, every rocket fired, signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.?
When President Clinton left office his military planners projected a rise in DOD budgets from about the $275 billion that had been reached in 1998 to about $305 billion by the year 2005. President Bush?s proposed 2004 military budget (including the $87 billion he has recently requested for the occupation and rebuilding of Iraq) will total $470 billion, a total that will exceed well over 4 percent of GDP. Non-military spending has declined as a percentage of the GDP from about 12.5 percent in 2000 to just below 12 percent in the current budget cycle. The National Priorities Project predicts a continual slide in non-defense spending. As the nation with the world?s biggest military budget, the U.S. spends 26 cents of every tax dollar on the military, 20 percent of total federal spending on the military and over half of all discretionary (non-mandated programs) spending on military.
While military spending begins to skyrocket, approaching Vietnam era expenditures, government support for those desperately in need stagnates or declines. More than one in ten families lives below officially designated poverty rates and 17 percent of all children live in poverty. Meanwhile, the National Priorities Project reports, government spending in support of Temporary Assistance to Needy Families (TANF) is less than 1 percent of the federal budget. Almost 12 percent of households in the country live with less than adequate food (34 million people, 13 million children). Food stamp budgets began a steep decline in 1994 from about $26 billion to $18 billion in 2002.
The Center for American Progress using data from the Congressional Budget Office recently calculated what President Bush?s request for $87 billion for the continued war in Iraq would translate into in non-military expenditures. Spent on domestic programs the $87 billion would:
*more than pay for the total budget deficits of all 50 states.
*cover two years of unemployment benefits.
*pay 3.3 million workers who lost their jobs since 2001 $26,363 each.
*pay over seven times the cost for Title I funding for low income schools (funds cut by 1/3).
*pay for cuts in after school programs (by 40 percent) 87 times over.
*pay for special education programs nine times over current legislated amounts that have been cut.
*pay for ten times what the governments spends currently on environmental protection (proposed cuts about 40 percent from past programs).
*pay eight times over for Pell Grant college scholarship programs (cut by ½).
*pay for the next three years of the President?s proposed Medicare drug program.
These and other data make the case clearly that military spending inevitably ?crowds out? significant social programs and all non-military expenditures at the national, state, and local levels. Without definitive insiders accounts of meetings of key policymakers, it is difficult to conclude that decisionmakers are making budget proposals by specifically taking money from a non-military program and allotting it to a military one. But, the evidence is overwhelming that the basic needs of growing percentages of the U.S. population are not being met and government resources that are designed, albeit modestly, to help meet basic needs are being reallocated to growing military spending. The general point President Eisenhower made in the 1950s is still relevant today although the magnitude of the distortions of military spending for peoples lives have grown to an extent unimagined in the 1950s.
Political Effects of Military Spending
The consequences of increased military spending impact on the domestic political life of the country and on United States foreign policy and international relations.
The downsizing of non-military programs alluded to above help make the case that military spending is again assuming the lion-share of federal spending. With efforts to justify the spending drawing upon the legitimate fears of the U.S. people about their physical security, Bush advisors increasingly argue that military spending has to be our number one priority (remembering the claims of NSC 68) and that defense needs require downsizing government as we have known it. Armed with the neoliberal ideology that claims that the state should provide for security and the market place all other human needs, a powerful case is being made for a radical reconstruction of government away from the idea that government should serve the needs of its citizenry socially and economically as well as in terms of security (the idea of positive government). As William Greider recently argued in The Nation (May 12, 2003) Bush?s key advisors wish to return public policy to the days of President William McKinley before the demands of Progressives, Populists, and labor militants to create the modern welfare state.
Along with giving a significant impetus to the argument that the U.S. can no longer pay for social programs because of the exigencies of the war on terrorism, increased military expenditures gives increasing political power to those sectors of the ruling class that represent the military, defense contractors, and their allies in Congress. The old notion of a ?military/industrial complex? or Cypher?s ?iron triangle? takes on new meaning in the 21st century as growing amounts of our national funds are placed in the hands of the managers of the ?war on terrorism.?
As with Eisenhower?s warning of possible ?unwarranted influence? of the military/industrial complex on American society, the ?war on terrorism? has stimulated a renaissance of military values, national chauvinism, the institutionalization of recruiting in public schools, the increased drive by administrators of universities for scarce military research dollars and a pervasive drive to ?rally round the troops.?
The connections between economic interest, military spending, a militarized political culture, demands for obedient support for United States foreign policy of necessity lead to the institutional- ization of domestic repression. Reflections on the history of civil liberties in the United States makes it clear that the principles of rights and liberties embedded in founding documents are often under attack and usually the attack comes during times when political elites engage in foreign adventures and seek to stifle opposition to them.. From the Alien and Sedition Acts, to the jailing of anti-war activists during World War I, to the anti-communist campaigns of the 1940s to the 1960s, to President Reagan?s efforts to jail opponents of his Central America policies to the Patriot and Homeland Security Acts today, the connections between militarism and domestic repression are clear.
Finally, military spending must be assessed in the context of United States foreign policy. A program of global empire created and managed by ?the last remaining superpower? has been proposed by key neoconservatives in the Bush Administration. The drive for empire was clearly unveiled in the September ,2002 National Security Assessment released to Congress. It claims that historically the United States has promoted democratization and the development of market economies. It declares that the United States has a special role to play in creating market-based democracies around the world today. It argues that the U.S project is being threatened by rogue and failing states, and, most importantly, diverse forms of international terrorism. In this context the United States must be equipped to respond to the forces of evil. This justifies the historic shift (in rhetoric at least) from a policy of containment of U.S. enemies to a policy of ?preemption.? The United States, the document declares, reserves the right to attack nations and peoples when we know they are planning (or thinking about) some assault on the U.S.
The Doctrine of Preemption has been bolstered by the construction of forty to fifty military bases in the Middle East, North African, and Asia (many in nations formally part of the Soviet Union). The wars on Afghanistan and Iraq were to be initial projects leading to a qualitative increase in the U.S. presence around the world: accessing and protecting energy resources; inducing stable client regimes in troubled areas of the world; purging the last vestiges of the old Soviet Union?s sphere of influence; and finally opening the door for even further U.S. capital penetration (often in competition with capitalist giants in Europe and Asia and the rising potential power of China). In the light of the new more expansive, military dominated foreign policy strategies, the domestic impacts and needs of military spending are intimately interconnected with the imperial goals of the Bush administration. It is not necessary to discern which came first, economic interest at home or abroad. What is critical to understand is how military spending works and affects the domestic economic and political system and at the same time promotes an imperial policy overseas.
A Progressive Agenda That Includes Opposition to Military Spending
This document argues that military spending has significant effects on the United States economy. On the ?positive? side, military spending historically, as today, has played a role in stimulating economic growth. During the height of the Cold War in the 1950s and 1960s, and much later in the Reagan era, military spending provided a kind of Keynesian boost to the economy. That is, such spending increased demand which lifted the economy out of recession. It should be noted, however, that such ?military Keynesianism? was short-lived and aided some sectors of the society more than others. Today, some economists suggest, the stimulative effects of military spending are not as great.
If there is modest growth attributable to military spending, it is far outweighed by the negative consequences of such spending. It ?crowds out? non-military spending. It leads to dramatic cuts in social spending at a time when more poor and working people are desperate for jobs, living wages, food, health care, shelter and other basic needs.
As to political effects military spending gives life to rightwing ideologues who argue that government cannot afford non-military spending. It gives excessive power to military sectors of the ruling class. It gives the material support to policies in pursuance of global empire. And it moves the U.S. further in the direction of a military state (political scientist Harold Laswell years ago called it a ?garrison state?).
Progressives need to make rigorous analyses of the horrible consequences of military spending available to grassroots organizers. Progressives need to incorporate demands for radical reductions in such spending in their Peace and Justice Agenda. Progressives need to insist that the candidates running for the presidency or for Congress in 2004 commit themselves to radical reductions in military spending, to an imperial agenda that justifies it, and to increasing domestic repression that targets its critics.
This progressive agenda might be briefly summarized in the following way:
Whereas military spending has transformative effects on the U.S. economy;
*providing huge rewards for select corporations that receive military contracts
*putting excessive power in the hands of military interests; corporate, military , and political
*threatening basic democratic rights and institutions
*stimulating a U.S. political culture that celebrates war and violence
*taking money away from poor and working people
*and, in addition, threatens the very philosophy of positive government that has inspired the struggles to defend the interests of workers, African-Americans, Latinos, women, and others over the last half century
We deplore the draconian increases in military spending and call for
-a 30 percent decrease in such spending over the next five years
-comparable increases in the social programs cut in the Bush era
-and the establishment of a National Commission for the Study of U.S. Militarism that would be charged with the task of examining definitely the affect of military spending on the U.S. economy, the U.S. political system, U.S. culture and on U.S. foreign policy. This Commission would be a diverse one with panelists representing working people, women, African Americans, Latinos, as well as representatives of government, the corporate sector, and higher education. It should be charged with issuing a report to the people that would be designed to stimulate public discussion on the future of the United States in the 21st century.
Harry Targ teaches U.S. foreign policy and political economy at Purdue University. He is a member of the National Executive Committee of the Committees of Correspondence for Democracy and Socialism.
Suggested Readings:
James M. Cypher, ?The Iron Triangle: The New Military Buildup, Dollars and Sense, January/February, 2002.
David R. Francis, ?War?s Mixed Impact on a Reviving Economy,? Christian Science Monitor, September 16, 2003.
David Gold, ?Fewer Jobs, Slower Growth:: Military Spending Drains the Economy,? Dollars and Sense, July/august, 2002 |
