The False Choice Between Pentagon Cuts and Jobs

By Christine Letts on 08/29/2012 @ 11:07 AM

Tags: Checkbook, Budget

There’s a lot of talk here in Washington and across the country about the effect on jobs if the Pentagon budget is cut. Pentagon contractors are threatening to hand out pink slips to thousands of workers just weeks before the November election, using the fear of layoffs to try and force Congress’ hand to avert planned cuts to Pentagon spending. But the choice between jobs and a balanced, responsible budget is a false one. Here’s the problem with the logic: More Pentagon spending doesn’t necessarily equal more jobs, and less Pentagon spending doesn’t necessarily equal fewer jobs.

There are two reasons that Pentagon spending isn’t the job creation tool it's made out to be:

1. Dollar for dollar, Pentagon spending creates fewer jobs than other spending, according to a study done by the Department of Economics and Political Economy Research Institute (PERI), University of Massachusetts. For every billion dollars spent in healthcare, the study concludes, we can expect 17,200 jobs. A billion dollars spent in clean energy would create 16,800. Education – a jobs creation machine that also gives us a stronger workforce – leads to a whopping 26,700 jobs per billion spent. Even if the $1 billion were to be given back as tax cuts, it would create 15,100 jobs. Military spending? Only 11,200 jobs per billion dollars.*
2. The second reason is a little less intuitive. Conventional wisdom is that if you spend more, you get more jobs. And that piece of conventional wisdom is often right, but that’s not the case for Pentagon spending. The top five Pentagon contractors got more money from the federal government in 2011 than they did in 2006. They also reported record profits. And they employed fewer people.**

There are plenty of arguments for and against Pentagon spending. People will argue that we need a strong national defense, or they’ll remind us that experts believe we can cut almost $1 trillion by reshaping our military to meet modern needs. Some will praise the size and strength of our military, while others will decry the waste from spending more on our military than the next 29 countries combined. I have a strong opinion about what we should do (as does FCNL), but I still believe that they're fair and important arguments to have.

And much of it comes down to principle; Washington Sen. Patty Murray said, “A budget tells the story of the kind of nation we are, and the kind of nation we want to be. It is a statement of our values, our priorities, and our vision.” I think that the principles we reflect in our budget as a whole, and in Pentagon spending in particular, deserve debate. But the debate around protecting the Pentagon from cuts under the banner of job creation--while slashing programs with stronger jobs creation records that contribute to a more sustainable future--misses the point.

References:

* FCNL’s Fact Sheet on Job Creation by Industry

** Defense Contractor Time Machine: Less Spending, More Jobs, Analysis Reveals from Project on Government Oversight. POGO provides caveats, available in the linked article, largely noting that defense contractors have clients outside of the federal government which may account for some of their job growth or loss. They conclude: “The data show, however, that the top five defense contractors, collectively, were cutting jobs while being awarded more taxpayer dollars … [in] a second consecutive year of record revenues and profits."

See also:

• Pentagon Contractors Play a Disturbing Game by William Hartung and Stephen Miles
• Defense Contractors: Driving the Pentagon Budget Debate from Project on Government Oversight