Sunday, July 22, 2012
The Republican position on federal spending could not be clearer: It doesn’t create jobs. Except when it goes to defense contractors.
Under the debt-ceiling deal reached last year, planned spending is going to be “sequestered” -- that is, cut -- starting next January. The defense budget is going to take half the hit. On July 12, Mitt Romney’s presidential campaign issued a press release with a statement from Bill Bolling, the Republican lieutenant governor of Virginia, attacking President Barack Obama for cutting defense too much.
“We are very concerned about the impact that sequestration could have on Virginia’s economy,” Bolling said in the statement. He added, “It could also deliver a devastating blow to the private-sector defense contractors who make up a big part of Virginia’s economy, especially in Northern Virginia and Hampton Roads. This is just another example of how the president’s approach to running the country is jeopardizing our economic viability.”
The same day, the state’s attorney general, Ken Cuccinelli, made the same point in his own statement for the Romney campaign. And the campaign hosted a conference call where Representative Randy Forbes, a Virginia Republican, said, “If you look at it from an economic point of view, this is something that is going to have an enormous, devastating blow on Virginia, especially in northern Virginia and in the Hampton Roads area.” There would be “a huge impact on beauty salons, restaurants, car dealers, the entire economy.”
The cuts probably will hurt Virginia, since it is, according to a 2011 Bloomberg Government study, the top recipient of federal defense dollars. Is that really a reason to keep the spending going, though? I’ve got nothing against northern Virginia -- along with Hampton Roads, it’s one of my favorite closely divided parts of a swing state. The federal government, though, does more than enough for the region already. You would expect Republicans, at least, to think so.
It’s not just Virginia politicians and the Romney campaign who are making the economic argument for defense spending. It’s a case that has also been made by House Armed Services Committee Chairman Buck McKeon, Senator John McCain and Senator John Cornyn -- Republicans all -- among others.
Representative Barney Frank, a Massachusetts Democrat, calls his Republican colleagues’ insistence that defense spending be protected to safeguard jobs “weaponized Keynesianism.” His accusation is unfair -- to Keynesians. The Keynesian argument for government spending applies only during economic slumps. The case Bolling and the others are making recognizes no such limitation: The federal government is supposed to keep the dollars flowing to particular communities for all time.
There is, of course, no reason to think that defense spending is more helpful to the economy than other kinds of federal spending. Republicans have been dead-set against sending federal money to states to help them avoid laying off teachers. Yet teachers, too, spend money at beauty salons and car dealerships. They, too, have “good paying and reliable jobs,” as the National Association of Manufacturers said of defense workers in a letter opposing cuts in April.
Needless to say, on the theory that the Republicans are advancing, the federal budget can never be cut. The US Conference of Mayors will be able to say that cuts in social spending will devastate the economy of our cities with at least as much justice as defense-heavy areas can complain about cuts to the military. Rural areas can say the same thing about farm subsidies.
Reductions in federal spending, whether for defense or social programs, will, of course, be disruptive to the people, businesses and communities who have come to rely on it. The cuts should not, however, hurt the broader economy. When federal spending falls and jobs tied to that spending disappear, private-sector spending should normally increase and create jobs tied to it.
So long as the Federal Reserve is targeting inflation or nominal spending, total economic activity should stay roughly the same, even if its composition changes. (If the Fed responds to government spending cuts by tightening money, jobs will be lost. But that would be the fault of the Fed, not the budget writers.)
The Bloomberg Government study listed the 10 states that depend the most on defense dollars. Seven of them voted for the Republican presidential candidate in 2008, and an eighth, Virginia, has usually voted Republican in presidential races. So the party’s interest in keeping defense jobs makes political sense.
Yet the purpose of the defense budget shouldn’t be to subsidize particular people or areas. We don’t buy tanks and train soldiers to keep beauty salons in business. The Republicans resisting big defense cuts generally think that they would jeopardize our national security. That’s a debatable proposition. So debate it. What Republicans should not do is make an economic argument for defense spending that is both untrue and inconsistent with everything else they say about spending and the economy.
When they do that, they treat the nation’s defense as little more than a source of political pork.