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Belated “Book Report” on Lessons from the Naval War College

June 18th, 2010 . by economistmom

A month ago I participated in a conference of mostly military officials and national security experts–I was probably the “oddest bird” there–at the Naval War College in Newport, RI.  The title and focus of the conference was “Economics and Security: Resourcing National Priorities.”  I had planned on writing about some of the things I learned much sooner than this, but then the debates over economic stimulus versus deficit reduction got pretty hot and heavy, so I was otherwise preoccupied.

And then a funny thing happened.  I began to recognize there were quite a few parallels between the other fiscal policy issues I always write about, and this particular angle that I really have never written about:  the role of defense and national security spending in achieving fiscal sustainability.

First, I think most Americans (regardless of what they think of our wars and military activity more generally) assume that cuts in the defense/national security budget would weaken our defense capabilities–that a tradeoff exists between deficit reduction and a strong defense.  But what surprised me the most at the Naval War College conference was my learning that most of these national security officials and experts, who all advocate for a strong defense, believed that if the defense budget were tightened (and all seemed to recognize that given our fiscal situation, such tightening is inevitable), the quality of defense spending would actually improve.  There was a clear message–from even those in uniform(!)at this conference–that more binding budget constraints would force national security policymakers to better prioritize.  Instead of just trying everything, they would need to put scarce dollars where they would have the most benefit.  They would find it worthwhile to eliminate wasteful spending, and improved strategic planning would become more a necessity rather than just an option.  (I realize it is troubling that the human lives at stake are not a good enough reason for better strategic planning–but even there, financial incentives at the margin matter.)

Thus, there is not a tradeoff between adequately financing the military and reducing the budget deficit.  You don’t have to be either in favor of a strong defense OR in favor of fiscal responsibility–there is no “bright line” that separates those camps.  Just like there is no “bright line” between those who are concerned about adequately stimulating the recovering-but-still-weak economy, and those who want to improve the longer-term fiscal outlook.  In fact, in both cases, the seemingly opposing goals turn out to be more symbiotic (and even synergistic) than opposing.  I’ve made the point many times regarding stimulus versus deficit reduction, but here’s a new video by the Brookings Institution’s Bill Gale that explains this very clearly.  And on defense spending, one of the experts I met at the Naval War College conference, Carl Conetta of the Project on Defense Alternatives, served on the “Sustainable Defense Task Force” which recently issued this report–which emphasizes “a set of criteria to identify savings that could be achieved without compromising the essential security of the United States.”  Coincidentally, the report opens with these two quotes from two other experts I met at the conference, the Hoover Institution’s Kori Schake and the Center for American Progress’ Michael Ettlinger:

“Conservatives need to hearken back to our Eisenhower heritage, and develop a defense leadership that understands military power is fundamentally premised on the solvency of the American government and the vibrancy of the U.S. economy.”  –Kori Schake, Hoover Institution Fellow and former McCain-Palin Foreign Policy Advisor

“A country that becomes economically weakened because it has shortchanged necessary domestic investments and carries excessive levels of debt will also eventually be a weaker country across the board.  An overall defense strategy that is fiscally unsustainable will fail every bit as much as a strategy that shortchanges the military.” –John Podesta and Michael Ettlinger, Center for American Progress

The “sustainable defense” report presents a series of options which together would save nearly a trillion dollars from the defense budget over the next ten years.  That is a lot of money, why, getting close to half the cost of the deficit-financed extensions of the Bush tax cuts that President Obama has proposed in his budget.  (I wink a little here.)

And speaking of the Bush tax cuts proposed by President Obama (a very old topic here)… At the Naval War College conference, Carl Conetta educated me on the fact that on defense spending as well, President Obama’s policy stance looks very much like that of the (immediately prior) Bush Administration.  (See this report of Carl’s and note Figure 3 on page 3.)

Finally, like their fear on speaking up about wildly-costly but politically-popular tax cuts (and being accused of being for “big government” and the “largest tax increase in American history”), politicians are reluctant to touch defense spending as something that needs to be trimmed for the sake of fiscal responsibility, for fear they will be accused of being “soft” on national security.  So like the deficit spending we do on tax expenditures that are not successful in achieving their ostensible purposes, the deficit spending we do on wasteful or redundant defense programs tends to get a free pass because of the politics.  In theory, the fiscal policy and national security experts say there’s a lot of room to spend less money more wisely–and not just spend less money but actually strengthen the economy and strengthen our national security.  In practice, without more binding budget constraints or demands from the American public for policymakers to impose such constraints on themselves, there’s no incentive to actually get it done.

7 Responses to “Belated “Book Report” on Lessons from the Naval War College”

  1. comment number 1 by: VAT Brat

    Congressmen are the ones who drive unnecessary defense spending against the advice of the military. The additional C-17 transport planes, redundant engine for the Joinst Strike fighter, the aerial tanker fiasco, and tons of other inefficienies are driven by the pork-barreling instincts of Congress, not by military experts’ advice. It isn’t fear of being labeled against defense as much as it is about giving payoffs to the constituents out of the public trough.

    I’ve waited a while for Economist Mom to produce the spending-cut knife, and I’m not surprised she started with the defense department. It’s laughable to see her hearken back to the good Einsenhower days when the percentage of GDP spent on defense was even higher than it is today.

    The big difference between the Eisenhower days and now is the chunk of federal expenditures devoted to non-defense spending. Those programs represent the greatest challenges to our fiscal health.

    Politicians not only fear being “soft on national defense,” they also fear being labeled “anti-education,” “heartless toward seniors,” “opposed to farmers,” “insensitive toward the working poor,” and other epithets.

    What we really need are recommendations that compel politicians to make tradeoffs today instead of spending other peoples’ money as a cure for their electoral fears.

  2. comment number 2 by: AMTbuff

    Defense spending goes straight into the pockets of Americans. Increasing defense spending would therefore be stimulus, and cutting it is anti-stimulus.

    It appears to me that ideological bias is at work when the government cuts defense spending while expanding all other types of government spending.

  3. comment number 3 by: BillSmith

    In the big picture all that stuff that defense spending buys us will only protect us in the short run. It’s the rest of the economy that protects us over the long run.

    Alas you have to get thru the short run to last for the long run. Keeping that in mind it is a tricky question of balance - which is made harder by pork barrel spending.

  4. comment number 4 by: SteveinCH

    AMT, didn’t you know the multiplier was much higher on all other forms of spending. Tax cuts are the lowest, then defense spending, then all other spending.

    Paul Krugman told me so.

  5. comment number 5 by: DaveB

    If the budget was seperated into the entitlement versus and true defense budget then I might agree but nearly 80% of the current budget goes to retirement pay, benefits and other required spending. Trying to reduce the budget by 5% results in nearly a 25% cut in actual defense programs since the benefits and entitlement cannot be cut. Seperate the two and then consider cutting 10% of that remaining 20%. Find areas that can be cut. That is much more realistic.

  6. comment number 6 by: DaveB

    Yes, I am retired Military (or will be when I hit 60). I am already looking at a retirement package that has been cut several times so that the package I was promised when I first signed up in 1977 is not what I will get when I retire. It is still good, do not get me wrong, but it is not what was originally promised. Especially in the medical area.

  7. comment number 7 by: sootytern

    DaveB: You should Google the Defense budget - your figures are way out of wack. The veteran’s retirement costs are $58.4 billion. The defense budget - not including the above figure - is
    well over $600 billion. That 80% figure is garbage.