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Defense Secretary Panetta Plays on Job Fears But Military Spending Is the Worst at Creating Jobs

September 16, 2011

When we spend $1 billion on the military rather than green investments, health care or education we forfeit between 5,000 and 17,000 jobs.

Two days ago, while representatives of war profiteers were on the Hill trying to push elected officials to protect their profit margins from the deficit committee, heads of the war industry met in a closed-door meeting with Defense Secretary Panetta. The next day, the war contractors held a press conference to try to spin away the fact that military spending costs jobs compared to other ways of spending the money. And today, Panetta and his subordinates came out swinging with the same bogus spin on “jobs.” Panetta says that cuts to the Pentagon budget that would be triggered if the deficit committee doesn’t produce a plan that passes Congress could cause the jobless rate to jump 1 percent.

Why, it’s almost like they planned the whole thing.

Panetta and his counterparts in the war industry can play Chicken Little all they want about war budget spending cuts, but they can’t change the simple fact that military spending is terrible at creating jobs, according to a 2009 study by the Political Economy Research Institute. In fact, of the areas of government spending studied by PERI, military spending was the worst at creating jobs. That means that no matter what nightmare scenario Panetta throws out there on possible job losses related to war budget cuts, the alternatives will always be worse.

The deficit committee is a zero-sum game. They are required by law to propose a plan by the end of November that would reduce the deficit by a set amount. That means the committee will slash some area of government spending. Since every other kind of spending out there creates more jobs than military spending, if Panetta succeeds in pushing the deficit committee to create a plan that cuts government spending but shields the Pentagon, more jobs will be killed in the economy as a whole.

Panetta and the war industry lobby keep citing the number of jobs in the defense industrial base to shore up their case, but they do so without any context. The simple fact is that the bloated war budget is already costing us jobs at its current level. We asked the author of the study, PERI’s Bob Pollin, to talk about military spending’s effect on jobs, and here’s what he told us:

“When we spend $1 billion on the military rather than green investments, health care or education we forfeit between 5,000 and 17,000 jobs. Creating more job opportunities in this country therefore means moving money out of the military and into socially beneficial domestic spending.”

Here’s what National Priorities Project’s Jo Comerford had to say in response to the same question:

“In the midst of a protracted recession, chronic unemployment and mounting concern about our nation’s debt, the sane rallying cry is for “jobs, jobs, jobs”! …It is imperative that we acknowledge, once and for all, that stimulating sectors such as education, transportation and construction will yield far more jobs than spending on military-related endeavors.”

Finally, here’s what the Project on Government Oversight’s Danielle Brian had to say about the kind of arguments being made by the military contractors and Secretary Panetta:

“Every serious economic analysis has shown that because [military spending] is not a consumer good, it is not creating the ripple effect in the economy that spending in almost any other sector does create. So, it [the “military spending is good for job creation” argument] just doesn’t stand up to any serious review.”

It’s not just the profiteers’ claims of job creation that don’t stand up to serious review; their “poor, pitiful us” routine also fails the smell test. At the war industry press conference held on Wednesday, industry spokeswoman Marion C. Blakey said defense had already been cut “into the bone,” and that the industry was collectively “very fragile.” But a look at a few of the 2010 salaries of the CEOs of corporations who make up Blakey’s group’s executive board sure doesn’t reveal any pain or fragility:

  • Lockheed Martin CEO Robert J. Stephens made $21.9 million (including $4 million in bonuses)
  • Northrop Grumman CEO Wesley G. Bush made $22.9 million
  • Boeing CEO W. James McNerney, Jr. made $19.7 million