Defense Spending May Come to the Rescue of the EconomyJanuary 08, 2009
While most reports suggest there will be cuts in defense spending under the Obama administration, an analysis piece in the The Christian Science Monitor sees the exact opposite, with the new administration enlisting Pentagon spending as a "stimulus" to help beat back the recession. The federal budget deficit is set to rise over $1.2 trillion this year, but President-elect Obama has already shown his willingness to try to spend the country out of recession. The Christian Science Monitor article notes that this likely means more money for defense — not less. Another reason defense spending is unlikely to fall: Congressional leaders won't want to be in a situation where they have to justify defense job losses in their districts during this recession. "I would be very doubtful that Congress will cut any major procurement programs because the Democrats would not want to be accused of putting anyone out of work as they put together an economic stimulus package," Dov Zakheim, a former Pentagon chief financial officer, told the newspaper. Instead, he predicts that federal spending on defense could rise as much as 2% over the next couple years. Economists argue that boosting defense spending could spur job growth and keep the economy from derailing further. Martin Feldstein, who was chairman of the Council of Economic Advisers under President Ronald Reagan, goes so far as to suggest that the Obama administration should increase the defense budget by 10% for procurement and research. Such an increase, he argues, could potentially create 300,000 additional jobs. |
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