The House of Representatives passed a bill on Tuesday night to avoid the so-called ‘fiscal cliff’ – the set of tax increases and spending cuts scheduled to begin January 1, 2013 (Tuesday). The bill makes Bush-era income tax cuts permanent for most Americans while letting them expire for top earners.
The other half of the fiscal cliff, the automatic spending cuts Congress imposed on itself last year, were not dealt with, however. A decision on what to do about those so-called “sequestration” cuts has been postponed for at least two months.
As part of the sequestration deal, the set of budget laws last year that imposed large, automatic spending cuts if an agreement to balance the budget couldn’t be reached by Congress, the Pentagon is set to endure about $500 billion in budget cuts over the next ten years.
On Monday, the Pentagon issued a statement warning that a failure to avoid the cuts would put the jobs of 800,000 civilian employees at risk.
But the proposed cuts to defense budgets are, frankly, puny. The harshest scenario for defense cuts would only put budgets back at about the 2007 level, and they aren’t even really “cuts” to defense spending; they are reductions in the rate of growth of defense spending.
Either way, the budget for military empire and wars will grow.
Illustrating how these cries are more scare stories than anything else is Secretary of Defense Leon Panetta’s less publicized predictions, according to the Associated Press, that “workers…will not face layoffs immediately” and that “he does not believe the Pentagon’s day-to-day operations would change dramatically.”
The military-industrial-congressional complex has lobbied hard to maintain current spending levels and projections.
One recent study, “commissioned by a top defense and aerospace trade association” – namely, the Aerospace Industries Association and the International Association of Machinists and Aerospace Workers – found that “a new batch of planned Pentagon spending cut would cause 1 million jobs to be lost next year.”
The National Association of Manufacturers, another lobby group, repeated this finding, adding that proposed cuts would “increase unemployment by 0.7 percent, and decrease gross domestic product by almost 1 percent.”
But, as Lawrence Korb, Senior Fellow at the Center for American Progress wrote earlier this year, these lobby groups kind of fibbed up their numbers.
“To maximize their findings (and their political impact),” Korb writes, “both studies assessed the effects of defense sequestration on every sector of the economy that could be hit by ‘induced effects,’ including secondary and tertiary effects like reduced consumer spending. As a result, the ’1 million jobs’ figure includes jobs in industries as distant from defense as ‘retail trade’ and ‘leisure and hospitality services.’”
And besides, Korb explained, “defense spending is not a jobs program.”
At least, it’s not supposed to be. As far as the health of the economy is concerned, defense budgets are a net drain. The jobs that these rent-seeking defense corporations maintain only show what big business can do with taxed and diverted wealth.
As the Cato Institute’s Chris Preble wrote recently, “It’s easy to focus exclusively on the companies and individuals hurt by the cuts and forget that the taxed wealth that funded them is being employed elsewhere.”
The minuscule defense cuts being contemplated could easily target areas of waste. The major source of growth in annual defense budgets since 2001 has been mostly (54%) due to the wars in Iraq and Afghanistan, much of the rest has been spent on wasteful superfluous weapons technology, bloated salaries and benefits plans, and expensive peacetime operating costs for the 900-plus military bases in 130-plus countries around the world.
Currently, the US spends more on its military than the next fourteen largest military spending countries combined. Warnings of doom to the economy, or to national security, are unfounded scare stories coming from the groups of people who benefit most from the government’s most lucrative and deadly welfare program.