No doubt, President Obama will call for stimulus when he talks about job creation in his speech tonight. Since many of us by now recoil at the word, perhaps it helps to ask: Which Obama stimulus would be the least bad?
The answer is neatly framed in a recent photo of young women posing as Rosie the Riveter, the symbolic female factory worker from World War II, snapped on the occasion of Obama’s Labor Day visit to the Detroit area.
Defense spending is the key: More hiring and spending by the Army, Navy, Air Force and affiliated departments, such as the Defense Advanced Research Projects Agency, the high-end military-technology developer.
This week, and not just because we are marking the 9/11 anniversary, the case for defense spending as job creator takes the “least bad” prize.
Look at the simple arithmetic: The most recent jobs report from the Bureau of Labor Statistics showed 14 million Americans unemployed. Slide half a million from the unemployed column to the Pentagon, and you pull unemployment down substantially.
The jobs created by a Defense Department employment program would be superior to any others Obama could advocate, for several reasons.
1) The military knows how to manage youth. Our great national problem isn’t merely unemployment; it’s youth unemployment. More than 25 percent of teenagers have no job. No US company (although McDonald’s comes close) has more experience handling youth than the military. The armed forces also have expertise in training the disadvantaged and unskilled.
2) The military knows how to train college-age and mid-career men and women. The Reserve Officers’ Training Corps is already on campuses. For older workers, the military knows how to impart useful skills, from systems technology to intelligence analysis to language instruction from Arabic to Spanish.
3) The military moves fast when it comes to hiring or procurement. If a stimulus doesn’t take effect quickly, it isn’t really a stimulus, which is what Obama learned after many millions of his 2009 spending package went unspent. Army and Navy recruiting offices are already rented, and as most Americans understand, the military knows how to spend money quickly. This ability has won the support of economists such as Martin Feldstein, who has made the case for the military as a stimulus device.
4) The military isn’t that expensive. Today, defense spending isn’t big relative to past outlays — measuring 5 percent of gross domestic product. In 2000, when we thought we had a post-Cold War “peace dividend,” it was 3 percent. In 1986, it was 6.2 percent. In 1953, toward the end of the Korean conflict, that share was almost 12 percent. As World War II ended, the spending was 36 percent.
But hasn’t military spending already ballooned relative to other government outlays? Even that point isn’t strong. In 1954, total federal spending was almost 19 percent of GDP and defense expenditure was more than 10 percent. The current estimates for total federal spending clock in at about 25 percent of GDP. At 5 percent of GDP, military spending — even with two wars and other costly commitments from Pakistan to Yemen to Libya — makes up only a fifth of all federal outlays.
Those who argue that defense spending is prohibitive tend to overlook what might be called the “DARPA factor.” The Defense Advanced Research Projects Agency has come up with paradigm changers — such as the Global Positioning System. After the 1983 downing of a Korean civilian airliner by the Soviets, President Ronald Reagan promoted the forerunner to GPS as a future tool for civilian navigation. Not many newspapers paid attention, but companies such as Garmin did.
To all these reasons one can add a final, more controversial one. A more heavily militarized America represents a deterrent to war. Although the 1990s peace dividend enabled us to reduce budget deficits, the cutbacks also sent a message to al Qaeda and other terrorists that America wasn’t ready to fight. Now, especially as European nations scale back their armed forces, an expanding US military would send a very different message.
On an anniversary week like this one, we think about our national soul. Americans are tired of war and joblessness. It’s worth thinking about how an expanded military could help prevent both.
Amity Shlaes is a senior fellow at the Council on Foreign Relations.
© 2011, Bloomberg News