Defense Spending Would Be Great Stimulus -- A Commentary

(Click The Image To Enlarge)
Newport News artist's concept of the US Navy's next aircraft carrier, the CVN-21. Newport News is owned by Northrop Grumman, and Northrop has all or part of every aircraft on the deck: the F/A-18s and F-35s parked with wings folded, the E-2 taking off and even the X-47 unmanned combat aircraft waiting to launch behind the F-35.(Image from Flight Global)

From The Wall Street Journal:

All three service branches are in need of upgrade and repair.

The Department of Defense is preparing budget cuts in response to the decline in national income. The DOD budgeteers and their counterparts in the White House Office of Management and Budget apparently reason that a smaller GDP requires belt-tightening by everyone.

That logic is exactly backwards. As President-elect Barack Obama and his economic advisers recognize, countering a deep economic recession requires an increase in government spending to offset the sharp decline in consumer outlays and business investment that is now under way. Without that rise in government spending, the economic downturn would be deeper and longer. Although tax cuts for individuals and businesses can help, government spending will have to do the heavy lifting. That's why the Obama team will propose a package of about $300 billion a year in additional federal government outlays and grants to states and local governments.

Read more ....

My Comment: The Defense Department is already the beneficiary of multi-billions of dollars, with additional projects already approved and online for development. Some programs are probably going to be downsized, but the momentum is clearly for an expanded military. Even if President Obama makes the decision to downsize the military, it will takes years to make any headway .... and i doubt Congress will be very obliging.

Personally .... if I want to stimulate the economy .... I would propose tax cuts across the board and limit (even freeze) the growth and reach of government .... but this opinion is in the minority right now.