October 31, 2014

Good Lesson at the Naval War College: A Strong Defense and Fiscal Responsibility Are Not Mutually Exclusive

Last month I participated in a conference of mostly military officials and national security experts at the Naval War College in Newport, RI. The conference title was “Economics and Security: Resourcing National Priorities.” 

Since then the debates over economic stimulus versus deficit reduction got pretty hot and heavy, and a funny thing happened. I began to recognize quite a few parallels between the other fiscal policy issues I always write about, and this particular angle that I really have never written about: the role of defense and national security spending in achieving fiscal sustainability.

First, I think most Americans (regardless of what they think of our wars and military activity more generally) assume that cuts in the national security budget would weaken our defense capabilities -- that a trade-off exists between deficit reduction and a strong defense. But what surprised me the most at the Naval War College conference was learning that most of the national security officials and experts there, who all advocate for a strong defense, believed that if the defense budget were tightened, the quality of defense spending would actually improve

All seemed to recognize that given our fiscal situation, such tightening is inevitable. But there was a clear message – from even those in uniform – that more binding budget constraints would force national security policymakers to better prioritize. Instead of just trying everything, they would need to put scarce dollars where they would have the most benefit. They would find it worthwhile to eliminate wasteful spending, and improved strategic planning would become more a necessity rather than just an option. (I realize it is troubling that the human lives at stake are not a good enough reason for better strategic planning – but even there, financial incentives at the margin matter.)

Thus, you don’t have to be in favor of a strong defense or fiscal responsibility – there is no “bright line” that separates those camps. Just like there is no “bright line” between those who are concerned about adequately stimulating the recovering-but-still-weak economy, and those who want to improve the longer-term fiscal outlook. In fact, in both cases, the seemingly opposing goals turn out to be more symbiotic (and even synergistic).

I’ve made the point many times regarding stimulus versus deficit reduction, but here’s a new video by the Brookings Institution’s Bill Gale that explains this very clearly. And on defense spending, one of the experts I met at the Naval War College conference, Carl Conetta of the Project on Defense Alternatives, served on the “Sustainable Defense Task Force, which recently issued a report emphasizing “a set of criteria to identify savings that could be achieved without compromising the essential security of the United States.” 

The report opens with two quotes:

“Conservatives need to hearken back to our Eisenhower heritage, and develop a defense leadership that understands military power is fundamentally premised on the solvency of the American government and the vibrancy of the U.S. economy.” Kori Schake, Hoover Institution Fellow and former McCain-Palin foreign policy advisor

“A country that becomes economically weakened because it has shortchanged necessary domestic investments and carries excessive levels of debt will also eventually be a weaker country across the board. An overall defense strategy that is fiscally unsustainable will fail every bit as much as a strategy that shortchanges the military.”John Podesta and Michael Ettlinger, Center for American Progress

The “sustainable defense” report presents a series of options which together would save nearly a trillion dollars from the defense budget over the next ten years. That is a lot of money -- close to half the cost of the deficit-financed extensions of the Bush tax cuts that President Obama has proposed in his budget.

And speaking of the Bush tax cuts proposed by Obama . . . At the Naval War College conference, Carl Conetta educated me on the fact that on defense spending as well, Obama’s policy stance looks very much like that of the immediately prior Bush Administration. (See Carl’s report and note Figure 3 on page 3.)

Some politicians don’t speak up about wildly-costly but politically popular tax cuts for fear of being accused of supporting “big government” and the “largest tax increase in American history.” Similarly, politicians are reluctant to touch defense spending for fear they will be accused of being soft on national security.

So like deficit spending on tax expenditures that don’t succeed in achieving their ostensible purposes, the deficit spending on wasteful or redundant defense programs tends to get a free pass because of the politics involved.

In theory, the fiscal policy and national security experts say, there’s a lot of room to spend less money – and spend it more wisely. And this could actually strengthen the economy and strengthen our national security. But unless the American public demands that policymakers impose more binding budget constraints on themselves, there’s no incentive for them to actually get it done.