Thursday, November 11, 2010

The Only Thing I'll Say About the Debt Commission For Now

Everybody's already had a chance to beat their breasts about the big headline-making cuts to Social Security and Medicare. The only thing I'd add is that the cuts actually have a chance A) to undermine the economy and B) shift big costs to state governments that, for now at least, aren't really well-equipped to bear them.

On the second front, it's worth looking at the proposed $100 billion in cuts to defense spending. That's a nice, big, round number, and one I initially found encouraging. But what to cut? Well, $1.1 billion of those savings would be from getting the Department of Defense out of the business of schooling the children of our soldiers, sailors and marines and dumping those kids on local school districts where those families are based. It doesn't eliminate the cost of that education of course, but it does dump it on state taxpayers. This is a small budget item in the scheme of things, but it does hint at something pernicious about the proposed cuts.

Back to the first front: It's time we had a frank national discussion about backdoor Keynesianism, whereby our government has propped up the economy for decades by buying and maintaining equipment for a military that is twice as expensive as the rest of the world's forces combined. (It is, frankly, the way that Republicans have been able to use government for economic ends while shouting about free markets.) A substantial portion of the proposed defense cuts come from reduced contracting and procurement costs. That's going to mean less work for companies like Boeing; that in turn will mean fewer jobs in places like Seattle and Wichita; and that in turn will weaken those communities through a variety of second-order effects.

This is a pain that is probably inevitable: The U.S. really can't afford to do twice as much, defensively, as everybody else in perpetuity. But a right-sized military will mean some pain, at least in the short-term, for private-sector workers whose jobs support and supply the defense establishment. We need to be honest about that.


KhabaLox said...

Hear, hear. (Or is it "Here, here." Or some other combination of those homophones?)

Any idea how much of the other "cuts" are not true cuts but transfers from Federal to Local?

Joel said...

I don't, though I'd imagine there are a few. It bears crawling through the document with a closer analytical eye I applied the first time around.