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Military spending is government spending

President Obama recently announced a change in direction for US military strategy in the wake of exiting Iraq, one that will involve some reductions in spending. Much pearl clutching and chin stroking followed.

But ongoing tinkering with the nation’s defense blueprint means many Texans could feel the pinch from a planned reduction of at least 100,000 ground combat troops. And projected Pentagon spending cuts of at least $489 billion over the next decade could force layoffs at major defense contractors in Texas, such as Lockheed Martin, Raytheon, BAE Systems and Boeing Co.

With the nation’s $15 trillion debt rivaling annual U.S. economic output, “this country is facing a crisis that it has to address,” Defense Secretary Leon Panetta told roughly 500 soldiers in a visit to Fort Bliss on Thursday. “We have got to put everything on the table.”


Stephen Fuller, an economic modeling expert at George Mason University, estimated that Obama’s planned defense reductions of $1 trillion could claim as many as 1 million jobs nationwide – with 91,600 of those losses coming in Texas.

“Our analysis reveals bleak outcomes for both the defense industry and the economy as a whole if $1 trillion is cut from defense,” Fuller said.

Yes, it’s true: When government spends less money on government programs like the military, it’s a drag on the economy. I marvel at how some people only make this connection when the government spending is on government programs that they happen to approve of. For what it’s worth, this new direction isn’t really a cut military spending, but a reduction in the rate of increase in military spending. The second derivative is now negative, in other words. The curve still points upward, however. Be that as it may, I’d be happy to see the economic impact of these reductions mitigated by spending that money on other priorities, like infrastructure. I mean, if we agree that there’s a correlation between government spending and job creation, we should proceed on to the next logical step. Right?

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