Wednesday, January 07, 2009

Hey Obama: A defense stimulus would be wise

There is a terrible misconception that spending on defense goes down a cash sink-hole.

Let's take for instance the F-22A stealth fighter. It's made in the USA for the USA, not that allies such as Australia and Israel wouldn't mind having some to supplement their air defenses. But because of the classified technology of fighter, which can avoid radar detection, federal law says these jets belong to only to us.

Lockheed Martin, Boeing, and Pratt & Whitney are the major contractors for the F-22A. American companies, with American workers, overseen by American engineers.

Our economy is in a real mess right now. To get out of it, President-elect Barack Obama is suggesting a massive public works initiative. Highways, bridges, and the like.

But defense provides jobs too.

Here's what Martin Feldstein wrote on Christmas Eve in the Wall Street Journal:

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.

A temporary rise in DOD spending on supplies, equipment and manpower should be a significant part of that increase in overall government outlays. The same applies to the Department of Homeland Security, to the FBI, and to other parts of the national intelligence community.

Dan Spencer expands on a defense stimulus, and says a Barack Obama committment to the F22A would ensure almost 100,000 American jobs, with an economic impact of $12 billion.

Although we are still fighting two wars, our next conflict could involve a foe with much more sophisticated air defenses. Iran perhaps? Stealth aircraft, such as the F-22, very well could be crucial for our side in such a war, and we don't compelled to ration them. Of our fighters, only the F-22 can fire missiles at air and ground targets simultaneously and flawlessly.

And maintaining and building highways is important to our nation's economic growth. But let's make sure Americans can afford cars to drive on them.

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