Throwing money at defense
The defense budget is likely to be the Achilles heel of the Reagan administration -- and of the country, too, for that matter -- if it is not subjected to the same kind of rigorous analysis which indefatigable budget director David Stockman has applied to the rest of the government.
One of the great American myths is that you can solve a problem by throwing enough money at it -- whether you are going to the moon, flying a space shuttle, eliminating hunger and poverty, rescuing inner cities, conquering disease, or staying stronger than the Soviet Union. Like most myths, this one has enough truth in it to make it durable. The truth is that money -- which is a shorthand way of saying the investment of resources --is a necessary condition for solving these problems.The mistake is in leaping from that simple truth to the conclusion that it is also a sufficient condition.
It was this leap which was the fallacy of Lyndon Johnson's Great Society. After hundreds of billions of dollars and ruinous inflation, urban ghettoes are at least as depressing as they were in 1965. Meanwhile, the federal budget got out of control, leading to the overwhelming public reaction manifest in last November's election.
What is being overlooked is that the same principles apply to national defense as to social welfare. The Reagan approach to defense carries with it the danger of transforming the defense establishment into an equally expensive welfare system for the industrial part of the military-industrial complex, and with results equally ruinous for the country.
The defense establishment undeniably requires attention. One may even grant that it requires more money. It needs better, perhaps even more, manpower; and it needs to retain more of the skilled manpower it already has. If needs to make its existing weapons work more than it needs new weapons.
The present permissive atmosphere in the White House and in Congress toward the Pentagon's budget requests ensures that these will more nearly resemble a child's letter to Santa Claus than the recommendations of a flinty-eyed budget examiner. The tendency is to go for more and more sophisticated weapons systems before the systems already in being are made operationally reliable. This, in turn, ensures cost overruns that will make the shyrocketing cost of welfare look like a drop in the bucket.
This is the most inflationary kind of spending the government does. In the first place, the rate of inflation in defense industry is greater than in the economy as a whole. In the second place, pouring billions of dollars out of the rest of the economy or add to the budget deficit. In either case, the effect is inflationary because the defense dollars will not add to the supply of goods available in the economy as a whole. In the third place, to the extent that all this is financed through deficit spending, the government will still be in the marketplace borrowing money and thereby keeping upward pressure on interest rates.
The administration's economic gurus, of course, say they are going to eliminate the deficit by cutting both spending and taxes. George Bush, who has since had a change of heart, accurately described this last summer as voodoo economics.
Among the practical problems with it is the failure to allow sufficiently for cost overruns, which experience has shown to be inevitable. Another practical problem is the magnitude and rapidity of the proposed defense increases -- 25 percent more in 1982 than in 1981. It is bureaucratically impossible to increase spending that fast without wasting a great deal of it.
Walter Lippmann used to caution us about keeping the commitments of policy in balance with the resources necessary to meet them. In moving to dismantle much of the Great Society, the Reagan administration has heeded that warning with respect to domestic affairs. We badly need the same approach in foreign affairs and defense.
The defense establishment is stretched thin, but this is in relation to the commitments it is expected to carry out.The momentum in Washington is to beef up defense, but there also need to be questions asked about the commitments.
There is talk, for example, of expanding from a two-ocean to a three-ocean Navy --Atlantic, Pacific, Indian. Maybe we need it, but what new commitments will we have to undertake to secure bases for it? And who will man it?
Finally, there needs to be a sense of priority about building up defense. The tendency is to go for everything at once, to strike while the political atmosphere is receptive. But suppose it develops that we can't afford everything at once? Do we need, for example, the three-ocean Navy and the Stealth aircraft at the same time we are digging up Utah and Nevada for the MX missile?
Even allowing for the propensity of generals and admirals to want everything in sight, they cannot be expected to make rational decisions on these questions until Congress and the President tell them in reasonably concrete term s what it is they are expected to do. Simply telling them to be stronger than the Soviet Unions is not good enough.