Defense spending as 'stimulus'?

The Pentagon's baseline budget for the current fiscal year is $514 billion, but with Secretary Gates's $70 billion request, war funding will top $136 billion in additional defense costs for 2009.

Other factors are also at play.

To pay for the wars in Iraq and Afghanistan, the Pentagon has used a controversial budgetary maneuver called "supplemental funding," in which costs for war operations are counted separately from the normal baseline budget.

As equipment such as trucks, planes, and other gear failed, these supplementals have been used to bankroll new weapons systems to replace the dilapidated gear. Supplemental funding has been like candy to a child, and lawmakers and the Pentagon itself would like to see the Pentagon be weaned off it. Senior Pentagon officials say the Defense Department's fiscal year 2010 budget, to be unveiled two weeks after Obama takes office, will reflect an increase of about $57 billion in money that is "migrated" from supplemental funding to the baseline budget – which will represent an annual increase of about 13 percent.

Boosting defense spending is the way to go in a recession anyway, argue many economists. The US government under Obama should go on a major spending spree to spur job growth and keep the economy from derailing, says Martin Feldstein, chairman of the Council of Economic Advisers under President Reagan. He argues that Obama should increase the defense budget by 10 percent for procurement and research, a move that could potentially create about 300,000 additional jobs.

"A substantial short-term rise in spending on defense and intelligence would both stimulate our economy and strengthen our nation's security," Mr. Feldstein wrote in a recent op-ed in The Wall Street Journal.

Senior military officials, including Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, argue for maintaining a "floor" of defense spending commensurate with about 4 percent of US gross domestic product. The US now spends 4.2 percent of GDP on defense – about $700 billion (of which roughly $187 billion is supplemental funding for the two wars). Admiral Mullen and others would like to see defense spending stay at that level for several years.

It's a target that seems unlikely to many analysts.

"That is a proxy argument," says Robert Work, vice president for strategic studies at the Center for Strategic and Budgetary Assessments, a think tank here. The Pentagon simply wants to maintain the current level of funding – including war funding – even after the wars wind down.

The baseline defense budget will rise somewhat as it absorbs supplemental war costs, he says, but competing interests will force the Pentagon to decrease its overall spending in the longer term.

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