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Analyst: Spend money on U.S.-built weapons

The government should use a portion of the economic stimulus package now being formed on defense spending in order to spur economic growth and preserve jobs in the U.S., Thomas Donnelly, resident fellow at the American Enterprise Institute, said during a panel discussion Tuesday at AEI.

“Overall, defense and aerospace employment is probably on the order of 800,000 jobs,” and grew last year, Donnelly said. “That’s as big as the auto sector,” which lost jobs in 2008.

Donnelly cited Boeing’s F-18 Super Hornet, which he said, supports 445 suppliers and has a total economic impact on the economy of $4.6 billion. He noted that all “major” weapons are built in the United States.

Donnelly said the government should add at least $20 billion each year to baseline defense spending, especially for procurement and personnel. Donnelly said such spending would be in line with what mainstream economists consider wise federal spending: that the government should invest where private resources are “slack.”

More defense spending also would take advantage of excess capacity in sectors such as aircraft and shipbuilding, according to Donnelly, a former editor at Defense News.

Additionally, such spending would help fill resource gaps in the military, he said.

The military at the start of the Bush administration already had resource “gaps” that meant it wasn’t fully equipped for the operations required of it. The military is working with outdated equipment, and more than $150 billion in defense projects were deferred in the 1990s, Donnelly said. But the increased defense budgets since the beginning of operations in Afghanistan and Iraq haven’t helped the military fill those gaps, he said.

“The extra money that’s been spent has not really reinvigorated or transformed, as the Bush administration once liked to say, the armed forces,” Donnelly said. Supplemental spending measures “don’t make the military bigger or more modern; they simply keep it going.”

Donnelly also said defense exports are a major element of industry. Foreign Military Sales grew last year, from $24 billion in 2007 to $32 billion in 2008, he said.

“We have the dominant defense-industrial position,” Donnelly said. Defense exports are “the most competitive element of our manufacturing sector.”

In a paper accompanying his comments, Donnelly outlined six proposals for making defense spending part of the economic stimulus, including:

• Keeping the production lines for the F-22 Raptor fighter jet open, and considering sales to close allies such as Japan and Australia.

• Sustaining production of the C-17 airlifter. With no new production, suppliers will start receiving stop work orders in 2009, according to Donnelly.

• Creating and equipping four additional Stryker brigades.

• Building more Littoral Combat Ships, perhaps three each year, with several shipyards doing the work.

• Recruiting and training 20,000 more troops each year, to take advantage of the fast spending rate for personnel spending.