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Tag(s): 9 11 Profiteers $$; Arms And Weapons Sales; Asia; Australia; Canada; China; Congressional Crime; Corporate Welfare; Cuba; Equality-Inequity; (more...) Germany; Iran; Lies DOD; Media Hypocrisy; Military Conractor Corruption; Military Industrial Complex; Russia; Switzerland; Taxpayer Rip-Offs; USA United States Of America; United Kingdom; War Profiteers - Ing (less...)
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May 4, 2007 at 06:34:33

Redistributive Militarism: Escalating Military Spending as Disguised Income Redistribution from Bottom to Top

by Ismael Hossein-zadeh Page 1 of 4 page(s)

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Critics of the recent U.S. wars of choice have long argued that they are all about oil. “No Blood for Oil” has been a rallying cry for most of the opponents of the war.

It can be demonstrated, however, that there is another (less obvious but perhaps more critical) factor behind the recent rise of U.S. military aggressions abroad: war profiteering by the Pentagon contractors. Frequently invoking dubious “threats to our national security and/or interests,” these beneficiaries of war dividends, the military–industrial complex and related businesses whose interests are vested in the Pentagon’s appropriation of public money, have successfully used war and military spending to justify their lion’s share of tax dollars and to disguise their strategy of redistributing national income in their favor.

This cynical strategy of disguised redistribution of national resources from the bottom to the top is carried out by a combination of (a) drastic hikes in the Pentagon budget, and (b) equally drastic tax cuts for the wealthy. As this combination creates large budget deficits, it then forces cuts in non-military public spending as a way to fill the gaps that are thus created. As a result, the rich are growing considerably richer at the expense of middle– and low–income classes.

Despite its critical importance, most opponents of war seem to have given short shrift to the crucial role of the Pentagon budget and its contractors as major sources of war and militarism—a phenomenon that the late President Eisenhower warned against nearly half a century ago. Perhaps a major reason for this oversight is that critics of war and militarism tend to view the U.S. military force as primarily a means for imperialist gains—oil or otherwise.

The fact is, however, that as the U.S. military establishment has grown in size, it has also evolved in quality and character: it is no longer simply a means but, perhaps more importantly, an end in itself—an imperial force in its own right. Accordingly, the rising militarization of U.S. foreign policy in recent years is driven not so much by some general/abstract national interests as it is by the powerful special interests that are vested in the military capital, that is, war industries and war–related businesses.

The Magnitude of U.S. Military Spending

Even without the costs of the wars in Iraq and Afghanistan, which are fast surpassing half a trillion dollars, U.S. military spending is now the largest item in the federal budget. Officially, it is the second highest item after Social Security payments. But Social Security is a self-financing trust fund. So, in reality, military spending is the highest budget item.

The Pentagon budget for the current fiscal year (2007) is about $456 billion. President Bush’s proposed increase of 10% for next year will raise this figure to over half a trillion dollars, that is, $501.6 billion for fiscal year 2008. A proposed supplemental appropriation to pay for the wars in Afghanistan and Iraq “brings proposed military spending for FY 2008 to $647.2 billion, the highest level of military spending since the end of World War II—higher than Vietnam, higher than Korea, higher than the peak of the Reagan buildup.”[1]

Using official budget figures, William D. Hartung, Senior Fellow at the World Policy Institute in New York, provides a number of helpful comparisons:

Proposed U.S. military spending for FY 2008 is larger than military spending by all of the other nations in the world combined.

At $141.7 billion, this year's proposed spending on the Iraq war is larger than the military budgets of China and Russia combined. Total U.S. military spending for FY2008 is roughly ten times the military budget of the second largest military spending country in the world, China.

Proposed U.S. military spending is larger than the combined gross domestic products (GDP) of all 47 countries in sub-Saharan Africa.

The FY 2008 military budget proposal is more than 30 times higher than all spending on State Department operations and non-military foreign aid combined.

The FY 2008 military budget is over 120 times higher than the roughly $5 billion per year the U.S. government spends on combating global warming.

The FY 2008 military spending represents 58 cents out of every dollar spent by the U.S. government on discretionary programs: education, health, housing assistance, international affairs, natural resources and environment, justice, veterans’ benefits, science and space, transportation, training/employment and social services, economic development, and several more items.[2]

Although the official military budget already eats up the lion’s share of the public money (crowding out vital domestic needs), it nonetheless grossly understates the true magnitude of military spending. The real national defense budget, according to Robert Higgs of the Independent Institute, is nearly twice as much as the official budget. The reason for this understatement is that the official Department of Defense budget excludes not only the cost of wars in Iraq and Afghanistan, but also a number of other major cost items.[3]

These disguised cost items include budgets for the Coast Guard and the Department of Homeland Security; nuclear weapons research and development, testing, and storage (placed in the Energy budget); veterans programs (in the Veteran’s Administration budget); most military retiree payments (in the Treasury budget); foreign military aid in the form of weapons grants for allies (in the State Department budget); interest payments on money borrowed to fund military programs in past years (in the Treasury budget); sales and property taxes at military bases (in local government budgets); and the hidden expenses of tax-free food, housing, and combat pay allowances.

After adding these camouflaged and misplaced expenses to the official Department of Defense budget, Higgs concludes: “I propose that in considering future defense budgetary costs, a well-founded rule of thumb is to take the Pentagon's (always well publicized) basic budget total and double it. You may overstate the truth, but if so, you'll not do so by much.”[4]

Escalation of the Pentagon Budget and the Rising Fortunes of Its Contractors

The Bush administration’s escalation of war and military spending has been a boon for Pentagon contractors. That the fortunes of Pentagon contractors should rise in tandem with the rise of military spending is not surprising. What is surprising, however, is the fact that these profiteers of war and militarism have also played a critical role in creating the necessary conditions for war profiteering, that is, in instigating the escalation of the recent wars of choice and the concomitant boom of military spending.[5]

Giant arms manufacturers such as Lockheed Martin, Boeing, and Northrop Grumman have been the main beneficiaries of the Pentagon’s spending bonanza. This is clearly reflected in the continuing rise of the value of their shares in the stock market: “Shares of U.S. defense companies, which have nearly trebled since the beginning of the occupation of Iraq, show no signs of slowing down. . . . The feeling that makers of ships, planes and weapons are just getting into their stride has driven shares of leading Pentagon contractors Lockheed Martin Corp., Northrop Grumman Corp., and General Dynamics Corp. to all-time highs.”[6]

Like its manufacturing contractors, the Pentagon’s fast-growing service contractors have equally been making fortunes by virtue of its tendency to shower private contractors with tax-payers’ money. These services are not limited to the relatively simple or routine tasks and responsibilities such food and sanitation services. More importantly, they include “contracts for services that are highly sophisticated [and] strategic in nature,” such as the contracting of security services to corporate private armies, or modern day mercenaries. The rapid growth of the Pentagon’s service contracting is reflected (among other indicators) in these statistics: “In 1984, almost two-thirds of the contracting budget went for products rather than services. . . . By fiscal year 2003, 56 percent of Defense Department contracts paid for services rather than goods.”[7]

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Ismael Hossein-zadeh is a professor of economics at Drake University, Des Moines, Iowa. He is the author of the newly published book, The Political Economy of U.S. Militarism His Web page is http://www.cbpa.drake.edu/hossein-zadeh

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1 comments

A one-eyed man in a world of the blind is king, but a rational man in a world of the irrational is a fool.
rabblerowzerA one-eyed man in a world of the blind is king, but a rational man in a world of the irrational is a fool.

The Military Industrial Complex has become the Dog.

I disagree with the author’s assertion that the Military Industrial Complex is the Tail wagging the Dog.

In truth, the Military Industrial Complex has usurped government and become the Dog. Our political leaders in both parties are junior members of the Military Industrial Congressional Complex, and as such exclusively represent the interests of the plutocratic owned Military Industrial Congressional Complex, not the American people.

That’s the corrupting power of money concentrated in the hands of the elite few.

Neither Democrats nor Republicans will address, much less reverse this corruption of Democracy because they have become one with the corrupters.

The only hope the American people have of regaining a Democratic form of government is to abandon both parties and form new parties.

by rabblerowzer (0 articles, 0 quicklinks, 0 diaries, 227 comments) on Saturday, May 5, 2007 at 9:35:39 AM