Procurement Spending May Not Plunge, Despite Fears

By | October 13, 2008 | Satellite News Feed

Defense spending on weapons systems may not plummet in the next several years, despite some pundits asserting that huge federal budget deficits, an imploding economy and nosediving federal revenues mean savage cuts in defense procurement are inevitable.

Those observers also claim that whether Sen. John McCain of Arizona, the Republican nominee, or Sen. Barack Obama of Illinois, the Democratic hopeful, is elected next month, the next president will have his own priorities that will need funding, competing with military programs for money.

Questions have been raised, for example, as to whether funding will continue to flow for missile defense programs, especially those still in development.

But all of that isn’t necessarily so, according to Loren B. Thompson, chief operating officer of the Lexington Institute, a think tank near the Pentagon focusing on defense and other issues.

Rather, Thompson gives five reasons why spending on weapons procurement "might not decline at all:"

  • Economic forces don’t drive defense spending; enemy threats do, and they aren’t about to disappear.
  • Spending on wars in Afghanistan and Iraq will decline as combat operations taper off, freeing funds to help cover acquisition programs.
  • Procurement programs are multi-year (and sometimes multi-decade) affairs that can’t be turned off like a spigot.
  • There is immense political clout in Congress — both corporate management and labor unions — militating for continuing procurement programs, and once those programs have begun, it may cost a staggering sum in cancellation fees to halt them.
  • Finally, weapons spending provides a Keynesian stimulus to the economy, which in its current ravaged shape can use some help. A key point is that by law, at least 50 percent of weapons platforms acquired must be made in the United States, ensuring that defense spending helps the U.S. economy, rather than firms abroad.

To read Thompson’s paper titled "Five Reasons Weapons Spending Won’t Fall" in entirety, please go to http://www.lexingtoninstitute.org on the Web.

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