Nothing so clearly demonstrates the Clinton Administration’s capacity for getting things wrong on the economy than its apparent decision to make military conversion a footnote to its deficit-cutting agenda.
By July 1, the Defense Base Closure and Realignment Commission will present Bill Clinton with its final recommendations for boarding up military bases across the country. Clinton is expected to follow these recommendations in the spirit of fiscal restraint, but politicians of all ideological stripes are resolutely fighting to keep their local bases open, keenly aware that the real purpose of the $300-billion military budget is to defend jobs.
With nothing approaching a comparable jobs program on the horizon, communities throughout the country are now peering into an abyss. The mayor of Charleston, S.C., whose naval shipyard was on the preliminary hit list, has declared, “This is the biggest challenge our community has faced maybe since the Civil War.” The shipyard employs 34,000 of the metropolitan area’s 238,000 working people.
The prolonged recession in California offers a foretaste of how, in the absence of an offsetting jobs program, base closings and other large-scale military cuts may reverberate throughout the country. Are there alternatives for the Clinton Administration less dismal than inviting a California-style slump nationwide or defending the Pentagon to save jobs? The military budget itself contains the answer. During the 1992 presidential campaign, Clinton promised to take the $60 billion he intended to cut from the military budget through 1997 and spend it on conversion. But the proposal Clinton announced in March offered only $19.5 billion over five years.
Still, stinginess is not even the most serious problem with Clinton’s proposal. Its basic premise is that the purpose of conversion is to ease the transition of military-dependent workers and firms to the private economy, with the benevolent forces of the market handling matters from that point. This fails to recognize that for all its bad features, from the wasteful to the nefarious, military spending has also brought substantial benefits to the economy that the market cannot duplicate. The Pentagon provided the foundation for the postwar development of the aerospace, communications and electronics industries–the most successful U.S. industries over this period. The Pentagon provided them with research and development subsidies, guaranteed markets and protection from foreign competition.
In addition, as Reagonomics demonstrated, increasing the Pentagon’s budget through deficit spending has been a powerful vehicle for boosting the economy out of recessions, since nearly all of the Pentagon’s largess is spent in the domestic market rather than on imports. Any realistic conversion program must replicate these salutary features of the military budget elsewhere in the economy. How? Consider the environmental area. It has only recently been recognized that for decades the Defense Department has been the nation’s single largest generator and repository of environmental toxins. The Pentagon estimates that it would cost $3 billion to clean up the bases that it plans to close over the next five years. But this assumes a cleanup schedule spanning decades. Accelerating the cleanup would create jobs in the short-term and make the sites viable for reuse more quickly.
A more ambitious conversion project would involve large-scale investments in renewable energy and other environmentally benign production technologies. In “Making Peace with the Planet,” Barry Commoner estimated that it would cost $1 trillion–a little more than what the Pentagon spends in three years–to transform the existing U.S. production system. This would entail an epoch-defining reconstruction of our mode of production: the substitution of solar for fossil fuel energy; high-performance organic farming for pesticides, and a range of alternatives for most petrochemical products. For a generation, the commercial diffusion of the new technologies would propagate jobs at a wide range of skill levels, just as did the diffusion of the automobile and associated industries in the early postwar period.
The obvious objection to such an economic strategy is that it violates the current season’s canons of fiscal responsibility. But the depressing effects of Clinton’s economic program should become evident quickly, and no politician wants to stand for reelection while presiding over a slump. The boundaries of what passes for fiscal responsibility may then broaden, finding new enthusiasts for such irresponsible causes as jobs, military conversion and the environment.