StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

defense spending

Posted by Stan Collender

As I said about a month ago, its not always smart to disagree publicly with an economic icon, especially when he's Martin Feldstein.  Nevertheless, a Feldstein article published on Christmas Eve in the Wall Street Journal is so wrong that it and he deserve to be called out.

The title of the article -- "Defense Spending Would Be A Great Stimulus" -- says it all.  It's Feldstein's contention that additional military spending should be part of whatever economic stimulus package Congress and the Obama administration adopt in a few weeks.

Here are my objections almost paragraph by paragraph.

Posted by Stan Collender

At some point in the past month or so, John McCain and Barak Obama or their advisors have both said that they will pay for some or all of what they're proposing with reduced military spending. 

The problem is that, even if all US troops are withdrawn from Iraq and Afghanistan, it's not at all clear that the Pentagon budget will fall much or even at all.

Consider the following:

Posted by Stan Collender

Secretary of Defense Robert Gates yesterday became the latest member of the Bush cabinet to say something that can easily be proven wrong to support the White House.

As reported in the Washington Post, Gates said that a delay in getting the funds requested by the president for Iraq and Afghanistan would soon force him to start laying off employees and ceasing operations at bases.

Gates should know better, and should know that someone would quickly call him out on this.

Posted by Stan Collender

Wonder no more: the defense budget will be increasing in the years ahead.

The Washington Post has published two articles in the past two days that point the way. On Thursday, Ann Scott Tyson reported that the military was having to pay bonuses to keep mid-level officers. The amount -- $25,000 to $35,000 -- wasn't much by Wall Street standards. But it is one of the best indications yet that personnel costs for the Pentagon will be increasing justso the Pentagon can keep the force it already has.

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