We Have to Trim the Bloated Pentagon Budget and Use the Cash for a 'Green Dividend' to Create Good Jobs
With the unemployment rate still hovering stubbornly around 10 percent, everyone is talking jobs. The White House is pressing for an extension of a subsidized jobs program that was part of the 2009 stimulus package. Candidates in the upcoming midterm elections are touting their own schemes to boost employment. The Tea Party movement and the far right are capitalizing on anger over lost jobs. And in a bid to recapture this populist anger, tens of thousands of progressives will descend on Washington this Saturday as part of the One Nation Working Together effort at “putting America back to work and pulling America back together.”
Creating jobs is not easy work. The federal government, challenged at every turn by Republican opposition in Congress, has been unable to push through a second stimulus package focused specifically on jobs. The private sector, which the Tea Partiers see as the motor of the economy, has been sitting on an unprecedented amount of wealth – a record $837 billion in cash – that companies are saving for better investment opportunities. "That's enough to pay 2.4 million people $70,000-a-year salaries for five years," writes Matt Krantz in USA Today.
Meanwhile, the economists debate over whether our unemployment problem is structural (a mismatch of available jobs to available workers) or cyclical (a result of falling demand). We’re out of work, economist Paul Krugman persuasively argues on behalf of the latter scenario, because the economic crisis created a downward spiral of tight wallets, tight money and tight investment. If the U.S. government pumped more money into the economy, demand would rise and construction workers, salespeople and machinists could go back to work.
But this debate among economists and politicians misses the crucial question: What kind of jobs should we be creating? How can we come out of this recession with a manufacturing sector and a workforce that are globally competitive, that produce things that people need in the new green economy?
Back in the 1990s, the United States had a golden opportunity to use the money freed up from dramatically shrinking the Pentagon to transform the U.S. manufacturing base and the infrastructure that supports it. We blew it. The peace dividend disappeared into deficit reduction, the United States did not follow the lead of countries like China and Germany to retool for a global green economy, and the Pentagon budget began to creep upward once again. Then, in the first decade of the 21st century, Washington doubled military spending, and the United States fell even further behind on these cutting-edge technologies.
We now have a second golden opportunity. The economic crisis has prompted even the head of the Pentagon to consider austerity measures, and there is talk of the Deficit Commission considering military budget cuts. As Saturday’s rally demonstrates, popular support for a new jobs program is strong. We need to grab hold of this "green dividend" – downsizing the Pentagon and upsizing our green manufacturing – before it’s too late.
And the key to this transformation – both economically and politically – is jobs.
The obvious solution to the current economic crisis in the United States is to reduce military spending and apply those savings to a green technology initiative that reduces our dependency on fossil fuels, shrinks our carbon footprint and creates jobs. Such a “green stimulus” could pull our economy out of recession. And, indeed, the Obama administration made such funds a feature of the original stimulus package and also created a position of green jobs czar.
But the great majority of these investments have come in the one-time American Recovery and Reinvestment Act—otherwise known as the Recovery Act—of 2009. In 2010 the cooperating Departments of Energy, Commerce, Labor, and Education launched the Regional Innovation Cluster Initiative. Its first pilot project was chosen to support the “two key national strategic objectives” of energy security and reducing the U.S. carbon footprint. The idea of this first project is to build on a region’s existing base in the field of energy-efficient building systems and design. Federal funding will underwrite the expansion of this base by a consortium that includes local manufacturing enterprises, government entities, universities, financial institutions, and nonprofits.
This is a good place to begin. But the collection of such initiatives on the administration’s drawing board—carbon capture and storage, Gulf Coast Ecosystem Restoration, modernizing federal environmental remediation laws, increasing energy efficiency and renewable energy in federal buildings, retrofitting existing housing stock, and a taskforce on oceans—do not add up to a green industrial policy. The administration has struggled to create an integrated strategy, involving a coordinated interagency process, devoted to the often-cited goal of building a green economy. But this hasn’t happened yet.
The administration is, however, trying to revive some programs that had been languishing since the post-cold war period and adapt them to this new mission. For instance, the administration has used Recovery Act money to restore funding to the network of Manufacturing Extension Centers and to redirect the network toward the green-economy-building mission. These Manufacturing Centers have been modeled on the Agricultural Extension offices that have been offering a helping hand to American farmers since the 1920s. In addition to providing a model for assistance to small manufacturers, the Agricultural Extension Service offers a broader lesson on the importance of government-assisted pilot programs in catalyzing a green transition. For American farming at the beginning of the 20th century, pilot programs that used new seeds and techniques greatly boosted harvests and convinced reluctant farmers to follow suit.
For the green dividend to take root, the federal government must support similar pilot programs in the green manufacturing sector. Some of those pilot programs have even begun inside the military-industrial complex itself. Some Department of Energy labs, for instance, have shifted to research and development in solar, biofuels, wind power, and engine efficiency. At the former Philadelphia Navy Yard, a new solar energy facility will employ 400 Philadelphians in manufacturing thin-film photovoltaic panels. The manufacturer, however, is a Greek company licensing Swiss technology.
For the United States to become competitive in these technologies, a major shift in federal budget priorities is necessary, from funding weapons of mass destruction to creating products of green construction. Ultimately, such a shift will create more net jobs. As several studies have demonstrated, a billion dollars invested in the non-military sector produces more jobs than a billion dollars invested in the military. If we are serious about job creation, we have to counter the jobs argument that the military contractors trumpet in their ads and letters to the president.
Tackling the Complex
The “obvious solution” of a green dividend is not so obvious to defense contractors worried about losing contracts—and unions and workers worried about losing existing jobs—all in exchange for the promise of a different kind of manufacturing. Politicians who might ordinarily back the obvious solution are reluctant to be seen as anti-job. The promise of a green job has a hard time competing with the reality of an existing military job. And instead of a green growth narrative, the country has essentially bought a very different story—of the Pentagon helping a foundering U.S. economy by providing essential jobs.
The Obama administration wants to cut Pentagon waste but is facing the big obstacle of entrenched defense dependency in virtually every state. The administration needs to map out the locations where military production is employing people making things for which we have no strategic need. It needs to determine which nascent elements of the green economy in those locations can be strengthened to become viable economic alternatives. And it needs to direct some of the federal resources available for green economic development to these locations.
A good place to start reining in defense spending unrelated to our security needs is by focusing on contracts the Pentagon itself certifies we don’t need. One of these is the C-17 cargo plane. Its contractors have strategically distributed the component subcontracts to form a political protection racket that would impress the mafia. Members of Congress with near-impeccable progressive credentials continue to appropriate money for this program, hoping to avoid political suicide.
This program has been in trouble for most of its life. Even Dick Cheney tried to phase it out when he was defense secretary. The Senate Armed Services Committee now supports the administration’s rejection of more C-17s. If this decision sticks, 5,000 workers in Long Beach, California alone will lose their jobs.
So Boeing is looking for ways to show it can cut costs. Of course, cost containment has never been the defense contracting industry’s strong suit. So in recent years Long Beach officials have come up with a raft of ideas for how they can do it for them: give Boeing more tax breaks, cut the company’s water bill, de-privatize Boeing’s in-house fire service, and so on. What sorts of services will be left for Long Beach residents once all these breaks are in place is anybody’s guess.
A reinvestment of the green dividend must rectify that problem. Many C-17 contractors could, if provided sufficient incentives, get involved in the technologically complex process of improving U.S. productivity with the kind of high-speed rail network that our economic competitors have been using for years.
Super-fast trains are only one method of getting us to a new world of green manufacturing. To draw a more specific roadmap, we still need to have information on the numbers of workers at these facilities who will need to transition to other work in an expanded green economy. This information is actually quite hard to come by. Military producers for the most part treat the job classifications of their employees as proprietary information and withhold this information from the public. Once those job classifications are available, however, we can start matching them up with green job classifications. The Political Economy Research Institute (PERI) at the University of Massachusetts has already broken out job categories for building and retrofitting, mass transit and freight rail, a smart grid for electrical transmission, wind and solar power, and advanced biofuels.
The green dividend is perhaps our last shot at transforming the U.S. economy. After the failure of the peace dividend, we have been given a second chance. If we blow it this time, we may never get another opportunity.