To a Bailout Economy: Defense Contractors Fight Budget Cuts With Jobs Promises

Stephen Glain is a Washington-based columnist for the Abu Dhabi National. He is writing a book about the militarization of U.S. foreign policy.

Leave it to the merchants of war to mount a nimble rearguard action.

America's defense contractors, who never shied from exploiting the Iraq war for commercial gain, are now marketing themselves as a critical source of employment amid murmurs of the most significant cuts in defense spending in a generation. Production of components for missile defense systems sustains 1,936 jobs and generates $192 million annually for the economy of the state of Arizona, Boeing points out in a recent press release. The F-22 Raptor has created 44,000 jobs nationwide, says Lockheed Martin, the company that builds the state-of-the-art fighter jet. The U.S. auto industry may be on life support, but the Army's Future Combat Systems program is keeping 1,678 people employed, declares the U.S. Army.

Well—to borrow that underappreciated phrase from Marilyn Rice-Davies—they would, wouldn't they? The Pentagon, after all, is no more willing to see the dispatching of its budget ox than any other government agency. The Office of Management and Budget announced last week that the Obama administration is setting the Pentagon's 2010 budget at $524 billion, about $60 billion below its draft spending plan. Even Secretary of Defense Robert Gates has warned the Pentagon that its wish list for costly, high-tech weaponry may be pared back at a time when two simultaneous wars have depleted the military of more basic warfighting wares. 

Arms makers are not the only one who have cause for concern. In case you haven't noticed it, the War on Terror is over. Reporters in Washington have recently noted how President Barack Obama has all but jettisoned the term, which had no redeeming value except as a device to scare voters, cow lawmakers—and sustain a national security budget that made Washington the epicenter of Terror Inc.

Following the 9/11 terrorist attacks, Congress allocated billions of dollars for states to shore up their defenses against a future assault. (In a cautionary tale for those following the negotiations over Mr. Obama's economic stimulus plan, much of those funds ended up paying for pork-barrel projects that had nothing to do with national defense.) To ensure a larger slice of the counter-terrorism pie, governors hired armies of Washington lobbyists to plead their case to Congress. To win their share of related business, security companies hired consulting agencies to polish their bids and presentations. The consulting agencies, in turn, hired more staff and rented larger, more elegant office space. That increased the demand for office buildings, which created the need for builders, which meant more building tools and materials.

Within months, Terror Inc. had spawned the Terror Economy, a vortex of new weapons and warriors, Jersey barriers, commercial property agents, PowerPoint presenters, uniform designers, arms-show caterers, systems integrators, and software creators. Well before mid-2007, when America's bubble economy finally burst, Washington, D.C., had become a Jerusalem of terror where thousands of security specialists, contractors, consultants, and pundits would gather to peddle their orthodoxy and replenish their address books. Their mass exodus to Washington fueled a construction boom so extensive that entire city blocks were cordoned off for months. The economic output that was lost to traffic snarls and other burdens on the city's blighted infrastructure was more than compensated for by the demand for hotel conference rooms, embassy security, and duck tape.

Now that the War on Terror is over, what will sustain Washington as the New Acropolis? Why, the Bailout Economy, of course. Mr. Obama's massive stimulus package will make the states more dependent on Washington than ever. Conveniently, the people who will dominate the Bailout Economy are already in place. The same lobbyists who worked Congress for antiterrorist funding will cajole lawmakers for money for new roads and airports. The same companies that bagged the big deals of the Terror Economy—the highly diversified Lockheed Martins, Raytheons, and Boeings—will build the Bailout Economy's energy grids, rail links, and computer networks.