A Reason Why Neither Presidential Candidate Will Reduce Defense Spending
If you think defense spending will influence your vote this Tuesday, forget it. Here'a an interesting analysis about why neither candidate will reduce defense spending. Basically, it's not possible to reduce defense spending. It doesn't matter whether your candidate is the Democrat or the Republican; neither will reduce spending no matter how bad the economy gets.
Contrast this with Senator Joseph Lieberman's recent commentary in the Wall Street Journal, My Line on Defense: No More Cuts. If you read it, I think you'll see that his commentary isn't much more than political grandstanding, with little substance.
One of the keys to understanding defense spending is understanding how defense contractors run their businesses.
So, for example, you may at some point see some reduction in the size of the Department of Defense - although I doubt that will ever happen anytime soon. But what you won't see is a reduction in the spending by DOD on defense contractors - the companies that specialize in designing and manufacturing weapons.
Now I'm not saying that some weapons programs here and there won't be cut. And I'm not saying that some ambitious new weapons program might not be shelved or rejected altogether. It's happened before. But that's not going to really reduce defense spending overall.
The fact is, defense contractors spend huge amounts of money on every project. We all know this. Perhaps you've seen those investigations into military spending that show how the DOD spent $2,000 on a toilet bowl cover, or some other absurd cost on a specific item. The thing is, even if that was brought under control, you'd still have ridiculously high spending by the military.
I recently read a pretty good essay by Ann Barnhardt that claims the real reason defense contractors spend huge amounts of money on every project is that there are simply too many managers being paid high salaries by these companies. Indeed, the big defense contractors might have 10 or more layers of managers between the scientists and engineers who do the actual work and top management. That's a lot of managers. What do all these people do?
Indeed, they collect six figure salaries. I'll leave it to you to figure out what they do. (If you've ever worked in a large corporation, you'll be able to use your imagination.) The point Ms Barnhardt makes is that this whole defense contractor business is a kind of middle class welfare system. The Defense Department wants these companies to pay these managers good salaries and because of that they are willing to pay through the nose for the weapons systems they contract. They're not so stupid or incompetent that they don't see that paying $2,000 for a toilet bowl cover is fiscally irresponsible or unacceptable. They're simply playing their part in sustaining a middle class welfare system.
A couple of other examples of this welfare system would be the health care industry and the financial services industry. In the case of financial services, we're specifically talking about their compliance departments.
The government creates regulations and rules that they insist be followed in these two industries. As a result, health care administrative costs are through the roof. As for financial services, the companies must hire individuals to monitor and enforce compliance.
Hospitals pay qualified administrators handsome salaries as do financial service companies pay compliance "professionals" handsome salaries. And all of this is due to the federal government and its endless growing list of rules and regulations.
It all makes sense when you think of how many jobs have gone overseas in industries that actually make things. The middle class is already reeling. Imagine what things would be like if we didn't have all these middle class welfare programs.
The problem, though, is that none of these positions really produces anything. And so we languish in a crisis of high unemployment and low productivity while our presidential candidates prattle on about how each will "create jobs." The government has already created jobs that produce nothing. Is that a solution to economic stagnation?
An Interesting Comparison
Now, take this concept of why defense spending is too high and won't be cut and apply it to Senator Joe Lieberman's Wall Street Journal editorial. Lieberman "takes a stand" against defense cuts. But when his comments are held up to what we've just discussed, they do seem like empty grand-standing by a has-been politician, don't they? To our original point about how neither political party will significantly cut defense spending, Lieberman's comments could have been penned by any number of Democrats or Republicans.
The situation with defense spending comes down to this: If waste (never mind corruption) were excised, spending could go down without significantly affecting the effectiveness of the military.
Contrast this with Senator Joseph Lieberman's recent commentary in the Wall Street Journal, My Line on Defense: No More Cuts. If you read it, I think you'll see that his commentary isn't much more than political grandstanding, with little substance.
One of the keys to understanding defense spending is understanding how defense contractors run their businesses.
So, for example, you may at some point see some reduction in the size of the Department of Defense - although I doubt that will ever happen anytime soon. But what you won't see is a reduction in the spending by DOD on defense contractors - the companies that specialize in designing and manufacturing weapons.
Now I'm not saying that some weapons programs here and there won't be cut. And I'm not saying that some ambitious new weapons program might not be shelved or rejected altogether. It's happened before. But that's not going to really reduce defense spending overall.
The fact is, defense contractors spend huge amounts of money on every project. We all know this. Perhaps you've seen those investigations into military spending that show how the DOD spent $2,000 on a toilet bowl cover, or some other absurd cost on a specific item. The thing is, even if that was brought under control, you'd still have ridiculously high spending by the military.
I recently read a pretty good essay by Ann Barnhardt that claims the real reason defense contractors spend huge amounts of money on every project is that there are simply too many managers being paid high salaries by these companies. Indeed, the big defense contractors might have 10 or more layers of managers between the scientists and engineers who do the actual work and top management. That's a lot of managers. What do all these people do?
Indeed, they collect six figure salaries. I'll leave it to you to figure out what they do. (If you've ever worked in a large corporation, you'll be able to use your imagination.) The point Ms Barnhardt makes is that this whole defense contractor business is a kind of middle class welfare system. The Defense Department wants these companies to pay these managers good salaries and because of that they are willing to pay through the nose for the weapons systems they contract. They're not so stupid or incompetent that they don't see that paying $2,000 for a toilet bowl cover is fiscally irresponsible or unacceptable. They're simply playing their part in sustaining a middle class welfare system.
A couple of other examples of this welfare system would be the health care industry and the financial services industry. In the case of financial services, we're specifically talking about their compliance departments.
The government creates regulations and rules that they insist be followed in these two industries. As a result, health care administrative costs are through the roof. As for financial services, the companies must hire individuals to monitor and enforce compliance.
Hospitals pay qualified administrators handsome salaries as do financial service companies pay compliance "professionals" handsome salaries. And all of this is due to the federal government and its endless growing list of rules and regulations.
It all makes sense when you think of how many jobs have gone overseas in industries that actually make things. The middle class is already reeling. Imagine what things would be like if we didn't have all these middle class welfare programs.
The problem, though, is that none of these positions really produces anything. And so we languish in a crisis of high unemployment and low productivity while our presidential candidates prattle on about how each will "create jobs." The government has already created jobs that produce nothing. Is that a solution to economic stagnation?
An Interesting Comparison
Now, take this concept of why defense spending is too high and won't be cut and apply it to Senator Joe Lieberman's Wall Street Journal editorial. Lieberman "takes a stand" against defense cuts. But when his comments are held up to what we've just discussed, they do seem like empty grand-standing by a has-been politician, don't they? To our original point about how neither political party will significantly cut defense spending, Lieberman's comments could have been penned by any number of Democrats or Republicans.
The situation with defense spending comes down to this: If waste (never mind corruption) were excised, spending could go down without significantly affecting the effectiveness of the military.
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