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Military Spending in the Economy and Public Imagination: An Interview with Heidi Peltier

Image via Brown Costs of War Project

Heidi Peltier is an economist who has researched and written extensively on military-related topics including public finance, contracting, and impacts on employment. She has been a part of the Brown Costs of War project staff since its creation in 2010. She has also written about the clean-energy economy and is the author of Creating a Clean-Energy Economy: How Investments in Renewable Energy and Energy Efficiency Can Create Jobs in a Sustainable Economy. In addition to her research, she has been a consultant for the UN Industrial Development Organization, the International Labor Organization, and the US Department of Energy, among other organizations.

Mira Mehta: What do you think is the most important thing for people to know about the Costs of War Project? 

Heidi Peltier: The main reason we got started and the main message that we want the public and policymakers to understand is that the cost of war goes well beyond the cost that we hear about in the Department of Defense budget for any specific war. Budgetarily, the costs include not only what the Department of Defense funds but also the cost of veterans’ care, the cost of interest on the debt that we take out to pay for war, and the cost for Homeland Security, for example. Then there are all the non-budgetary costs: the effects on civilians, the families of people who are wounded and killed, the civilians who are impacted directly by war or indirectly by loss of access to healthcare. There are the environmental costs and the human rights abuses; the costs of war go well beyond what we hear about. One of the goals of the project is to help people understand those wide-ranging costs so that we’ll think more carefully before engaging in future wars.

MM: You’ve noted in the past that people think military spending is more important to the economy than it actually is. Can you explain what you mean by that and what alternatives could help offset any economic costs of reducing military spending? 

HP: It’s a kind of public perception that war and the military are essential for jobs—that we need military spending to remain high, whether we’re at war or not at war, because military industries have good manufacturing jobs located in every state and in every congressional district, and if we cut military spending, we’re going to hurt the economy. That is in some ways a misperception because it turns out that there are other ways to produce even more jobs by spending the same amount that we spend on the military. Some of my research has looked at the question: If we shifted some military spending into alternative sectors including healthcare, education, clean energy, or infrastructure, what would that do for jobs? It turns out that, for all of those sectors in particular, we’d actually create more jobs than we would lose by shifting funds from the military to those sectors. That is partly because some of those sectors, especially education, are more labor-intensive than the military. So dollar per dollar, more of the spending goes to employing people as opposed to paying for capital and equipment and plants. I’ve written multiple papers that have shown time and again that if you shifted military spending into any of those sectors that taxpayers care about, you would create more jobs than we would lose.

MM: What type of policy programs or systemic support do you think are necessary to support people through the types of job transitions you’re suggesting? 

HP: That’s a very important consideration when we think about transitions. The clean energy transition is one of the really good alternatives because there are a lot of good manufacturing jobs in the clean-energy economy. We need the production of wind turbines, solar panels, smart grid technologies, energy efficiency hardware, electrical goods, and all kinds of manufactured goods. But those things won’t necessarily come from the United States if there’s not some kind of industrial program or political support for making sure that those manufacturing jobs are in the domestic economy. We could have things like manufacturing tax credits for manufacturing facilities to open up. Certain states or certain areas that might be, for example, hardest hit by a reduction of fossil fuel use or a reduction in military bases or places where jobs are more likely to be lost are places where we should consider targeting investments in renewable energy and particularly in manufacturing.

MM: A significant portion of US military spending goes to private contractors. What impact, if any, do you think that has on policy decisions and the efficiency of our spending? 

HP: The idea behind military contracting and contracting in general is that it’s supposed to save money. Some people would theorize that the private economy is more efficient and less wasteful than the government. As it turns out, in military contracting in particular, there are pretty high amounts of waste, fraud, and abuse. What I’ve found in some of my research, which has been supported by various government reports, lawsuits, and other publications, is that something like 30 to 40 percent of military contract spending is lost to waste, fraud, and abuse. Contracting, from a budgetary perspective, ends up being more costly rather than a cost savings for the American taxpayer. In recent years, about half of defense spending has gone to contractors. One of the results of that is a really strong political lobby—lobbying for more defense spending, lobbying for certain kinds of defense spending in certain places, and affecting policy decisions—because there’s a real financial interest in having policies that are beneficial to those contractors. Huge corporations like the Big Five—Lockheed Martin, Raytheon, Northrop Grumman, Boeing, and General Dynamics— spend millions of dollars each on lobbying every year. They can spread the message that decreasing defense spending is bad for jobs, that decreasing defense spending is bad for national security, that we need to increase the production of arms, that we need to increase nuclear capacity, that we need to increase things that contribute to their profits but in the end don’t actually make us more secure.

MM: With all of the research you have read and conducted contradicting this narrative, how do you go about challenging it?

HP: At the Costs of War project, we’re trying to not only get the message of the full costs, consequences, and alternatives of war into the hands of policymakers but also really to change the public dialogue about this and raise the question of what makes us more secure. Is more military spending actually the path to security? We also want to make the American public more aware of the role of the military in raising emissions and contributing to climate change. To the extent that climate change makes human existence less secure, increasing military operations actually makes us less secure through climate change. So there are various messages that we hope to get into the public conversation to change the way people think about the military and about this notion that a bigger military is necessarily better.

MM: You’ve noted a connection between militarism and climate change. Can you explain how the two are intertwined?

HP: The US military consumes about three-quarters of the fuel of the US government and is responsible for something like 80 percent of US government emissions. So it’s a huge user of energy and a huge emitter—that’s just relative to the federal government, not relative to the entire US economy, but the emissions and the fuel use of the US military are equivalent to some small countries, like Denmark, Sweden, and Portugal, and more than many smaller countries. Therefore, making any changes to the US military can have an effect on climate change, how much petroleum is used, and how much renewable energy could be used. The US military has been at the forefront of making changes that have led to massive changes in our economy, like with the internet. If the military made a big push for renewable energy, it could change the costs of renewable energy and speed up the adoption of renewable energy. So it has a significant role to play in reducing its fuel use, both by becoming more efficient and by reducing its operations, rather than having a huge global presence—the Department of Defense admits that it has something like 20 percent extra capacity in bases and installations around the world. If we reduced that excess capacity, the United States could reduce its emissions with no change in readiness or operational capabilities.

MM: What would your ideal alternative world look like without all of this high military spending and militarization? 

HP: The overall picture would be that the US military has a smaller presence in the world, that it reduces its global footprints, that it doesn’t so easily engage in overseas interventions, and that it uses other tactics—non-force tactics, like economic sanctions and incentives, like diplomacy—to have an effect on other countries. The domestic economy would shift away from some of the arms production into the production of things that we also need to make us secure in other ways. Those are things like clean energy, infrastructure, healthcare facilities, education, and so on.

MM: What do you see as the biggest barrier to creating that kind of world? 

HP: I’d say that the two biggest barriers are the American public’s belief that our military needs to be not only the biggest military in the world but also 10 times bigger than any other military and that the idea of patriotism is equivalent to high spending on the military. I think both of those beliefs need to be challenged. Then we have this barrier that the Big Five and other consulting companies get a huge chunk of military spending and can spend some of that on lobbying and affecting policy. As long as that continues happening, and as long as there’s a revolving door between defense industries and Congress and other roles in government, there’s going to be continued political support for military spending and high spending for contractors.

*This interview has been edited for length and clarity.