The peace dividend

...Central Intelligence Agency, has concluded that the contraction of the Soviet Union's offensive military posture is all but irreversible...

...At the beginning of the next fiscal year, these unpaid obligations—contracts already made or committed to—amounted to about $270 billion...

...But keeping U.S...

...But whatever happens within the Soviet Union, the military threat that it formerly represented has no significant chance of reappearing in the foreseeable future...

...2. The United States should not withdraw from Europe without corresponding reductions by the Soviet side and should maintain some forces there indefinitely for the stability of Europe, entirely apart from the Soviet presence...

...This budget provides for only a slight change in the rate of decline since the defense budget peak of FY 1987...

...Even if a hardline regime were able to regain power in Moscow," he notes, "it would have little incentive to engage in major confrontations with the United States...

...Here is precisely a case where planning for conversion is essential...

...The first priority is to make it clear that the military budget will be reduced sharply over the next five years...

...In terms of the new budgetary authority for defense being requested by the administration, there is a pool of about $120 billion earmarked for new projects and therefore easiest to cut...

...One need not be an expert in military strategy or international affairs to understand that spending anywhere near $300 billion on defense in Fiscal Year (FY) 1991 is an irresponsible waste of money...

...Gorbachev has already made unilateral cuts in Soviet conventional forces and, in effect, has been forced to undergo a fifty-five-division cut in the de facto collapse of the Warsaw Pact...

...The current negotiating framework is obsolete...

...Nuclear deterrence was aimed at preventing a Soviet attack on ourselves or our allies in Europe...

...This may or may not be so...

...Mimeo...

...But evidence from previous military cutbacks suggests that we can go considerably beyond even the reductions proposed by Kaufmann and the other cited defense analysts (which in turn are far beyond the administration's proposals) before having to worry about the impact on the U.S...

...Kaufmann and the Korb group would maintain a sizeable number of troops in Europe and a smaller navy than the WPI group, for example...

...We have reached the point where the Europeans themselves must take on the responsibility for sorting out the power balances on that continent...

...Indeed, the greatest beneficiary of a shrinkage in the military budget is the economy of the country doing the shrinking...

...A number of other experts, including former Defense Secretaries Robert McNamara and James Schlesinger, have supported the general thrust of these studies...

...With Western European economic integration and the integration of Eastern Europe into a massive market, Europe stands on the brink of extraordinary economic opportunities...

...This article was written before the Middle East crisis...

...The one-year drop in outlays after the Korean War was as large as 2.2 percent of GNP, which in today's economy would be over $100 billion...

...economy...

...One reasonable concern about the pace of military budget cuts is the impact that such a shift in resource demand might have on the economy...

...3. Reductions must proceed very slowly so as to be "reversible" in case Gorbachev should fail and "hardliners" take back control of the Soviet Union...

...FALL • 1990 • 421 Comments and Opinions These defense reduction plans are based on similar strategic considerations: (1) maintaining a second-strike capability of between three thousand and four thousand submarine- and bomber-launched nuclear warheads, (2) reducing troops and eliminating battlefield nuclear weapons in Europe, (3) maintaining flexible, mobile forces capable of being deployed around the world, and (4) continuing research on new weapons technology...

...companies with, if necessary, government support for long-term financing...

...Schultze, Charles L. Statement before the Joint Economic Committee of Congress, December 19, 1989...

...Government Printing Office), 1990...

...The first step in bringing the military budget in sync with the world as it now exists is to ask the right question...

...Washington, D.C., 1989...

...If we are in less danger now than we were in 1976, and if one-half of the military budget is sufficient for our present defense needs, then something less than a ten-year phase down period is clearly in order...

...if anything, the drain on our resources will make it easier for the Germans to dominate the United States economically...

...EDS...

...Much of the vast Reaganite military expenditure turns out to be of no use for the kind of operation the U.S...

...This large cut may have helped to produce a short recession in 1954, but largely because the defense cuts were not offset with increases in nondefense public spending...

...New York: World Policy Institute), 1989...

...Thus, whether looked at in aggregate or in terms of specific weapons systems, the financial cost of national security has declined dramatically...

...We cannot, of course, prevent all of the dislocation that will be caused by defense budget reductions...

...It is impossible to take seriously the argument that under present conditions—when the Warsaw Pact is irrelevant, the Berlin Wall obliterated, Germany on the brink of unification, democratic and economic reforms sweeping the Soviet Union, and international communism virtually eliminated as a force in the world—we need to spend more, in real terms, than we did in 1976...

...The case for delay here is even weaker...

...Delay only strengthens the remaining hardliners in both camps and prevents us from ridding ourselves of a similar burden...

...Budget of the United States Government, Fiscal Year 1991...

...As Richard Darman has commented, a defense spending cut, "while politically popular in the abstract will not be politically popular in all its particulars...

...The Soviets are desperate to reduce the burden of armaments on their economy...

...If, on the other hand, we begin by determining what we need to spend, we have a chance to separate actual defense considerations from the financial interests and bureaucratic inertia that stand in the way of a rational defense budget...

...This resistance is the administration's high card in the budget game...

...The whole point is to "dislocate" resources out of the defense sector...

...A Report by the Committee for National Security and Defense Budget Project...

...Office of Management and Budget (OMB), Executive Office of the President...

...The START talks, for example, were intended to ratify unlimited modernization on both sides in exchange for the destruction of existing warheads...

...Moreover, should the cold war return, there will be ample opportunity for the United States to rearm...

...A second obstacle to quick military reductions is the existence of contractual obligations already extended by the Pentagon but not yet paid for...

...We should wait for successful conclusions to the START negotiations, which might not be completed for four or five years...

...A peace dividend of between $100 and $150 billion already exists...

...On the national security side, several arguments on behalf of caution have been advanced: 1. The United States should not reduce its strategic arsenal without corresponding reductions on the Soviet side...

...But there is no point in modernizing forces already vastly inflated beyond current needs, particularly at a time when the Soviets are desperate to reduce their defense commitment...

...3. Establishment of a civilian equivalent of the Defense Advanced Research Projects Agency to begin immediately to finance research and development projects with civilian payoffs...

...defense budget was $203 billion in 1990 dollars...

...Actual spending would be about $303 billion, representing a 2.3 percent increase in nominal terms, which an assumed 4.9 percent inflation rate translates into a 2.6 percent cut in real terms...

...The president's budget, however, proposes that it be spent on the Pentagon...

...Nor has a case been made that the United States must now be responsible for European "stability" — a euphemism for fear of German reunification...

...On the whole, therefore, one-year cuts in defense of less than fifty billion dollars hold no risk of macro-economic harm, unless all or most of it is devoted to fiscal deficit reduction...

...Prevailing practice takes the present budget as a point of departure, making what we did yesterday the principal yardstick for judging what we should do tomorrow...

...The major obstacle in reducing the military budget is the political resistance of those whose economic fortunes will suffer—Pentagon generals, industry executives, politicians from areas with military bases, and anxious workers...

...William Webster, director of the U.S...

...It is possible that Gorbachev could be overthrown, snuffing out perestroika and returning the Soviet Union to totalitarian dictatorship...

...It is conceivable that large and sudden disruptions in important sectors of the economy could endanger the nation's economic growth...

...We should resist the efforts of the Pentagon and conservative ideologues to use this crisis as a pretext for hiking military expenditures...

...There is simply no rationale for a defense budget of the size now contemplated by the Bush administration...

...Even so, temporary periods of unemployment are bound to FALL • 1990 • 423 Comments and Opinions result...

...The concern is that Europe will be dominated economically —and therefore politically— by the Germans...

...The administration's budget proposes that it be given the authority in FY 1991 to commit $307 billion to be spent for military purposes...

...If we answer the question of how much we need from the "bottom up" —from an analysis of the minimum necessary weapons systems and troop deployments to defend our interests—we get an even smaller figure...

...Restructuring the U.S...

...Washington, D.C.: U.S...

...One place to begin is with the lowest level of spending in real dollars...

...Nor would we want to...

...The second set of rationales for taking as long as a decade to reduce defense spending is domestic...

...Given the dramatic change in the international political climate, Bush's budget is completely isolated from reality...

...A statement Maxine Phillips prepared under the auspices of the World Policy Institute...

...2. Economic development planning assistance for affected firms and communities...

...These technologies would be made available to U.S...

...It is ironically reminiscent of the bureaucratic planning style that has failed in Eastern Europe...

...One of the best ways to assure the continuation of Gorbachev's revolution is to cut back on U.S...

...Defense Spending...

...Given that commitment, defense-conversion efforts should be built around the following principles: 1. Generous severance pay and retraining for affected workers...

...Military: Defense Needs in the 21st Century...

...But government spending in the aggregate did not decline, and there was no impact on the overall economy...

...And the U.S...

...There is no serious argument that a united Germany is in the foreseeable future a military threat to Europe...

...In the past, expectations (reasonable in view of the historical experience) that the defense business would return created an attitude among contractors of indifference to efforts at conversion...

...military power during the cold war—that the United States would be left with a formidable capacity for deploying military force at half the current price...

...Our contribution to the process going on 422 • DISSENT Comments and Opinions within the Soviet Union is to provide evidence to the Russians that Gorbachev's policies can free up Soviet economic resources without an added threat of military vulnerability to the West...

...forces threatening the Soviets as quickly as possible...

...Events of the past year have made it clear that the probabilities of either event are now about zero...

...history has shown that no nation in the world has the ability to gear up to a military economy as quickly as the United States...

...Over the past year several expert studies—by former DOD (Department of Defense) official William Kaufmann, by the World Policy Institute (WPI), and by a group headed by former Assistant Secretary of Defense Lawrence Korb and former CIA Director William Colby—have shown that the defense budget could be cut in half over ten years and still leave the United States and its allies secure...

...in real terms that decline has averaged 2 percent per year in spending and 2.9 percent per year in budgetary authority...

...The full text may be obtained from the Institute at 1730 Rhode Island Ave, NW, Washington, D.C...

...20036...

...The largest one-year post-Vietnam cut was 0.9 percent of GNP, the equivalent of almost $50 billion today, and still much larger than anything now being contemplated...

...The best way to ease such transition costs is to make a concerted effort to involve communities and defense firms likely to suffer cutbacks in the business of servicing areas where the public budget will be expanding: infrastructure, civilian research and development, and environmental technologies...

...Assuming that this represents the most difficult portion of the defense budget to cut, it still leaves a pool of $187 billion in new expenditures (out of a total administration budget of $303 billion) that can be cut without violating existing commitments...

...Cain, Stephen Alexis and Natalie Goldring...

...Washington, D.C.: Committee for National Security and Defense Budget Project), 1990...

...Kaufmann, William W. Glasnost, Perestroika, and U.S...

...To evaluate the possibility of general decline in economic growth resulting from military spending cuts, the size of any such cuts should be compared to GNP...

...Washington, D.C.: The Brookings Institution), 1990...

...is conducting in the Middle East...

...troops in Europe will scarcely prevent this...

...Of this, we can expect about $117 billion to be spent in FY 1991...

...In any event, the economy recovered quickly in 1955 despite the fact that military spending cuts continued...

...American Priorities in a New World Era...

...But the important point is the agreement—among many people who themselves were major players in the buildup of U.S...

...The studies differ somewhat on what the composition of defense would look like after the reductions...

...experience provides some guidance...

...commercial equipment to Eastern Europe, which have had the effect of ceding markets to Western European competitors...

...Using the peace dividend for domestic investment is the best way to assure that the market will eventually find new uses for labor and capital currently committed to defense production...

...We can, however, do several things to smooth the transition and mitigate the resistance...

...battlefield nuclear weapons' range is limited to those nations that are now rapidly aligning with the West...

...4. Identification of "dual use" military technologies with civilian applications (such as high-speed computers, vertical-takeoff aircraft, specialized machine tools), which are now classified or otherwise restricted from commercial development...

...Many of the European nations have now come close to, and in some cases surpassed, America's levels of per capita wealth and income...

...By this measure, as recently as 1976 under a Republican president, when a united Warsaw Pact was armed to the teeth, the U.S...

...Before determining how much we can cut from the present budget, we first must ask: "How much do we need to spend...

...This article is excerpted from a report issued by the Economic Policy Institute...

...Kaufmann, "Some Small Charge for Defense," the Brookings Review, 8 (Summer 1990...

...q Selected References Barnet, Richard J., Lester R. Brown, Robert S. Browne, et al...

...5. Eliminating obsolete cold war restrictions on the export of U.S...

...The case it makes for a peace dividend remains, we believe, essentially sound...