Why Pentagon program cuts won't necessarily bring job cuts.

Military analysis.
March 19 2009 6:19 PM

Don't Be Afraid To Kill the F-22

Why Pentagon program cuts won't necessarily bring job cuts.

The Pentagon. Click image to expand.
The Pentagon

Word is that Secretary of Defense Robert Gates plans to slash or kill several big-ticket weapons programs when he rolls out the full details of the Pentagon budget next month. The contractors for some of the projects on the chopping block are fighting back pre-emptively with the most potent slogan in politics today: Jobs!

Fred Kaplan Fred Kaplan

Fred Kaplan is the author of The Insurgents and the Edward R. Murrow press fellow at the Council on Foreign Relations.

Many lawmakers and commentators who are otherwise critical of excess military spending wonder whether it's a good idea to swing the ax at a time when the government is spending more than a trillion dollars to stimulate the economy.

Advertisement

Lockheed-Martin is milking this sentiment, most blatantly with a full-page ad in the Washington Post warning that halting production of its F-22 Raptor fighter jet—believed to be a top candidate for cancellation—would mean the loss of 95,000 jobs. The advertisement's photo features not the sleek supermodern plane itself, as similar ads have in the past, but rather a blue-collar worker in a Chicago foundry, one of more than 1,000 factories in 46 states that share a piece of the Raptor's action.

But there's something wrong with this picture (apart from the irony of a major corporation appearing to support Lenin's claim that capitalism requires ever-expanding production for war). The fact is, Gates could kill the F-22 and a bunch of other programs like it—and cause very little, if any, economic damage, at least in the next couple years while the recession still lingers.

Here's why.

There are two measures of the federal budget. One is "budget authority"—how much money is requested and allocated. The other is "outlays"—how much is actually spent in a given year. For much of the budget, in the Pentagon and elsewhere, the two measures are nearly identical; most of the money goes for salaries, which is spent right away. But weapons programs are large-scale capital projects. They take years to build, and therefore it takes years for budget authority to translate into outlays.

Precisely how many years is spelled out in a voluminous document called the National Defense Budget Estimate (also known as "the green book"), published each spring by the Pentagon's comptroller. The relevant chart (on Pages 48 and 49 of last year's edition) is labeled "Outlay Rates To Be Used for Incremental Changes in Budget Authority," and it reports the rates for each category of military spending over a seven-year period.

For instance, for Air Force aircraft procurement, only 23 percent of the money authorized in a budget is spent in the first year. Another 32 percent is spent in the second year, 26 percent in the third year, 11 percent in the fourth year, 5 percent in the fifth year, 1 percent in the sixth year, and 1.7 percent in the seventh year.

With this in mind, look at the F-22 Raptor. Last year, for the fiscal year 2009 budget, Congress approved $3.6 billion to buy 20 more planes. By the green book's calculation, just $828 million of that sum is being spent during 2009 (the first year of outlays). Almost $1.2 billion of it will be spent next year, another $1 billion in the year after that, and so forth.

In other words, the Pentagon pays out more money to the contractors in each of the two years after the budget goes into effect that it does in the initial year.