The American Bad Dream – (3) A Profitable Business

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During the Reagan Administration, the United States continued to spend billions on developing and manufacturing nuclear weapons and potential missile defense systems.  Ironically, shortly after Reagan had refused to discontinue the SDI program in disarmament talks at Reykjavik, the SDI anti-missile defense initiative was reportedly discontinued anyway: “By 1985, after billions of dollars but minimal results, Reagan’s SDI was shut down but research continued.” [1]

In general, “military spending was very high” [2] during both of the Reagan administrations: “By the time Reagan stepped down from the helm, he had expanded the U.S. military budget to a staggering 43% increase over the total expenditure during the height of the Vietnam War.” [3] This effort entailed “massive budget deficits.” [4]

The United States military budget has consistently remained very high, and its military budget in 2009 was greater than that of the next top eighteen nations combined, from China down to Greece. [5] The United States still maintains military bases all around the globe, and with its leadership role in the world, considerable military spending has been expected and generally accepted by the public.  How much military spending is needed has always been controversial, however, especially in peacetime.  How much military spending (like the SDI pending) was wasteful and ultimately non-productive is also a big and very important topic, addressed elsewhere on this site.

The important points here are that Reagan’s expensive peacetime military buildup was very profitable for the government contractors involved, and it was financed in a $4 trillion expansion of government debt.   In other words, contractors gained considerable wealth, while government spent beyond its means, hitting taxpayers up with the huge additional cost of covering and repaying these huge debt obligations in the future.

That high level of military spending was anything but fiscal conservatism.  It was one thing to go massively into debt in the emergency presented by World War II, but quite another to do it in peace time.  It is remarkable that the heirs to this kind of irresponsible fiscal policy today are referred to as “conservatives,” when such policies are nothing short of radical.

This is a good time to recall President Dwight Eisenhower’s famous emphasis, in his Farewell Address to the Nation on January 17, 1961, of the potential danger of the military-industrial complex:

          “Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But now we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions.  Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations.

“This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence – economic, political, even spiritual – is felt in every city, every Statehouse, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

          “We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together. [6]

That fifty years ago a Republican president would warn America in his farewell address of the dangers of undue corporate influence on public policy is clear evidence that a vast change has since occurred in what the Republican Party stands for and in whose interests it represents.  Indeed, the meaning of the word “conservative” has undergone a wholesale change.

JMH – 2/20/11


[1] “Reagan’s Military Buildup,”

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] – List of countries by military expenditures.

[6] (Emphasis added)

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