Gunpoint Stimulus

Defense contractors are trying to frighten Americans into believing that Pentagon budget cuts will destroy the economy. It's bogus.

Since 1998, U.S. military spending has grown exponentially, reaching 20 percent of overall federal spending and more than half of discretionary spending-levels not seen since the end of World War II. In particular, the portion of the budget used to purchase equipment from private industry has doubled over the last 14 years, growing from about $100 billion in 1998 to nearly $200 billion today.

Unsurprisingly, the defense industry has enjoyed remarkable prosperity during this time, with industry profits quadrupling between 2001 and 2010. But with a struggling economy and the conclusion of two wars, the United States can no longer afford to fund a massive defense buildup in the absence of an existential threat. Every bipartisan group confronting the deficit problem -- including the President's Debt Commission (Simpson-Bowles), the Domenici-Rivlin Task Force, and the Gang of Six -- has recommended reducing defense spending by about $1 trillion over the next decade. And the Budget Control Act (BCA), passed last summer, called for Congress to identify $1.2 trillion in cuts, revenue, or both to address this fiscal dilemma. If Congress failed, the act stipulated that $500 billion be automatically "sequestered" from defense (an equivalent amount would also be "sequestered" from non-defense programs) to meet the shortfall.

Faced with the prospect of declining government spending, the defense industry has stepped into the fray. Whereas for much of the last decade the defense industry relied on fears of terrorism and the ongoing conflicts in Iraq and Afghanistan to secure lucrative contracts, the end of the wars and the economic downturn have forced it to dramatically change its approach. Now, the defense industry is marketing itself as an essential job creator. Lockheed Martin, in particular, garnered headlines last week by announcing it will issue layoff notices to the majority of its 123,000 employees the week before the November elections unless sequestration is averted. It's certainly a tactic tailored to the times. The question is: will it work?

The Lockheed announcement was not the first shot in this new battle. In October 2011, the Aerospace Industry Association (AIA) published an economic impact analysis which concluded that cuts of $1 trillion over 10 years would cost the U.S. economy more than 1 million jobs, increasing the rate of unemployment by 0.6 percent. More recently, the National Association of Manufacturers (NAM) echoed this dire economic forecast, reporting that the BCA plus sequestration would result in the loss of over 1 million jobs, increase unemployment by 0.7 percent, and decrease gross domestic product by almost 1 percent. Most of these jobs, however, would not come from the defense industry itself. To maximize their findings (and their political impact), both studies assessed the effects of defense sequestration on every sector of the economy that could be hit by "induced effects," including secondary and tertiary effects like reduced consumer spending. As a result, the "1 million jobs" figure includes jobs in industries as distant from defense as "retail trade" and "leisure and hospitality services."

In addition to this methodological sleight of hand, the AIA and NAM studies are flawed for two fundamental reasons. First, defense spending is not a jobs program; it is a collective effort to address the threats facing the country, assure our national security, and secure our interests abroad. Therefore, the level of defense spending should be dictated by our national strategy and fiscal capacity, both of which point towards a drawdown. While it is in our interest to maintain essential industrial capacity, revenue growth and profit margins should not enter the calculus. Furthermore, if implemented wisely, $1 trillion in cuts spread over 10 years would not threaten our industrial base or national security. After more than a decade of real growth, such cuts would amount to a reduction of only about 15 percent in real terms and return defense spending to 2007 levels.

Second, defense spending is an extremely inefficient way to stimulate the economy. Both studies ignore the fact that defense spending creates far fewer jobs per billion dollars spent than other forms of government spending. For example, spending on educational services creates three times as many jobs as military spending and health care twice as many, according to research from the University of Massachusetts. Even tax cuts create almost 30 percent more jobs than money spent on weapons. So if Congress wants to spend taxpayer money to create jobs, it shouldn't give it to defense contractors.

Last week, the defense industry brought out the big guns, announcing that, since sequestration would kick in on January 1, 2013, the WARN Act (which requires that employers give their employees 60 days' notice about layoffs) would require defense contractors to issue layoff notices on November 2, 2012-4 days before the presidential elections. That's when Lockheed Martin said that it therefore plans to notify the "vast majority" of its 123,000 employees that their jobs could be lost due to sequestration. Defense hawks immediately seized on the warning as a political weapon; Senator Lindsey Graham (R-SC) has even called on defense companies to start issuing layoff notices sooner to force Congress into repealing sequestration.

The defense industry's new line is a potent political offensive designed to hit legislators where it hurts: their districts. It's a variation on the long-standing industry strategy of spreading the production of weapons systems across numerous congressional districts in order to ensure political support for the programs. Taking the economic tack -- particularly in an election year in which the political punditry has decreed that "it's the economy, stupid" -- is also a useful way to separate the defense spending debate from its proper historical context. Many of the people now animated by the industry's jobs claims are unaware of the recent history of the U.S. defense industry and its taxpayer-financed bonanza.

The offensive has certainly spooked members of Congress with military installations or defense industrial operations in their districts (basically, everyone). Rep. Buck McKeon (R-CA), the chairman of the House Armed Services Committee, has been particularly vocal, declaring that sequestration would "cripple our economy and defenses in a single blow." Senator Kelly Ayotte (R-NH) has also taken up the call, along with Senator John McCain (R-AZ).

While these tactics are designed to cause legislators and their constituents to panic, the fact of the matter is that defense companies are overstating the impact of sequestration. First, sequestration would require the Pentagon to reduce its budget by about 10 percent next year. While a 10 percent reduction in weapons procurement certainly would not be good news for defense contractors' bottom lines, it would hardly require companies to lay off their entire work force.  Lockheed Martin, for example, would still be contracted to build new F-35s, if perhaps not as many as anticipated, and provide maintenance and spare parts for numerous aircraft already in service.

Additionally, defense industry leaders have kept quiet about another trend bolstering their businesses: foreign arms sales. The State Department announced in early June that it had approved over $44 billion in sales of military parts or equipment by private U.S. companies abroad in 2011, up $10 billion from the previous year. This equipment was researched, developed, and tested in large part with U.S. taxpayer funds, but the defense industry has been strangely silent regarding Uncle Sam's seed capital. 

Moreover, sequestration impacts budget authority -- that is, how much money Congress sets aside for programs each year. Not all of this money, however, is spent in the year it is appropriated. Right now, for example, the Department of Defense has an unobligated or unspent authorized balance of $88 billion. As a result, the Pentagon's outlays -- that is, how much the Department spends in 2013 -- will almost certainly be considerably higher than what Congress appropriates, even under sequestration, so there is some economic breathing room. Massive and immediate layoffs would be both premature and an overreaction.

But the most dangerous result of these strong arm tactics by the defense industry has been to prompt budget hawks on the Hill to attempt to divorce the defense cuts from a comprehensive debt reduction plan. The sequester was, after all, the stick intended to force a grand bargain, and in that way it is working. We should not allow the parochial concerns of defense company executives -- even dressed up as sudden concern for economic stimulus -- to distract from this broader public policy debate.

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Justice Delayed

Ten years later, the International Criminal Court is still on trial.

A decade ago, the International Criminal Court (ICC) opened its doors for the first time. Four years after 120 countries voted to create a permanent institution to prosecute genocide, crimes against humanity, war crimes, and aggression, the court that activists had long dreamed of was becoming a reality.

Or so it seemed. In a sleepy suburb of The Hague on that July day, two court officials took questions from journalists and, when they were finished, walked into the modern office building that would serve as the court's headquarters. They kept right on walking, though -- through the back door and straight out of the building. The ICC was just an empty shell. No offices were ready, and the court had no budget. Staffers bought the court's first telephones on their personal credit cards.

Even worse, the infant court faced a hostile superpower. In 2002, the United States was not only determined to keep its distance from the court -- it was using its weight to restrict the ICC's reach. A few weeks after the court opened, President George W. Bush signed legislation directing the United States to cut off military aid to any country unwilling to sign a pledge refusing to send U.S. citizens to The Hague. The measure went even further, authorizing the president to use "all means necessary" to free Americans held by the court. The ICC's first employees felt the institution's fragility acutely. One of the first judges, Sang-hyun Song, told me recently that he and other judges "were not at all sure about whether this new baby would be able to survive all the hostility shown by the big powers."

Ten years later, that same building in The Hague hosts a staff approaching 1,000 lawyers, investigators, and administrators from around the world. The court's annual budget exceeds $100 million. Once personae non gratae in Washington, court officials now confer regularly with the State Department and White House staff, and the United States has pledged to help investigations when possible. In all, the ICC has launched investigations in seven countries and brought charges against 28 individuals, including Sudanese President Omar Hassan al-Bashir, former Ivory Coast President Laurent Gbagbo, and notorious Lord's Resistance Army commander Joseph Kony. Perhaps most importantly, the U.N. Security Council has twice referred situations to the court (Sudan and Libya), giving the ICC jurisdiction where it had none before and bringing the court into the center of international efforts to manage conflict.

For all the distance the court has covered, however, its 10-year anniversary is still far from joyous. Growing pains and the dilemmas of prosecuting complex crimes, often in the midst of war, have left even some true believers frustrated. It took the court more than six years to process, try, and convict the first suspect captured -- Congolese militia commander Thomas Lubanga -- and that case still hasn't gone through the appeals stage. (The prosecutor clashed repeatedly with judges and defense counsel over the confidentiality of evidence, producing several long delays.) Meanwhile, the court's member states fret about the expense of the ICC's proceedings.

The ICC's difficulties run even deeper. The permanent court may be a milestone in the development of international law, but it is often a bit player when it comes to international politics. It relies almost entirely on states to fund its operations, aid its investigations, and, most fundamentally, enforce its arrest warrants. The ICC's first decade has demonstrated repeatedly that however much states may like the abstract notion of international justice, they're not often willing to elevate it to the top of their policy agendas -- or defend it in the face of competing interests.

The court's political problems have been most dramatic in Africa. Thirty-three African states have joined the court, the most from any region, but many African leaders reacted harshly to the court's indictment of Sudan's Bashir in 2009. The next year, the African Union decided its members had no obligation to comply with the court's arrest warrants and chastised then-ICC prosecutor Luis Moreno-Ocampo for making "egregiously unacceptable, rude and condescending statements." In 2011, the court's pursuit of several senior Kenyan officials led to renewed hostility between The Hague and African officialdom. Kenyan diplomats at one point tried to engineer a mass African defection from the court. Their bid was unsuccessful, but the animosity continues.

The ICC's response is that it goes where the crimes are. "What is being targeted is not any country. What is being targeted is impunity, which is more rampant in that particular continent than any other part of the world," Judge Song told me. What's more, in three cases -- the Central African Republic, Democratic Republic of the Congo, and Uganda -- the national governments in question were the ones who invited the ICC to intervene. And in Libya and Sudan, it was the U.N. Security Council that asked the court to investigate. Only in the Ivory Coast and Kenya did the ICC set its own processes in motion.

More fundamentally, court officials insist that prosecuting those killing and tormenting African civilians shows concern for Africa, rather than animus against it. "What offends me most when I hear criticisms about the so-called African bias is how quick we are to focus on the words and propaganda of a few powerful, influential individuals and to forget about the millions of anonymous people that suffer from these crimes," the new ICC prosecutor, Fatou Bensouda, said recently. "Because all the victims are African victims." Bensouda's recent elevation to the top spot (she has been Moreno-Ocampo's deputy for eight years) could smooth the court's relationship with African leaders; born in Gambia and educated in Nigeria, she is more reticent and less fond of the microphone than the sometimes freewheeling Moreno-Ocampo.

Yet the leadership transition at the court likely won't change the underlying political realities it faces. The African complaint is not just about the cases that the ICC has pursued; it's also about the ones it hasn't. Despite having at least limited jurisdiction, the court has not opened full investigations into violence in Afghanistan, Colombia, Georgia, or Iraq. In April, Moreno-Ocampo decided that Palestine's ambiguous legal status prevented him from acting on the Palestinian Authority's invitation to investigate crimes in its territory. In each of these situations, there's room for debate about whether an ICC investigation was warranted. In the aggregate, however, there is strong evidence that the court has trodden very carefully in areas where major powers have strong interests.

This geopolitical caution isn't surprising given that the court is a weak institution still struggling to establish itself. The critical question for the future is whether its cautious first decade will begin returning benefits in terms of tangible support from major powers. The court has more than 120 members, including the entire European Union, Japan, and Brazil. But the United States, China, India, Russia, and Turkey remain wary and have opted not to join. Although the U.S.-ICC relationship has mellowed considerably, there's no chance Washington will become a member anytime soon, and there are limits to the support it will offer. Beijing and Moscow seem content to let the ICC work, provided it doesn't stray into their immediate spheres of influence. But for the court to succeed in the long run, it will need sustained support -- not just tolerance -- from the powers with the diplomatic, military, and intelligence clout to make the ICC's writ run.

There's still not much evidence of that commitment. Western diplomats have not leapt to the ICC's defense in Libya, where the transitional government has challenged the court's right to try Muammar al-Qaddafi's son Saif al-Islam. Most tellingly, Sudan's Bashir has been engaged in a cat-and-mouse game that tests the court's credibility, traveling to an array of different countries, including several ICC members, so far without consequence. The ICC duly complains to the Security Council, but that body has done little to back up the court. Worse, key council members have welcomed Bashir themselves. In June 2011, the Sudanese president received the red-carpet treatment in Beijing. In his last briefing to the Security Council on Sudan, Moreno-Ocampo all but pleaded for stronger diplomatic support.

Optimists insist the court is young and still growing in influence. But there is another, more sobering possibility -- that the international criminal justice movement hit its high point in the 1990s with the tribunals for the former Yugoslavia and Rwanda and the creation of the ICC. The geopolitical winds may not be blowing in the court's favor today. Its most ardent backers have been European states, most of which have more pressing matters on their plates and will likely have decreased weight in the future. Meanwhile, the United States and key emerging powers remain lukewarm. The court's next decade, it turns out, may be tougher than its first.