Buying Bombs or Building Bridges?

Last week I read an interesting piece by historian James Livingston about the misconception that private investment has anything to do with economic growth.  Professor Livingston's argument - consumer and government spending are the drivers of economic growth - didn't surprise me.  I'm no economist but I could have told you that spending creates demand and demand creates growth, and I've argued in past posts that by rebuilding America's middle class we could rebuild our economy.  However I was surprised that Professor Livingston argued that private investment has nothing to do with driving growth.  I'd even go so far as to disagree, but I'm not a professor with 35 years worth of experience studying capitalism.

Whether I disagree with Professor Livingston on the issue of private investment or not, he is certainly right about consumer and government spending, as most Americans and one of our two political parties seem to realize.  But this brings me to another - you guessed it - point of Republican hypocrisy when it comes to the role of government.

Ask a conservative about government spending and you're likely to be told that if we spend another dime the world will end.  That's only slightly hyperbolic.  But if there is one kind of spending Republicans are okay with, it's defense spending.  Medicare? Psshhh, F-22s?  Yeah!  Now, though this is another manifestation of Republican hypocrisy, it is a useful one.  Military spending would probably help create jobs; WWII pulled America out of the Great Depression after all.  Even Paul Krugman, while also lamenting Republican hypocrisy, acknowledges that government spending on the military will spur job creation.

This leads me to two points:
1) If government spending on the military is good, shouldn't we also encourage government spending on infrastructure?  Sure, building F-22s creates jobs and I'm not adverse to F-22s, but I'd rather have roads, bridges and digital infrastructure, not to mention schools and better public transportation.

2) If Republicans really believe military spending creates jobs then it would be advisable for them to work with Democrats to find an agreement on a deficit reduction deal before the November 23rd deadline to cut $1.2 trillion from the deficit.  If no deal is reached by then, automatic cuts totaling $1.2 trillion kick in, and about a third of those cuts would be military spending.

Rumor has it that Democrats recently proposed a longterm deal that would trim the deficit by $3.2 trillion, $3,200,000,000,000!!!! Look at all those zeroes! When Democrats proposed the deal they included nearly a billion dollars worth of cuts to Medicare, Medicaid and discretionary spending, most of which is spent on programs championed by Democrats.  Also included were $1.3 trillion in new tax revenues.  Republicans, predictably, balked.  Democrats were willing to make sacrifices, Republicans were not.  Same ole song and dance.

But this circus is ultimately going to be the downfall of the ringmasters.  Republican intransigence is going to lead to automatic spending cuts that will cause job losses in the private sector, and while Democrats were willing to make substantial cuts to important programs, Republicans turned up their noses at the very mention of the word tax.

All of this could be avoided if Republicans would acknowledge some basic economic facts, among them those pointed out by James Livingston.  If we could only get half of our politicians to realize that building bridges, just like buying bombs, was good for job growth then maybe we could make some progress.  As things stand now, we're more likely to see more damaging cuts in a few weeks when the deadline for cuts passes without a budget deal.  Then we'll be without bombs or bridges or jobs.  And once again, all Americans will be on the losing end of Republican obstruction.