The Iron Triangle
The new military buildup
by James M. Cypher
Dollars and Sense magazine, January/February
The U.S. government's Commission on National
Security/21st Century, convened in October 1998, was a who's who
of industry, government, and military-that is, of the country's
power elite. Former Senators Gary Hart and Warren Rudman chaired
the Commission. Its commissioners included Martin Marietta CEO
Norm Augustine and former House Speaker Newt Gingrich. Its 29
"study group members" came from top universities like
MIT and Princeton, and think tanks including the RAND Corporation,
the Cato Institute, and the Brookings Institution. The Commission
also enjoyed the cooperation of the Departments of Defense and
State, as well as top intelligence agencies like the CIA and the
National Security Agency (NSA). In 1998, the Commission began
a major review of U.S. military strategy. Its aim? To redesign
the institutional structure of the military for the post-Cold
The Commission's 1999 report New World
Coming: American Security in the 21st Century, outlined a strategy
for the United States to "remain the principal military power
in the world." In the coming century, the report argued,
the United States will become increasingly vulnerable to direct
"nontraditional" attacks-against its information technology
infrastructure, for example. It will have to intervene abroad
more frequently to deal with state fragmentation or to ensure
an "uninterrupted" supply of oil from the Persian Gulf
region or elsewhere. And it will face rivals in its drive to dominate
space. The report concluded that to ensure continued U.S. dominance,
U.S. military spending will have to rise dramatically.
BIG AND HEAVY, FAST AND LIGHT
The Clinton administration, which had
overseen a dramatic decline in military spending over the course
of the 1990s, basically ignored the Commission's conclusions.
It now looks, however, like U.S. military doctrine will follow
many of the recommendations in New World Coming.
The Department of Defense's latest big
picture document, the October 2001 Quadrennial Defense Review,
aims both to "restore the defense of the U.S. as the department's
primary mission" and to build forces capable of moving rapidly
overseas. Not to be outdone, the Army has produced two major documents
outlining plans to retain the military's heavy aircraft and tank
forces while developing lighter, faster units that it can deploy
virtually anywhere in the world within 96 hours.
The post-September 11 era of military
spending will allow the Pentagon to have its cake and eat it too-continuing
major Cold War-era weapons systems and funding the cyberage "Revolution
in Military Affairs" (RMA). The RMA emphasizes high-tech
warfare-communications networks, satellites, robot observation
planes, smart bombs, night-vision instruments, highly mobile "light"
armor, and global positioning system (GPS)-equipped soldiers-over
old-fashioned heavy-weapons systems. Many Pentagon officials and
major weapons contractors feared the RMA because it could disrupt
the method of military contracting going back to the beginning
of the Cold War-building a huge arsenal of ships, planes, tanks,
and missiles to confront the Soviet "threat." Military
officials had built their careers on that approach, and weapons
contractors had made many fortunes from the resulting arms contracts.
They feared that the RMA would marginalize them. The novelty of
the Army's approach is to spend enough money to keep everyone
happy, funding the "old military" and the "new
BALANCING THE IRON TRIANGLE
The "Iron Triangle" forms the
U.S. military establishment's decision-making structure and includes
its major interest groups. One side of the triangle includes the
"civilian" agencies that shape U.S. military policy-the
Office of the President, the National Security Council, the Senate
and House Armed Services Committees, and civilian intelligence
agencies like the CIA and NSA. A second side includes the military
institutions-the Joint Chiefs of Staff, the top brass of the Air
Force, Army, Marines, and Navy, the powerful "proconsul"
regional commands (known as "CINCs"), and, in a supporting
role, veterans' organizations like the American Legion and the
Veterans of Foreign Wars. At the base of the triangle are the
8S,000 private firms that profit from the military contracting
system, and that use their sway over millions of defense workers
to push for ever-higher military budgets.
Everyone in the Iron Triangle knew that
the Bush Administration would increase military spending. The
question was whether the increase would be vast enough to fund
the old weapons systems, the "Star Wars" National Missile
Defense scheme, and the RMA. And if not, who would pay the price?
On February 13, 2001, President Bush announced that the United
States would be moving beyond the Cold War model and into the
RMA. In March 2001, he submitted a 2002 budget that upped military
spending by only $14 billion over Clinton's 2001 budget. Many
powerful members of the Iron Triangle, who had staked their careers
on the old system, could now foresee their marginalization.
They were not about to go without a fight.
Between March and August 2001, they struggled to save outmoded
weapons systems like the F-22, the most expensive fighter plane
in history, and the plan to build the unreliable V-22 Osprey aircraft,
a project that then-Secretary of Defense Dick Cheney nearly killed
eleven years before. It was, according to The New York Times,
a battle "as intense and intemperate as any in recent memory"
within the Iron Triangle.
Even before September 11, Secretary of
Defense Donald Rumsfeld advocated a revised military budget with
a total spending increase of $52 billion. He still favored, however,
reconfiguring the military along RMA lines, reducing military
units, cutting bases, and retiring unneeded weapons systems. Even
while he proposed the larger spending increase, Rumsfeld's opponents
in the Pentagon succeeded in portraying him as weak, unfocused,
and "spiraling down." Legislators fought him on base
closures, contractors resisted any reduction in lucrative weapons
contracts, the Armed Services fought him on manpower reductions,
and Democrats resisted the National Missile Defense program -which
Rumsfeld had spearheaded.
Post-September 11 emergency spending allocated
an additional $25.5 billion to military objectives. In all, military
spending will rise by at least $58.6 billion over 2001 levels,
a 19% increase-just exceeding Rumsfeld's goal. ("Special
Appropriations" will probably push the basic military budget
even higher during the current fiscal year. ) Now, Rumsfeld will
be able to make a down payment on the RMA, while the vested interests
will see plenty of funds for the old-style "legacy system"
Fighter-plane programs will get an incredible
$400 billion in new multi-year contracts. Lockheed Martin will
get $225 billion over 12 years to build nearly 3,000 Joint Strike
Fighter planes for the Air Force, Marines, and Navy. According
to Business Week, Lockheed also stands to make $175 billion in
sales to foreign buyers over the next 25 years. Drowning in its
record trade deficit, the United States desperately needs the
boost to the trade balance provided by arms exports. The Joint
Strike Fighter, if it brings in the expected $175 billion in export
sales, may go down in history as the largest single boost to the
balance of payments ever. Currently the United States controls
50% of the global arms market, with foreign military sales running
at $16.5 billion in 1999. That figure will be on the rise as new
weapons are delivered to Pakistan, Uzbekistan, Tajikistan, Oman,
the United Arab Emirates, and Egypt.
Looking ahead, the RMA's fantastic weaponry-and
its enormous costs-are only just beginning to emerge. Northrup
Grumman, General Atomics, and Boeing are speeding robot airplanes
into production. Other contractors are developing thermal imaging
sensors to "see" targets through night, distance, fog,
and even rock formations. The Navy is promoting a new destroyer-class
warship, the DD-21, loaded with cruise missiles and guns capable
of hitting targets 100 miles inland. Known as the "stealth
bomber for the ocean," the DD-21 is estimated to cost $24
billion. Cost overruns of 300% are common, however, so there's
no telling what taxpayers will ultimately pay.
THE ECONOMIC IMPACT
Bush justified his mammoth June 2001 tax
cut partially as a measure to reverse the economic downturn that
began the previous March. In October 2001, he proposed further
tax cuts as an "economic stimulus" package. The two
tax cuts combined, however, will likely provide less of a short-term
boost than the nearly $60 billion increase in military spending.
Most of the June tax cut will go to people with high incomes,
who tend to spend a smaller proportion of the additional income
they receive from a tax cut. And a large portion of what they
do spend, they tend to spend on imported luxury goods, rather
than domestic goods.
Most of the proposed "stimulus"
program suffers from the same problems, plus a few more. The new
proposal also includes a clause allowing businesses a bigger write-off
for equipment as it decreases in value. But a corporation can
take the write-off while spending on capital depreciation that
they would have done anyway. The same is true of the elimination
of the corporate "alternative minimum tax," which had
set a tax "floor" for corporations no matter how many
deductions they could claim. Corporations will use these windfalls
to pay off debt or to invest outside of the United States.
Compare this to the $60 billion in new
military outlays. Most of this money will go to civilian suppliers
who will use it to pay for domestic labor, materials, and equipment.
Only a modest portion, 5-10%, will leak out of the United States
to military base operations. (Even that may not be as large a
"leak" as it might seem, since base employees stationed
overseas often buy U.S. exports.) Moreover, because of the new
emphasis on the RMA, the military will be buying more newly designed
weapons than it has in a long time, and this will have a strong
impact on the economy.
But will this counter the current recession?
University of Texas economist James K. Galbraith has argued that
the United States will need $600 billion in new spending in 2002
to pull out of the recession. However, only about $214 billion
will come from increases in emergency and military spending plus
the two tax cuts. Reduced interest rates will also stimulate new
spending, but probably not on the scale required. If Galbraith
is correct, even the massive outlays for the military will fall
far short of the sum needed to turn the U.S. economy around.
What about its long-term effects? Some
claim that increased military spending will drain U.S. productivity
and slow long-term growth. But much of the United States' growth
during the post-WWII period was stimulated by military spending.
As Business Week noted in October 2001:
Defense spending on research and development
has sparked much innovation. Microchips, radar, lasers, satellite
communications, cell phones, GPS, and the Internet all came out
of Defense Dept. funding for basic research at the Massachusetts
Institute of Technology, Stanford University and national laboratories.
There were breakthroughs at IBM and Bell Laboratories, and all
were commercialized by Intel Corp., Motorola Inc., and other corporations.
The same is true of artificial intelligence, supercomputers, high-speed
fiber optics, and many other breakthroughs. The bulk of information
technologies, in fact, were developed through massive R&D
investments in military technology.
The argument that military spending undercuts
productivity must be seen in a broader context: Conservative economists
have long argued that government spending does not increase investment
because it causes an offsetting reduction in private investment-known
as "crowding out." Some liberal economists have appropriated
this argument to oppose military spending as a drain on the economy.
That argument underestimates the structural importance of military
spending and the arms industry to capitalism. The new military
buildup is not likely to "crowd out" private investment,
but to stimulate investment and technical innovation. The military
buildup will definitely "crowd out," however, spending
on public needs, such as a viable rapid rail system, public education,
and a national health care system-all of which could greatly enhance
productivity. More military spending will focus inordinately on
information technology and other high-tech systems. More artificial
intelligence technologies, global positioning systems, robot planes,
and thermal imaging sensors, however, are not going to house,
educate, or heal people who lack housing, education, or health
81G VISIONS, BIG PLANS
The current military buildup is about
much more than countering the slide in the high-tech sector, or
countering the current economic recession. It is about consolidating
the United States' position as the only superpower. Continued
U.S. dominance requires continued control of the world's most
important traded commodity-energy. The United States imports 52%
of the oil, and a growing share of the natural gas, that it consumes.
The profits of oil giants like Shell, Exxon/Mobil, and Chevron/Texaco
come from their global control of oil and gas resources. Securing
this control is one of the major functions of the U.S. military.
U.S. foreign policy will focus increasingly
on securing global resources, longtime observer and critic of
U.S. military affairs Michael Klare argues in his new book Resource
Wars. (This stands in contrast to the Cold War era, when directly
economic motives were less important to U.S. foreign policy than
the superpower rivalry with the USSR.) The Pentagon and other
centers of U.S. power clearly view Middle East energy resources
as a "vital interest," warranting massive military outlays
and the export of the top-level weapons to client regimes in the
region. Between 1990 and 1997, the United States exported $42
billion in arms to the Persian Gulf states, of which $36 billion
went to Saudi Arabia.
This focus on the oil-exporting regions
will only rise under the Bush administration. Even though the
Bushes never really established themselves in the oil industry,
their tilt toward "big energy" is unmistakable. George
W. Bush's number-one corporate donor was Houston's Enron Corporation,
the ill-fated energy trader; Vice President Dick Cheney comes
fresh from his job as CEO of Dallas' Halliburton Corporation,
the world's largest oil-well service company; and Condoleezza
Rice served as a director of the Chevron Corporation before becoming
National Security Advisor.
"Oil runs the world and the Saudis
are the linchpin of oil production," a unnamed senior administration
official told the New York Times in October 2001. The United States
has struggled in the past to reduce its reliance on Middle East
oil supplies-pressuring Mexico and Venezuela to increase production,
hoping for big increases from Colombia's rich oil fields, and
so on. Since 1990, the United States has reduced OPEC oil from
approximately 61% of its total oil imports to 52%-so only about
27% of the oil consumed in the United States now comes from OPEC
(including Venezuela). But this is not the whole story: The United
States has also assumed the role of military guarantor of oil
stability for Europe and Japan. The growing instability of the
Persian Gulf states, in spite of the huge sums that they and the
United States have committed to military defense, portends even
greater U.S. military involvement in the region for the foreseeable
Meanwhile, near the Gulf, two alternative
sources of oil are becoming increasingly attractive-the Caspian
Sea region and the rest of the former USSR. U.S. oil companies
are now plunging into Russia. Halliburton has 300 specialists
in Western Siberia struggling to revive the Samatlor oil field,
while Shell and Exxon/Mobil are investing in a new field off Shakalin
Island. Exxon has committed $5 billion to the effort over the
next five years. Russia is now exporting about 3.3 million barrels
a day, nearly half what Saudi Arabia exports. But if the oil giants
invest in new pipelines, Russian exports could leap to 5.3 million
barrels a day by 2004, according to Business Week. Much of this
new oil, and huge quantities of natural gas-one third of the world's
gas reserves are located in the former Soviet Union-would come
from the Caspian Sea region of Central Asia, the biggest economic
prize since the United States took effective control of Saudi
oil in February 1945.
This makes Afghanistan, through which
a major Caspian pipeline would likely run, a strategic linchpin
of the global energy industry and the world economy. U.S., European,
and (Russian gas and oil firms have taken a major interest in
the Caspian region's vast oil and gas reserves since the early
l990s. Major pipelines now carry these resources to Turkey, From
which they can be shipped to Western Europe, the United States,
and the rest of the world. Unocal, Pennzoil, British Petroleum,
and Amoco were major participants in the Azerbaijan International
Operating Company (AIOC), a large-scale project to build pipelines
from the Caspian Basin to Turkey and the Black Sea. Unocal has
also proposed a pipeline from Turkmenistan, Uzbekistan, and Kazakhstan
through Afghanistan to India and Pakistan, and to the Pakistan
coast for export to China-though the company now says it has shelved
the project. ~
The U.S. military is now developing a
long-term presence in Central Asia, which it will undoubtedly
use to secure the rich supply of Caspian oil and gas. The Pentagon
has been courting the government of Uzbekistan for years, giving
its officers military training in the United States since 1995,
and conducting military exercises in Uzbekistan since 1999. In
November 2001, the U.S. military began negotiating with the government
of Tajikistan to use former Soviet military bases there during
the U.S. war in Afghanistan. Considering that a U.S. garrison
has been permanently stationed in Saudi Arabia since the Gulf
War, it seems unlikely that the U.S. military will leave either
Uzbekistan or Tajikistan after the Afghanistan war.
The outcome of this high-stakes struggle
remains to be seen. Russia and the Caspian region resemble the
Persian Gulf region in their fragile social foundations. So shifting
to the former for imported oil and gas will not eliminate the
United States' reliance for energy on states with huge potential
for instability. If an Afghanistan pipeline is ever built, however,
it will help give U.S. and Russian oil interests leverage they
have not had in decades over the Persian Gulf region, just by
making the Gulf's oil supplies a much smaller part of global production.
Moreover, with energy demand in developing Asia predicted to surpass
that of North America by 2020, it will give the United States
added leverage over these economies. The current U.S. power play
in Central Asia, in short, dramatically increases the likelihood
that the U.S. military will succeed in achieving the goals articulated
by the Commission on National Security/21st Century-securing control
of the global energy supply, and maintaining the United States'
position as the world's only superpower.
James M. Cypher teaches economics at California
State University, Fresno.