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How Not to Create Jobs

3:08 PM, Sep 16, 2011 • By DANIEL HALPER
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Earlier this week, Tom Donnelly and Gary Schmitt wrote a FoxNews.com column that detailed how cutting defense would be bad for creating jobs:

With President Obama's "jobs speech" now delivered to Congress, national attention is fixed more than ever on job creation. And with the unemployment rate above 9%, and the underemployed pushing the "real" jobless rate to over 16%, the stakes could hardly be higher.

But if job creation--and maintaining those jobs Americans do have--is our national focus, why is cutting the defense budget more deeply still on the table? The fact is that cutting defense spending on the scale being proposed under the debt-ceiling agreement will not appreciably help to fix the country's long-term fiscal problem, will make the nation less secure and is, demonstrably, a terrible thing to do when the economy is struggling as it is.

Sure enough, Loren Thompson reports today on the Lexington Institute's blog, Senate appropriators have requested defense cuts that would result in 199,500 jobs lost: 

This week the defense subcommittee of the Senate Appropriations Committee cut $26 billion from the Obama Administration's fiscal 2012 budget request. The move is intended to align future Pentagon spending with the requirements of the recently enacted Budget Control Act. However, the cuts the subcommittee proposes to implement would destroy at least 200,000 jobs, and probably more at a time when the government is contemplating going deeper into debt to fund the president's jobs bill.

Consider the $13.3 billion the appropriators propose to delete from military investment accounts -- $9 billion for procurement and $4.3 billion for R&D. Let's assume that every $200,000 in investment spending creates one direct job, either in the government or the private sector. At that rate, $13.3 billion in cuts would destroy 66,500 jobs. But that's just the beginning, because economic models indicate that for every direct job created, two indirect jobs are also created in retail, construction, education and other activities made possible by the spending of defense workers. So the total hit to the economy from the proposed cuts is actually 66,500 times three, or 199,500 jobs. 

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