Three seemingly unrelated news stories in the past two weeks, partially buried under the Simpson case and the Whitewater scandal, actually combine to offer a glimpse into California's economic growth prospects for the next couple of years.
First, the state economic news continued to be consistent with slow recovery--jobs and construction going up, but not fast enough to prevent a rise in the unemployment rate. (Cautionary note: Federal unemployment statistics for individual states are notoriously unreliable.) Second, the General Accounting Office--Congress' sometimes controversial watchdog--reported that President Clinton's defense budget is $150 billion too small over the next five years to cover his own limited priorities. Third, while American troops are on a humanitarian mission to Rwanda to help alleviate the almost unimaginable refugee disaster, the Clinton Administration seems poised to invade Haiti.
These apparently disparate stories together foreshadow major national security problems and continued economic problems for California unless Congress and the President rethink the Administration's reckless defense drawdown. Clinton is driving the defense share of the economy to its lowest level since the Great Depression. Our entire history reveals that every time we overdo a defense drawdown, the next necessary buildup is always vastly more costly in terms of resources and American lives.
Fortunately, President Clinton's ill-conceived defense drawdown--incidentally also the major problem of California's economy--is finally coming under scrutiny in Congress and elsewhere as ruthless aggressors from Bosnia to North Korea thumb their noses at America's interests.
The President's strategy is to be able to engage in two regional conflicts simultaneously. While this might seem far-fetched, imagine that during the Gulf War, North Korea had invaded South Korea. Possibilities abound that American military forces, on missions ranging from humanitarian aid to combat, will be required to defend our own national interests. Defense Secretary William J. Perry, asked why the United States was launching the aid mission to Rwanda, said it was "because we're the only ones with the logistical capability" to do so.
The two-conflicts strategy is necessary because if America is unable to deal with two conflicts simultaneously, aggressors need only to wait for the United States to become preoccupied somewhere and unable to respond elsewhere. Worse yet, it would make us much more reluctant to defend our interests knowing that we would forgo the opportunity to respond if another conflict arose.
Thus, even if one agrees with Clinton's defense priorities, he will have to come up with an additional $150 billion to provide the defense resources to carry out those policies (funds available if he abandons his new social engineering domestic programs, which are unlikely to solve the problems they putatively address).
Most serious national security analysts believe the Clinton priorities are a minimalist notion of what U.S. military preparedness and capability should be in the dangerous and volatile post-Cold War world.
The $150 billion is not just a lot of money. It is necessary to make sure we have sufficient aircraft carrier groups, Air Force wings, Army divisions and the training, sophisticated weaponry, spare parts and lift capability to project our strength when and where it is necessary. If not, we not only may find ourselves in trouble launching a future action, but may be more likely to need to do so as the deterrent effect of a strong America willing and able to use force disappears.
The only way American foreign policy can be successful is for it to be backed by strength, including the ability and will to use military resources appropriately. Ronald Reagan, George Shultz and Cap Weinberger knew that, and the military buildup and staring down of the Soviets helped to destroy communism. George Bush, Jim Baker and Dick Cheney knew that, and successfully navigated the end of the Cold War and masterfully drove Saddam Hussein out of Kuwait. So far, unfortunately, it appears that President Clinton hasn't the slightest clue. For America and the world, let's hope he catches on quickly and works out a more sensible defense drawdown with Congress.
Why do I make such a fuss about these issues in a column usually devoted to California's economy? As reiterated over and over again here, the Clinton drawdown is not only imprudent for the nation's security, it represents the big economic earthquake for California, accounting for over half the jobs lost during the recession.
To repeat: One out of five dollars the United States spends on defense is spent in California--on personnel, bases, aerospace procurement, etc. A defense drawdown that would be $150 billion smaller over five years translates roughly into $30 billion less income to be sucked out of the state, about the same as our pro rata share of a $250-billion federal tax cut.
Comparing the more prudent drawdown with Clinton's current plan makes a big difference to California: The additional cuts Clinton proposes,beyond the already large defense drawdown agreed to at the end of the Bush presidency, would cost the California economy $16 billion or more a year, assuming the reductions are spread proportionately across the country. The more prudent drawdown would bring the extra hit to California down to about $10 billion a year, rather than $16 billion or more annually. The difference amounts to perhaps a quarter of a million jobs for Californians.
Our primary interests must be in the nation's security and in America's geopolitical role in the world, but recent events--and independent, detailed analyses--keep revealing that the Clinton defense drawdown, so damaging to California's economy, doesn't measure up to his own defense priorities.
We need to demand this for our nation's security, and the side benefit will be a reduction of the drag on California's economy.