by Frank Thomas
Faced with intermediate and long-term financial austerity pressures, the Dutch government is now planning to cut $1.4 billion from a $12.1 billion Defense Budget, bringing the Budget to 1.3% of GDP in 2011. During the Cold War, the highest this % got in the Netherlands was 2.8%. There has been a steady spending decline since 1991. For example, the number of F-16s has gone from 162 to 87; the number of brigades from 10 to 3.5; the number of frigates from 18 to 6. The military personnel level of 48,000 today is far, far below what it was in the Cold War period.
The Dutch 2011 Defense Budget cuts include reducing military (primarily Army) and civilian personnel (48,000 and 21,000, respectively) from 69,000 to 59,000 or 15%. This means at least one-in-six military employees will likely lose their jobs in the very near future. The Dutch plan is to do a lot fewer protracted operations with many ground troops. Under a policy of AGILITY FORCE and FLEXIBILITY of RESPONSE, the tactical policies will be: (a) to perform operations where speed and having enough transport capability is important, and (b) to undertake long-term committments that do not have any footprint in another country's territory.
Can you imagine the 5-10 year accumulated savings possible if the US had the leadership courage to reduce our bloated Defense Budget from +5% of GDP (+-$800 billion including veterans benefits) to a still high 3.5% of GDP or +-$520 billion at today's prices .... monies better redirected to R&D, infrastructure, green energy independence, education for real job growth and long-term deficit reduction. As you know, I have long held the view our miltary spending -- in combination with last 20 year gigantically accelerating trade deficits from over-consumption and exhorbitant oil imports and trend of slowdown in the growth rate of federal tax revenues -- is simply bankrupting us and strangling our ability to make serious internal productivity improvement investments.
Here's the Netherlands, a small country of 16 million people getting a grip on its hard choices for structural financial stability, reducing again to 1.3% of GDP its already modest level of Defense spending by American standards. The Defense spending of most mature EU countries averages about 1.7% of GDP. Not surprisingly, the one exception is the UK where spending is 4% of GDP. But the right-left coalition goverment led by Cameron is also now considering substantial Defense Budget cuts. China's Defense spending is around 1% of GDP. And they are not too anxious to accelerate this given the country's huge next 10-year investment requirements for industrializing the economy amidst grossly inadequate natural resources (except large quantities of CO2 pollution-intensive coal reserves).
As with all our structural problems -- including your to-the-point article on the wisdom of going after solar and wind energy with a Marshall Plan vengeance -- we are stuck in our usual culture of polarized do-nothing, special-interest politics. We have a play-it-safe President more concerned about re-election than decisively knocking heads together NOW to come out of our social-economic morass and paralysis on the critical issues obvious to everyone. So we'll patiently drift status-quo for some 18 months while Obama's supporters divert their energies to raising $800 million, some say $1 billion, for his next election campaign.
On the positive side, we can try to feel good about monthly job reports of 200,000 new jobs created (net of state government firings) which, if achieved every month over the next few years, would take until 2019 before our nation would reach a 5%, 2007 pre-bubble unemployment level. And this EXCLUDES the 10-12 million underemployed now not officially reported as unemployed in BLS statistics. For as everyone also knows, today our true unemployment is 8.8% plus 7-8% underemployed or no longer looking for a job.
We remain between a Rock and a Hard Place. It's WAKE-UP time on many fronts!
