US Stimulus Plan: A Bare Cupboard for Defense?

While France plans to use its economic stimulus spending to accelerate key defense buys and add another Mistral Class amphibious operations ship, the USA appears to be taking a different approach. Congressional Quarterly magazine’s “Defense Firms Seek Insulation From Cutbacks Associated With Stimulus” observes that the $800 billion economic recovery package now under construction in Washington appears to have something for nearly everyone – except defense contractors:

“To be sure, some defense companies had sought to obtain weapons funding in the stimulus bill… “In December, defense lobbyists went nuts,” one said. But it became clear that weapons projects were not what the Obama team was looking for… [Fearing cuts,] the Aerospace Industries Association [AIA] has spent nearly $2 million on ads to convince decision makers that the defense sector plays an important role in the economy. The group is under no illusions that the rate of growth in defense spending since the Sept. 11, 2001, terrorist attacks can be sustained, but it hopes to limit the cutbacks.”

The AIA has also has asked congressional leaders to include $4 billion in upgrades for civilian aviation infrastructure, and are lobbying for policy changes that include lower corporate tax rates and making a tax credit for research spending permanent. Lower corporate tax rates clash with Democrats’ ideology, but tax credits for research dovetail with similar needs in sectors like alternative energy, which makes them more likely to be adopted.