Bush Improving Economy Tied To War Jobs

The Secret of the New Jobs

In the first three months of this year, defense work accounted for nearly 16 percent of the nation's economic growth, according to the Commerce Department. Military spending leaped 15.1 percent to an annualized rate of $537.4 billion, up from $463.3 billion in the comparable period of 2003, when Bush declared major combat operations in Iraq over.

"That's pretty good, considering it's only 3 to 4 percent of the economy," said Joseph Liro, an economist at the New Jersey-based research firm Stone & McCarthy. "For one quarter, that's a pretty big number."

It is impossible to know how many of the 708,000 jobs created in the past three months are defense-related, since the Labor Department does not track defense contractor employment. But anecdotal evidence suggests the contribution is significant.

The flagging textile and apparel industry, which lost 50,000 jobs last year, gained 2,400 in April and is up 500 through the first four months of 2004, said Charles W. McMillion, president and chief economist of MBG Information Services. That is the first net job gain for the industry in the first four months of any year since 1990, the last year for which the Labor Department maintained statistics. Since civilian textile demand is satisfied largely through imports, "Buy American" military orders must be driving the increases, McMillion said.

Coming on top of three major tax cuts, that spending will drive the federal budget deficit to more than $400 billion this year. That borrowing will eventually have to be repaid in higher taxes or reduced government services and benefits.

Economists have long argued that war is an inefficient use of government revenue. A dollar spent on a highway not only employs workers but also creates a lasting, broadly shared benefit for the economy. A dollar spent on military equipment is soon lost to enemy attack or the rapid wear of war. If it bought a bomb or bullet, it simply explodes.

The families of thousands of National Guard members and reservists have been dealt severe financial blows by the extended deployments of breadwinners.

Then there's the constant worry that all this work will disappear as quickly as it materialized. A machinist at the Goodyear plant, whose son drives an Army truck in the volatile area west of Baghdad known as the Sunni Triangle, fretted that Goodyear has put too many eggs in the military basket.

"We're only a pawn. You know that. Everybody in this community hopes like hell that Goodyear keeps this plant here. If the military drops out, we could be done. It's a bad deal," he said.

But for now, it's a good deal for thousands of workers.