From Labor Research Association

When the dust from the 2004 presidential election has cleared, the real legacy of the Bush administration will remain unchanged. That legacy is a military buildup that has drained the nation of money, jobs and productive capacity, and established the Department of Defense (DoD) as the largest business organization in the world.

Bush’s DoD has more than $1 trillion in assets, 3.3 million employees and a budget of $417 billion for fiscal year 2005. Its assets are larger than the assets of General Motors and Ford combined. It employs more Americans than the five largest U.S. corporations combined. Its annual budget is larger than the total annual revenues for Wal-Mart and Exxon Mobil.

If the DoD were a country, its economy would be larger than the economies of Belgium or Switzerland.

In 2003, Bush pushed through the largest increase in military spending in 21 years and handed the DoD $355 billion, an amount nearly equal to the 2003 federal deficit of $377 billion.

This year, the military budget hit 3.8 percent of GDP and accounted for 20 percent of all federal spending, up from 3.0 percent of GDP and 16 percent of federal spending in 1999. The Canadian defense budget is 1.0 percent of GDP.

The 2005 DoD budget of $417 billion is larger than the projected federal deficit for the year and does not include the $100 billion that Bush plans to demand for the war in Iraq and Afghanistan for fiscal year 2005.

The DoD budget for 2005 also does not include additional funding for the new defense systems that Bush is pushing or the $30.5 billion for domestic security, an increase of 9.7 percent from 2004. No evidence of the effectiveness of the increased security spending has been offered, and no studies of the value of new security programs have been completed.

Bush’s entire budget for all nondefense programs is just $386 billion, or $31 billion less than the defense budget. The nondefense budget for 2005 represents a 0.5 percent increase over 2004, compared with a 7.0 percent increase in the defense budget.

The Congressional Budget Office is projecting a cumulative deficit of $2.3 trillion over the next decade, most of it due to the higher military spending initiated by the Bush administration.

The acceleration of military spending under Bush occurred after a 10-year decline in spending as a share of GDP and as a share of federal spending. The peace dividend -- achieved only after decades of an unproductive and dangerous weapons build-up -- has been lost.

Spending for the first 19 months of the war in Iraq stands at $120 billion. In addition, the war has cost the U.S. $150 billion in lost gross domestic product and shaved one full percentage point off annual economic growth, according to the Brookings Institution. This loss to the economy includes the cost of higher oil prices, increased budget deficits and greater business and consumer uncertainty generated by the war.

The percentage point of lost economic growth caused by the war explains the ongoing high rates of unemployment that have continued throughout the recovery period. A return to full employment -- commonly defined as unemployment of 4 percent or less -- requires sustained annualized GDP growth of at least 4 percent. This growth rate cannot be achieved as long as the Iraq conflict is pulling billions out of the economy every month.

Beyond Bush’s military buildup, the total cost of the Iraq war is now $270 billion in direct and indirect economic costs. If the war drags on, the total cost could approach $1.9 trillion during the decade after the March 2003 invasion, according to Yale economist William Nordhaus.

Without these war costs added in, projections by the Brookings Institution put the federal deficit at $5.2 trillion over the next ten years. The national debt will climb from $4 trillion today to nearly $10 trillion in 10 years, or 54 percent of GDP. Estimated interest payments will reach $3.4 trillion over the decade, according to the Center on Budget and Policy Priorities. By 2014, interest payments will consume $486 billion a year -- 13 percent of the federal budget, according to the Center.

The lasting legacy of the Bush administration is an economy shackled by misplaced military spending and a government dominated by an all-powerful DoD.



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