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The U.S. Employment Effects of Military and Domestic Spending Priorities

This study is focused on the employment effects of military spending versus channeling some significant part of the military budget into alternative purposes. We begin by introducing the basic input-output modeling technique for considering issues such as these in a systematic way. We also review the results of earlier efforts to compare the employment effects of military spending versus alternative government spending priorities.

We then present some simple alternative spending scenarios, namely devoting $1 billion to the military versus the same amount of money spent for five alternatives: tax cuts which produce increased levels of personal consumption; health care; education; mass transit; and construction targeted at home weatherization and infrastructure repair. We have included tax cuts/personal consumption in this list since it is the most straightforward alternative spending use—that the money freed up from a reduction in military spending goes back directly to taxpayers for them to use as they see fit. We have also, reluctantly, excluded a category for renewable energy investments. This is only because the data now available to us are not adequate to make reliable estimates as to the employment effects of investments in renewable energy projects.1 As a provisional substitute, one can consider the categories of mass transit and construction on home weatherization as constituting investments in energy conservation.