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Six Degrees of Military Spending

Nearly everyone knows someone who gets paid by the Pentagon. That’s why it’s so hard to cut.

The Department of Defense, with its 2.3 million workers, is the single largest employer in the United States. The defense industry, which is the main private-sector recipient of defense dollars, directly or indirectly employs another 3 million people. This, in a nutshell, is why it’s so hard to cut government spending in general and military spending in particular.

The scope and reach of the government are far bigger than we think, explains John J. Dilulio of the National Academy of Public Administration in the Spring 2012 issue of National Affairs. It’s more than just the money Washington spends or the people it employs. It’s also the people in the private sector who live off that spending. It’s the nonprofit organizations paid to help administer government programs. It’s the contractors who run the programs, the contractors’ sub-contractors, and so on.

Dilulio calls this interconnected mass “BIG PAP,” short for “Big Inter-Government” and its “Private Administration Proxies.” In 2012, for example, the Department of Defense shelled out $688 billion to cover, among other things, the salaries of some 801,000 civilian employees and 766,000 contractors. The Pentagon’s BIG PAP therefore amounts to more people than the headcount of the active duty military. The biggest contractor, Lockheed Martin, hires an additional 40,000 subcontractors as well.

If you live in northern Virginia, the most military-heavy region of the state that receives more Pentagon money than any other, you almost certainly know someone who works for the Department of Defense or one of its contractors or sub-contractors, or who is married to someone else who does. While Virginia takes top dollar, a 2011 Congressional Research Service (CRS) report notes that the Defense Department is by far “the top federal employer in most states.” It also employs “more than 90 percent of federal civilian employees in foreign countries.” BIG PAP is everywhere.

The business of government is extremely lucrative. As The Washington Examiner’s Tim Carney noted in a September column, the three counties in America that have a median income above $100,000 are all in northern Virginia, and seven of the 10 richest counties are all within commuting distance of the District of Columbia. As he concludes, “You can surmise where the wealth is coming from: the expanding federal government.”

On average, federal employees are paid more than their counterparts in the private sector. A 2009 study by Chris Edwards, director of fiscal studies at the Cato Institute, found that the average federal civilian worker now earns twice as much in wages and benefits as the average private-sector worker. According to the CRS, the average 2010 salary in the federal government was $74,800, compared to a national average of $44,400 for all workers. The difference is even more pronounced within the military industry. A March 2012 report by the consulting firm Deloitte found that roughly 80 percent of aerospace and defense industry employment is paid for mostly by the government, and that in 2010 the average wage for their industry was $80,100.


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