A Bad U.S. Economy Is Good For DOD

A year ago I was assuming that the military budget would be increasing faster than what was commonly assumed because the Pentagon would have to pay more to recruit and maintain the number of people in uniform.  With personnel being a hefty chunk of what the Pentagon spends every year, and given the problems it was having a year ago getting people to enlist in the midst of an increasingly unpopular war, bonuses and other incentives seemed like a sure thing and more resources were going to have to be devoted to recruiting.

This article from last Monday's New York Times shows that the Pentagon had been assuming pretty much the same thing.  In addition to adding more recruiters, it was planning to use a change in the GI Bill that significantly expands post-military service education benefits (and costs) and was going to rely increasingly on signing bonuses for new recruits.

But as the article points out, a funny, or actually not so funny, thing happened on the way to these assumptions: the U.S. economy went south and private sector jobs became scarce.  Suddenly, people who never considered enlisting before looked at the military as an employer of last resort and signed up.

The Pentagon's personnel costs will still be increasing this year and next, especially because the Army and Marines are in the final stages of increasing the number of people in uniformed by close to 100,000.  But the increase likely won't be as much as seemed inevitable a year ago.

On the other hand, we should probably begin to assume that spending at the Department of Veterans Affairs will be a bit higher a few years down the road.