The defense economy and American prosperity

At just over 3 percent of gross domestic product, U.S. military spending totals more than $600 billion annually. A number of recent developments and long-term trends, however—including sequestration and contractor consolidation—threaten the health of the U.S. national security industrial base. The American defense industry is being squeezed on multiple fronts, but just how important is the defense sector to the overall strength of the American economy? Do specific cities or regions have more to worry about than others should defense spending continue to decline? What impact does defense spending have on regional and national job creation and technology innovation?

On August 17, the Foreign Policy and Economic Studies programs at Brookings hosted a discussion of the American economy and the role that defense industry could play in the nation’s continued recovery and economic health. Panelists included Ben S. Bernanke, Brookings distinguished fellow in residence, and Mark Muro, senior fellow and policy director of the Metropolitan Policy Program. Michael O’Hanlon, author of The Future of Land Warfare and co-director of the Center for 21st Century Security and Intelligence, also participated and moderated the session.

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