The Iron Triangle
The new military buildup
by James M. Cypher
Dollars and Sense magazine, January/February 2002
The U.S. government's Commission on National Security/21st Century, convened in
October 1998, was a who's who of industry, government, and military-that is, of the
country's power elite. Former Senators Gary Hart and Warren Rudman chaired the Commission.
Its commissioners included Martin Marietta CEO Norm Augustine and former House Speaker
Newt Gingrich. Its 29 "study group members" came from top universities like MIT
and Princeton, and think tanks including the RAND Corporation, the Cato Institute, and the
Brookings Institution. The Commission also enjoyed the cooperation of the Departments of
Defense and State, as well as top intelligence agencies like the CIA and the National
Security Agency (NSA). In 1998, the Commission began a major review of U.S. military
strategy. Its aim? To redesign the institutional structure of the military for the
post-Cold War era.
The Commission's 1999 report New World Coming: American Security in the 21st Century,
outlined a strategy for the United States to "remain the principal military power in
the world." In the coming century, the report argued, the United States will become
increasingly vulnerable to direct "nontraditional" attacks-against its
information technology infrastructure, for example. It will have to intervene abroad more
frequently to deal with state fragmentation or to ensure an "uninterrupted"
supply of oil from the Persian Gulf region or elsewhere. And it will face rivals in its
drive to dominate space. The report concluded that to ensure continued U.S. dominance,
U.S. military spending will have to rise dramatically.
BIG AND HEAVY, FAST AND LIGHT
The Clinton administration, which had overseen a dramatic decline in military spending
over the course of the 1990s, basically ignored the Commission's conclusions. It now
looks, however, like U.S. military doctrine will follow many of the recommendations in New
The Department of Defense's latest big picture document, the October 2001 Quadrennial
Defense Review, aims both to "restore the defense of the U.S. as the department's
primary mission" and to build forces capable of moving rapidly overseas. Not to be
outdone, the Army has produced two major documents outlining plans to retain the
military's heavy aircraft and tank forces while developing lighter, faster units that it
can deploy virtually anywhere in the world within 96 hours.
The post-September 11 era of military spending will allow the Pentagon to have its
cake and eat it too-continuing major Cold War-era weapons systems and funding the cyberage
"Revolution in Military Affairs" (RMA). The RMA emphasizes high-tech
warfare-communications networks, satellites, robot observation planes, smart bombs,
night-vision instruments, highly mobile "light" armor, and global positioning
system (GPS)-equipped soldiers-over old-fashioned heavy-weapons systems. Many Pentagon
officials and major weapons contractors feared the RMA because it could disrupt the method
of military contracting going back to the beginning of the Cold War-building a huge
arsenal of ships, planes, tanks, and missiles to confront the Soviet "threat."
Military officials had built their careers on that approach, and weapons contractors had
made many fortunes from the resulting arms contracts. They feared that the RMA would
marginalize them. The novelty of the Army's approach is to spend enough money to keep
everyone happy, funding the "old military" and the "new military"
BALANCING THE IRON TRIANGLE
The "Iron Triangle" forms the U.S. military establishment's decision-making
structure and includes its major interest groups. One side of the triangle includes the
"civilian" agencies that shape U.S. military policy-the Office of the President,
the National Security Council, the Senate and House Armed Services Committees, and
civilian intelligence agencies like the CIA and NSA. A second side includes the military
institutions-the Joint Chiefs of Staff, the top brass of the Air Force, Army, Marines, and
Navy, the powerful "proconsul" regional commands (known as "CINCs"),
and, in a supporting role, veterans' organizations like the American Legion and the
Veterans of Foreign Wars. At the base of the triangle are the 8S,000 private firms that
profit from the military contracting system, and that use their sway over millions of
defense workers to push for ever-higher military budgets.
Everyone in the Iron Triangle knew that the Bush Administration would increase
military spending. The question was whether the increase would be vast enough to fund the
old weapons systems, the "Star Wars" National Missile Defense scheme, and the
RMA. And if not, who would pay the price? On February 13, 2001, President Bush announced
that the United States would be moving beyond the Cold War model and into the RMA. In
March 2001, he submitted a 2002 budget that upped military spending by only $14 billion
over Clinton's 2001 budget. Many powerful members of the Iron Triangle, who had staked
their careers on the old system, could now foresee their marginalization.
They were not about to go without a fight. Between March and August 2001, they
struggled to save outmoded weapons systems like the F-22, the most expensive fighter plane
in history, and the plan to build the unreliable V-22 Osprey aircraft, a project that
then-Secretary of Defense Dick Cheney nearly killed eleven years before. It was, according
to The New York Times, a battle "as intense and intemperate as any in recent
memory" within the Iron Triangle.
Even before September 11, Secretary of Defense Donald Rumsfeld advocated a revised
military budget with a total spending increase of $52 billion. He still favored, however,
reconfiguring the military along RMA lines, reducing military units, cutting bases, and
retiring unneeded weapons systems. Even while he proposed the larger spending increase,
Rumsfeld's opponents in the Pentagon succeeded in portraying him as weak, unfocused, and
"spiraling down." Legislators fought him on base closures, contractors resisted
any reduction in lucrative weapons contracts, the Armed Services fought him on manpower
reductions, and Democrats resisted the National Missile Defense program -which Rumsfeld
Post-September 11 emergency spending allocated an additional $25.5 billion to military
objectives. In all, military spending will rise by at least $58.6 billion over 2001
levels, a 19% increase-just exceeding Rumsfeld's goal. ("Special Appropriations"
will probably push the basic military budget even higher during the current fiscal year. )
Now, Rumsfeld will be able to make a down payment on the RMA, while the vested interests
will see plenty of funds for the old-style "legacy system" military.
Fighter-plane programs will get an incredible $400 billion in new multi-year
contracts. Lockheed Martin will get $225 billion over 12 years to build nearly 3,000 Joint
Strike Fighter planes for the Air Force, Marines, and Navy. According to Business Week,
Lockheed also stands to make $175 billion in sales to foreign buyers over the next 25
years. Drowning in its record trade deficit, the United States desperately needs the boost
to the trade balance provided by arms exports. The Joint Strike Fighter, if it brings in
the expected $175 billion in export sales, may go down in history as the largest single
boost to the balance of payments ever. Currently the United States controls 50% of the
global arms market, with foreign military sales running at $16.5 billion in 1999. That
figure will be on the rise as new weapons are delivered to Pakistan, Uzbekistan,
Tajikistan, Oman, the United Arab Emirates, and Egypt.
Looking ahead, the RMA's fantastic weaponry-and its enormous costs-are only just
beginning to emerge. Northrup Grumman, General Atomics, and Boeing are speeding robot
airplanes into production. Other contractors are developing thermal imaging sensors to
"see" targets through night, distance, fog, and even rock formations. The Navy
is promoting a new destroyer-class warship, the DD-21, loaded with cruise missiles and
guns capable of hitting targets 100 miles inland. Known as the "stealth bomber for
the ocean," the DD-21 is estimated to cost $24 billion. Cost overruns of 300% are
common, however, so there's no telling what taxpayers will ultimately pay.
THE ECONOMIC IMPACT
Bush justified his mammoth June 2001 tax cut partially as a measure to reverse the
economic downturn that began the previous March. In October 2001, he proposed further tax
cuts as an "economic stimulus" package. The two tax cuts combined, however, will
likely provide less of a short-term boost than the nearly $60 billion increase in military
spending. Most of the June tax cut will go to people with high incomes, who tend to spend
a smaller proportion of the additional income they receive from a tax cut. And a large
portion of what they do spend, they tend to spend on imported luxury goods, rather than
Most of the proposed "stimulus" program suffers from the same problems, plus
a few more. The new proposal also includes a clause allowing businesses a bigger write-off
for equipment as it decreases in value. But a corporation can take the write-off while
spending on capital depreciation that they would have done anyway. The same is true of the
elimination of the corporate "alternative minimum tax," which had set a tax
"floor" for corporations no matter how many deductions they could claim.
Corporations will use these windfalls to pay off debt or to invest outside of the United
Compare this to the $60 billion in new military outlays. Most of this money will go to
civilian suppliers who will use it to pay for domestic labor, materials, and equipment.
Only a modest portion, 5-10%, will leak out of the United States to military base
operations. (Even that may not be as large a "leak" as it might seem, since base
employees stationed overseas often buy U.S. exports.) Moreover, because of the new
emphasis on the RMA, the military will be buying more newly designed weapons than it has
in a long time, and this will have a strong impact on the economy.
But will this counter the current recession? University of Texas economist James K.
Galbraith has argued that the United States will need $600 billion in new spending in 2002
to pull out of the recession. However, only about $214 billion will come from increases in
emergency and military spending plus the two tax cuts. Reduced interest rates will also
stimulate new spending, but probably not on the scale required. If Galbraith is correct,
even the massive outlays for the military will fall far short of the sum needed to turn
the U.S. economy around.
What about its long-term effects? Some claim that increased military spending will
drain U.S. productivity and slow long-term growth. But much of the United States' growth
during the post-WWII period was stimulated by military spending. As Business Week noted in
Defense spending on research and development has sparked much innovation. Microchips,
radar, lasers, satellite communications, cell phones, GPS, and the Internet all came out
of Defense Dept. funding for basic research at the Massachusetts Institute of Technology,
Stanford University and national laboratories. There were breakthroughs at IBM and Bell
Laboratories, and all were commercialized by Intel Corp., Motorola Inc., and other
The same is true of artificial intelligence, supercomputers, high-speed fiber optics, and
many other breakthroughs. The bulk of information technologies, in fact, were developed
through massive R&D investments in military technology.
The argument that military spending undercuts productivity must be seen in a broader
context: Conservative economists have long argued that government spending does not
increase investment because it causes an offsetting reduction in private investment-known
as "crowding out." Some liberal economists have appropriated this argument to
oppose military spending as a drain on the economy. That argument underestimates the
structural importance of military spending and the arms industry to capitalism. The new
military buildup is not likely to "crowd out" private investment, but to
stimulate investment and technical innovation. The military buildup will definitely
"crowd out," however, spending on public needs, such as a viable rapid rail
system, public education, and a national health care system-all of which could greatly
enhance productivity. More military spending will focus inordinately on information
technology and other high-tech systems. More artificial intelligence technologies, global
positioning systems, robot planes, and thermal imaging sensors, however, are not going to
house, educate, or heal people who lack housing, education, or health care.
81G VISIONS, BIG PLANS
The current military buildup is about much more than countering the slide in the
high-tech sector, or countering the current economic recession. It is about consolidating
the United States' position as the only superpower. Continued U.S. dominance requires
continued control of the world's most important traded commodity-energy. The United States
imports 52% of the oil, and a growing share of the natural gas, that it consumes. The
profits of oil giants like Shell, Exxon/Mobil, and Chevron/Texaco come from their global
control of oil and gas resources. Securing this control is one of the major functions of
the U.S. military.
U.S. foreign policy will focus increasingly on securing global resources, longtime
observer and critic of U.S. military affairs Michael Klare argues in his new book Resource
Wars. (This stands in contrast to the Cold War era, when directly economic motives were
less important to U.S. foreign policy than the superpower rivalry with the USSR.) The
Pentagon and other centers of U.S. power clearly view Middle East energy resources as a
"vital interest," warranting massive military outlays and the export of the
top-level weapons to client regimes in the region. Between 1990 and 1997, the United
States exported $42 billion in arms to the Persian Gulf states, of which $36 billion went
to Saudi Arabia.
This focus on the oil-exporting regions will only rise under the Bush administration.
Even though the Bushes never really established themselves in the oil industry, their tilt
toward "big energy" is unmistakable. George W. Bush's number-one corporate donor
was Houston's Enron Corporation, the ill-fated energy trader; Vice President Dick Cheney
comes fresh from his job as CEO of Dallas' Halliburton Corporation, the world's largest
oil-well service company; and Condoleezza Rice served as a director of the Chevron
Corporation before becoming National Security Advisor.
"Oil runs the world and the Saudis are the linchpin of oil production," a
unnamed senior administration official told the New York Times in October 2001. The United
States has struggled in the past to reduce its reliance on Middle East oil
supplies-pressuring Mexico and Venezuela to increase production, hoping for big increases
from Colombia's rich oil fields, and so on. Since 1990, the United States has reduced OPEC
oil from approximately 61% of its total oil imports to 52%-so only about 27% of the oil
consumed in the United States now comes from OPEC (including Venezuela). But this is not
the whole story: The United States has also assumed the role of military guarantor of oil
stability for Europe and Japan. The growing instability of the Persian Gulf states, in
spite of the huge sums that they and the United States have committed to military defense,
portends even greater U.S. military involvement in the region for the foreseeable future.
Meanwhile, near the Gulf, two alternative sources of oil are becoming increasingly
attractive-the Caspian Sea region and the rest of the former USSR. U.S. oil companies are
now plunging into Russia. Halliburton has 300 specialists in Western Siberia struggling to
revive the Samatlor oil field, while Shell and Exxon/Mobil are investing in a new field
off Shakalin Island. Exxon has committed $5 billion to the effort over the next five
years. Russia is now exporting about 3.3 million barrels a day, nearly half what Saudi
Arabia exports. But if the oil giants invest in new pipelines, Russian exports could leap
to 5.3 million barrels a day by 2004, according to Business Week. Much of this new oil,
and huge quantities of natural gas-one third of the world's gas reserves are located in
the former Soviet Union-would come from the Caspian Sea region of Central Asia, the
biggest economic prize since the United States took effective control of Saudi oil in
This makes Afghanistan, through which a major Caspian pipeline would likely run, a
strategic linchpin of the global energy industry and the world economy. U.S., European,
and (Russian gas and oil firms have taken a major interest in the Caspian region's vast
oil and gas reserves since the early l990s. Major pipelines now carry these resources to
Turkey, From which they can be shipped to Western Europe, the United States, and the rest
of the world. Unocal, Pennzoil, British Petroleum, and Amoco were major participants in
the Azerbaijan International Operating Company (AIOC), a large-scale project to build
pipelines from the Caspian Basin to Turkey and the Black Sea. Unocal has also proposed a
pipeline from Turkmenistan, Uzbekistan, and Kazakhstan through Afghanistan to India and
Pakistan, and to the Pakistan coast for export to China-though the company now says it has
shelved the project. ~
The U.S. military is now developing a long-term presence in Central Asia, which it
will undoubtedly use to secure the rich supply of Caspian oil and gas. The Pentagon has
been courting the government of Uzbekistan for years, giving its officers military
training in the United States since 1995, and conducting military exercises in Uzbekistan
since 1999. In November 2001, the U.S. military began negotiating with the government of
Tajikistan to use former Soviet military bases there during the U.S. war in Afghanistan.
Considering that a U.S. garrison has been permanently stationed in Saudi Arabia since the
Gulf War, it seems unlikely that the U.S. military will leave either Uzbekistan or
Tajikistan after the Afghanistan war.
The outcome of this high-stakes struggle remains to be seen. Russia and the Caspian
region resemble the Persian Gulf region in their fragile social foundations. So shifting
to the former for imported oil and gas will not eliminate the United States' reliance for
energy on states with huge potential for instability. If an Afghanistan pipeline is ever
built, however, it will help give U.S. and Russian oil interests leverage they have not
had in decades over the Persian Gulf region, just by making the Gulf's oil supplies a much
smaller part of global production. Moreover, with energy demand in developing Asia
predicted to surpass that of North America by 2020, it will give the United States added
leverage over these economies. The current U.S. power play in Central Asia, in short,
dramatically increases the likelihood that the U.S. military will succeed in achieving the
goals articulated by the Commission on National Security/21st Century-securing control of
the global energy supply, and maintaining the United States' position as the world's only
James M. Cypher teaches economics at California State University, Fresno.