Navarro’s Lima “Success” Story Has a Sad Ending for Taxpayers

White House trade policy advisor and longtime Democrat Peter Navarro wrote in the New York Times today to boost President Trump’s visit to a General Dynamics M1 Abrams tank plant in Lima, OH as an economic success story and slam former President Eisenhower’s prescient warning about the “military industrial complex.” This puff piece is only half the story. It overlooks key details and ignores basic economics. In contrast to the hero’s tale Navarro spins, the M1 Abrams tank is a poster child for government waste and political favoritism.

Navarro’s narrative could be right out of Grimm’s Fairy Tales. The villain, President Obama, probably cackled as he tried to shut down the plant. But the good Republicans in Congress kept funding tank production. Sadly, it wasn’t enough and employment still fell. “Enter President Trump”—as Navarro writes—on a white horse to save the day with buckets of taxpayer cash to rescue the poor tank project and everyone will live happily ever after.

The full story is not this fairy tale.

It’s true that for years, during the Obama administration, the Pentagon did seek to reduce or zero-out their M1 Abrams tank purchases, and to impose a temporary freeze on the Abrams line. They did not, however, advocate for a wholesale closure of the plant, which also has been modernizing the Stryker vehicle and manufacturing prototypes for a new ground combat vehicle. One major goal of the 2011 Budget Control Act was to force agencies, like the Pentagon, to better prioritize spending.

Still, the Army’s choice to stop requesting new tanks wasn’t the result of sudden and severe hardship. The Army has more tanks than it could ever use, particularly as combat moves away from traditional scenarios where a tank might be practical. CNN reported in 2012 that more than 2,000 MI Abrams tanks sit under the sun at an Army Depot in the California desert, where they were shipped straight from the factory. The article goes on:

The U.S. has more than enough combat tanks in the field to meet the nation's defense needs - so there's no sense in making repairs to these now, the Army's chief of staff Gen. Raymond T. Odierno told Congress earlier this year.

If the Pentagon holds off repairing, refurbishing or making new tanks for three years until new technologies are developed, the Army says it can save taxpayers as much as $3 billion.

More recently, reported “the U.S. Army has 6,000 M1 Abrams tanks and for years has been saying that it doesn't need any more…” Still, despite this embarrassment of tanks, Congress has insisted on funding more to preserve district jobs.

Navarro goes on to tote the “modernization” of the M1 happening in Lima, suggesting that “spending that $11 billion could actually mean saving money in the long run” by taking advantage of economies of scale. However, the basic premise of economies of scale is an underlying assumption that many units are necessarily in the first place, a case the Pentagon hasn’t made. Even worse, in the Lima News, Project on Government Oversight (POGO) military fellow Dan Grazier points out that taxpayers are getting little bang for our modernization-buck:

We’re going to spend several million dollars upgrading a tank without adding really any new capability...It’s still going to do exactly what the Abrams has done since its inception, it’s just getting more expensive. It’s still going to shoot the exact same distance.

If there is a moral Navarro’s fable tries to convey, it is that spending money (despite growing deficits) on dated systems is supposedly worth the sacrifice in order to sustain the mythological defense industrial base. This line of reasoning fails to consider the broader costs  to taxpayers and our national security, as explained in this 2018 study from the National Taxpayers Union Foundation:

… taxpayers should be concerned [about] protectionist measures that will only increase the cost of defending the nation, force into service inferior or unnecessary military equipment, alienate our allies, and slow down economic growth − all for the benefit of a few entrenched, politically-connected firms. Politics as usual is a messy business, but in this case it also means higher taxes and a less secure America.

It’s increasingly dangerous and unsustainable for public policy to be driven by these kinds of half-truths. The distortions in the economy and misallocations of resources only grow as tax dollars, subsidies, or protectionist measures artificially prop up favored industries at the expense of taxpayers and consumers. Pentagon spending should be driven by strategic need, not the failed policies of the past.