Proposed $54b Jump In Defense Budget Won't Help Economy Much

The impact of recruiting more soldiers and paying for their training and wages would be different than the impact of ordering more naval ships or F-35 fighter jets. With so much of the U.S. economy dependent on consumer spending, defense spending doesn't make a significant impact, said Fordham University economist Giacomo Santangelo. To pay for the increase in defense spending, Trump has proposed $54 billion in cuts to foreign aid and domestic agencies such as the Environmental Protection Agency. Trump's proposals to boost military spending and cut taxes may remind some of former President Ronald Reagan's approach, but this proposed spending would still be well below the relative level Reagan spend during the arms race with the Soviet Union. Reagan's Cold War military buildup and tax cuts bolstered employment among defense contractors. While military communities and economists wait to see how the spending drama plays out, Wall Street is already picking winners. Since Trump was elected the S&P defense and aerospace sector has gained 17.4 percent, which is well above the overall 11.6 percent gains the S&P 500 recorded during the same time.