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Defense and the economy

The American people want a strong defense. But they cannot but be staggered by the figures on military spending. The defense budget for this fiscal year is already over the $200 billion mark. Now President Reagan has approved a $245 billion budget for fiscal 1983 -- a 7 percent increase in real terms. With such stratospheric sums, the public is bound to ask: Does the United States really need that much defense? What impact will such spending have on the American economy?

These are questions deserving earnest thought and debate as the administration budget runs the congressional gauntlet.

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In theory, the United States can afford such huge outlays in terms of its massive economy. The military budget as a percentage of the gross national product has been declining since the buildup of the mid '60s if inflation is taken into account. Hence Mr. Reagan is simply reversing this trend in the face of an unrelenting Soviet buildup and of clear areas of vulnerability in the American arsenal. The defense burden should thus be no heavier than it was before the Vietnam war.

But even conservative economists ask whether the country can bear a $1.5 trillion defense budget over five years without fueling inflation and straining resources at a time when the economy needs revitalizing. Today there is a recession. But, once industry is running closer to capacity again, bottlenecks could develop in major defense industries as competition for engineers and technicians grows, thus pushing up costs and prices.

Economists of the Council on Economic Priorities similarly warn of the damage which high military spending could inflict on the civilian economy as a result of the diversion of capital and labor to the military sector. The administration will not want to ignore the council's findings that of l3 major industrialized countries those that spent a smaller average share of the national economic output on defense experienced faster growth, greater investment, and higher productivity in the past two decades. It is not fair, of course, to compare the US with such countries as Japan, which is not a superpower and does not bear responsibility for defense of the free world. Yet it is clear that, the bigger the spending on defense, the harder it will be to reinvigorate the civilian economy.

This is not to suggest shortchanging the military. It is to suggest that military programs ought to be carefully scrutinized for their cost and need. Deputy Defense Secretary Frank Carlucci is moving in the right direction with his so-called ''honest budgeting'' -- being candid about actual costs, cutting back some programs, and improving management at the Pentagon. But there is far more room for eliminating waste and inefficiency than has yet been acknowledged. Here the problems are largely political, for it would take a bruising battle to abandon unnecessary military bases, say, which are so zealously defended by the lawmakers.

There is also the question of how to spend military dollars. The average layman will have difficulty threading his way through the complex discussion about different weapons systems and defense policy. But he at least should be aware of the debate. Critics like James Fallow, author of ''National Defense,'' and Senator Gary Hart argue that the US is spending too much on gold-plated, ultrasophisticated weapons which in the end are unsuited to battlefield conditions. Other specialists, on the other hand, think that innovative high-technology weapons are precisely the way to offset the Soviet weapons systems. Many, meantime, are concerned that too much stress is being placed on strategic nuclear arms -- and such dubious ones as the MX missile -- and not enough on putting America's conventional forces in good shape. The controversy over whether or not to maintain draft registration is but one aspect of the current uncertainty.

Whatever decisions are made, Congress ought to look at these issues closely and demand a solid case for new military programs before putting out dollars for them. Given the poor state of the economy, the mammoth federal deficits, and the prospect of more cuts in social spending, the American public, too, is likely to have something to say.

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