That’s a big shift from four years ago. Here’s what the Republican presidential candidate John McCain was saying about climate change.

“It’s real. It’s a danger to our planet, it’s a danger to the future of these young people who are in front of me and their children. And it’s got to be stopped.”

You won’t hear talk like that from any of the Republican presidential candidates this go-round. There’s a reason for that, said David King at Harvard’s Kennedy School of Government.

“In a time of real economic distress, who is paying attention to global climate change? And especially if the costs of solving the reality of global climate change are so high they’re going to come directly in conflict with the economy, with jobs, and who wants to face that reality?”

But the Republican presidential candidates are more than just ignoring the issue, they’re running away from it. Take the case of Newt Gingrich. He appeared in a commercial in 2008 sitting on a couch next to Speaker of the House Nancy Pelosi. The two politicians introduce themselves, then Pelosi says, “We don’t always see eye to eye, do we Newt?”

Gingrich responds, “No, but we do agree our country must take action to address climate change.”

Gingrich has had to answer repeatedly for that commercial during this campaign season. Here’s what he told Fox News.

“It’s probably the dumbest single thing I’ve done in recent years. It is inexplicable.”

Gingrich also said he’s scrapping a chapter about climate change in his new book.

William Moomaw with the Fletcher School at Tufts University said the Republican candidates are distancing themselves from the issue for ideological reasons. “They believe that addressing climate change will require government action, or even worse, intergovernmental action.”

Moomaw said to understand just how far the Republican Party has shifted on environmental issues, consider the case of the incandescent light bulb. President George W. Bush signed a law in 2007 that requires new bulbs to be 30 percent more efficient. Moomaw said many Republicans now see that law as a source of government intrusion.

“Candidates like Michele Bachmann were jumping up and down and shouting how they were going to repeal this – to be denied their right to put any lightbulb in any socket in America is just too much control, a loss of freedom.”

But it’s not just the Republican Party that’s not addressing climate change. President Obama has fallen virtually silent on the issue. If you visit his 2012 presidential Web site, you’d be hard pressed to find any mention of climate change and global warming. That’s a political calculation, said David King at Harvard.

“If there’s no benefit politically to talking about global climate change, then you just keep your mouth shut.”

Perhaps the president and the Republican candidates are simply following our lead. According to a recent poll from the Pew Research Center, Americans ranked global warming as the least important of 22 priorities, just behind campaign finance reform.

The trick is to find the right basket.

“You want something that is comparable, especially if you want to look at price inflation rates across countries,” said Matthew Slaughter, associate dean at Dartmouth’s Tuck School of Business. “And one of the great things about the Big Mac is, to their credit, McDonald’s makes the same Big Mac whether it’s in Buenos Aires or Boston.”

The Big Mac Index was first introduced by The Economist magazine in 1986. It began as something of a joke. But the price index quickly caught on as good way to measure purchasing power across borders.

With the Big Mac, you’ve got a whole basket of goods and services right between the sesame seed buns. There’s lettuce, tomatoes, and meat. There’s also the cost of marketing and the electricity needed to light up the golden arches, all factored into the price of the burger. And that’s why you look at the whole Big Mac, said Slaughter.

“If you take just an ingredient out of a Big Mac, like a head of lettuce, there’s a lot of local variation in the type of lettuce that there is in Argentina and the United States and other countries, that make it a lot harder to be confident you’re actually measuring the same product across those locations.”

But if the Argentine government is indeed artificially suppressing the price of its Big Macs to game the index, Slaughter said there are plenty of alternate measures.

“You could go across the street to Burger King and price Whoppers, you can go to Wendy’s and price a particular Wendy’s sandwich. The key is, especially if looking across countries, is trying to have an identical product, which is why something made by a global corporation is often times useful because they have the same standards, whether it’s IKEA, or McDonald’s, or Burger King.”

But just how much weight should we give to the Big Mac Index? Or a Whopper or IKEA Index?

Robert Paarlberg teaches his political science students about the Big Mac Index at Wellesley College. He likes the index and says it’s a good way to understand the concept of purchasing power. But…

“I don’t think it’s a very good indicator of anything. But it’s great fun for everyone.”

Outside of the classroom, economists and policymakers look at a much bigger picture to gauge inflation or purchasing power. Paarlberg said just looking at one product, like a Big Mac, is an overly simplistic way to really understand economic conditions.

“In the United States, when we measure inflation, we use a basket of goods, not any one good. And when we construct the consumer price index, we actually take care to exclude food and energy because the prices of those goods are so volatile, they would create a volatile index that would drive business decisions in the wrong direction.”

So, take the real-world usefulness of the price of a Big Mac with a grain of salt, or to be more accurate, 2.1 grams of salt.

The city of Doral has a nickname: Doralezuela. Located next to Miami, the city of 45,000 is the heart of Venezuela’s expat community.

Most Venezuelans arrived here over the past 10 years. Ernesto Ackerman is sort of a dean of the community. He moved here from Caracas in 1989. He says Venezuelans here are politically engaged, just not with American politics.

Ackerman: “You ask the Venezuelans: ‘What do you think about the candidates?’ They will talk about the six candidates in Venezuela and they will give you the whole résumé of each one and what did he say a half hour ago. And then you tell them, ‘OK that’s good. But now let’s talk about the candidates of the Republican party that are now in the primary.’ They don’t know.”

Ackerman is the president of the Independent Venezuelan-American Citizens. Among other goals, his organization wants to get native Venezuelans here more engaged in local issues. It’s a challenge. We met at the Venezuelan restaurant Arepazo Dos. During our discussion, the owner – Lorezno Di Stefano – came over.

Margolis: “Nice to meet you.”

I told Di Stefano that I was working on a story about what Venezuelan-American voters are thinking about. He blurted out this answer.

Di Stefano: “We only need Chavez out. That’s it.”

That exasperates Ackerman.

Ernesto Ackerman (photo: Jason Margolis)

Ackerman: “You see, you ask him about the presidency and they go straight to Chavez.”

Ackerman says if Venezuelans want to get rid of Chavez, they need to vote him out. It’s not up to American politicians.

Manuel Corao, a local radio host and columnist, says that’s the reality of America’s interests.

Corao: “The trade with Venezuela is very important for this country. We don’t have many illusions they are going to change the political (policies) for Venezuela.”

Last year, the US imported $40 billion dollars worth of stuff from Venezuela, mostly oil. Venezuela is our ninth largest trading partner in terms of imports.

Still, tough talk toward Hugo Chavez matters here. And the Republican presidential candidates know it. Mitt Romney has been chiding President Obama for being weak on Chavez.

Here’s Newt Gingrich speaking last week in Miami.

Gingrich: “I think we need to say calmly and pleasantly to Chavez, we know who you are, we believe what you say, and therefore we regard you as a mortal enemy of the United States.”

Gingrich also brought up the time President Obama was photographed smiling and shaking hands with Chavez three years ago. That image still galls some people down here.

I met Venezuelan-born Hector Pires at a Tea Party event.

Pires: “When you see a president, where we’re supposed to be free, and shaking hands with a dictator, it tells me a lot.”

But Obama’s policy toward Venezuela and Latin America is pretty similar to that of his predecessors, Presidents Bush and Clinton, says Susan Kaufman Purcell. She directs the Center for Hemispheric Policy at the University of Miami. Purcell says Republicans, in general, have taken a more aggressive tone.

Purcell: “But look I don’t think anyone believes that the United States wants to send military forces into Venezuela or overturn the government by force. I just don’t think there’s any appetite for that, and I’m not sure they think it’s necessary.”

Local columnist Manuel Corao put things another way. Here’s what he says about American politicians and Venezuela.

Corao: “They talk, talk, but they don’t do nothing.”

Corao says Venezuelan-Americans are starting to wise up to politicians who come down to Florida and utter a few anti-Chavez lines. He says the community is slowly growing up.

They’ve elected two native Venezuelans to city council seats, including Luigi Boria in Doral. Boria says he wants to hear how the Republican presidential candidates will turn around the economy, not their stance on Venezuela.

Luigi Boria (photo: Jason Margolis)

Boria: “It’s not that I don’t love Venezuela, because I still remember where I grew up – and the food and the places that I visited when I was a child – and I love those places. But we have to now guide ourselves in where we are, no?”

Boria has been here 22 years. That makes him an old-timer for this community. He’s built a business and raised children here.

For newer arrivals, though, their memories of Venezuela are still fresh. And they look toward American presidential candidates with one question in mind: How will they get rid of Hugo Chavez?

A popular campaign stop: Cafe Versailles in Miami's Little Havana (Photo: Jason Margolis)

There’s a political truism in Miami: Cuban Americans always vote Republican.

But four years ago, that voting bloc started to fray. Candidate Obama captured about a third of the Cuban vote in Miami.

Now the right-wing Miami Cuban establishment has a warning for their community: President Obama is soft on the Castro brothers.

Republican Congresswoman Ileana Ros-Lehtinen spoke in Miami this week at a Mitt Romney campaign event. Switching between Spanish and English, Ros-Lehtinen said every time President Obama mentions Cuba it’s to explain why he’s giving further economic concessions to the Castro regime.

Ros-Lehtinen is referring to the Obama administration’s easing of travel restrictions and remittances to Cuba. Critics call the policies an economic boon for the Castros.

“So what you have now is an emboldened regime that feels that they can do whatever they want because they’re not facing any consequences,” said Mauricio Claver-Carone, director of the US-Cuba Democracy PAC.

“There has to be consequences to certain bad actions: taking an American hostage, huge waves of repression. If they think they can do it, and they’re going to get this inflow of hard currency, then they’re going to increase the repression and continue doing so.”

Mauricio Claver-Carone introducing Mitt Romney in Miami (Photo: Jason Margolis)

The Republican presidential candidates are seizing on this. Mitt Romney spoke in downtown Miami this week.

“Negotiations are not a matter of giving and hope, they’re a matter of giving and getting in return. This president has done something which is characteristic of his presidency and that is he turns and gives. And says that everybody in the world has the same interest and so people will give back to us. He’s wrong.”

But polls suggest a majority of Cuban Americans actually favor the Obama administration policies toward Cuba.

Uva de Aragón likes the policies and visits the island. She was born in Cuba and left as a young girl. De Aragón recently retired as the associate director of the Cuban Research Institute at Florida International University.

“I think the more open Cuba is, the more people who travel to Cuba, the more money you send to Cubans: the more you empower them, the more they’re knowledgeable. The people who travel and who bring magazines or stories, or whatever are an important source of information. So I’m very favorable to anything that opens up the island.”

De Aragón sees a contradiction between what many Cuban-Americans say and what they do. For instance, she said when you ask them about remittances, they respond this way: “Yes, of course I’m in favor of the embargo.”

But De Aragón said when you ask the same people if they send their family money back in Cuba, they’ll say, “Of course, he’s my brother!”

Cuban American Joe Garcia doesn’t mince words about the hardliners on Cuban policy and the Republican candidates courting them.

“What you have going on here is a clown show and the audience is filled with clowns.”

Garcia ran unsuccessfully for Congress in 2008 and 2010 as a Democrat. He says the president’s Cuba policies have been very effective assisting dissidents and expanding civil society. He said the hard-line hasn’t worked. Garcia called the rightwing position toward Cuba a religion, not a rational policy.

“Part of the problem is that we’re engaged in revenge politics, which of course feels very nice, right? There’s a warmth and a heat that is driven by the absolute loathing of the Castro regime, which I share in. But later in the week someone will call for the 82nd Airborne to invade Cuba and I’m sure Gingrich will up the ante by calling for a nuking of the Havana suburbs just to teach Fidel a lesson.”

That hasn’t happened. But Newt Gingrich did call this week for American support for a “Cuban Spring.”

David Cardenas, left, and Giancarlo Sopo, right (Photo: Jason Margolis)

Some in the under-30 crowd here say all the bad blood and bickering over travel restrictions and remittances is a distraction.

I met David Cardenas and Giancarlo Sopo for dinner in downtown Miami. Cardenas is active in the Republican party; Sopo is with the Democrats. They have small disagreements about travel restrictions, but they say it’s not worth arguing about.

“I think on the big issues relating to Cuba, in the final analysis, Cubans overwhelming agree with one and other,” said Sopo.

“I completely agree with that,” said Cardena. “I think Cubans are united as a community, united in their policy positions toward Cuba.”

The trade embargo has overwhelming bipartisan support here. And in Congress and the White House.

Cardenas and Sopo are able to break bread together, perhaps because Cuba is not the focus of their lives.

“I would say that Cuban Americans of our generation are not single-issue voters, much in the same way our grandparents and some of our parents are,” said Cardenas.

“I would agree with what David is saying,” said Cardenas. “Cuba was much closer to their lives. They had just left the country, many of them still had hopes of going back. I think David and I, we see Miami as our home.”

And that’s where their real disagreement begins: What domestic economic policies are best for their home?

Some community banks are trying to change this dynamic, places like Mitchell Bank on the south side of Milwaukee.

Historic Mitchell Street was once a primary shopping destination on the south side of Milwaukee. Today, old signs above boarded up windows are some of the last reminders of a bygone era. The Mitchell Bank building has stood the test of time though: It’s been open for business at the corner of 11th and Mitchell since 1907.

This used to be a Polish and German neighborhood. But around the 1990’s, the area became home to Latin American immigrants, mostly from Mexico.

I walked the street with James Maloney, chairman of Mitchell Bank. He said the bank had a choice: follow the old customers going out, or cater to the new ones coming in.

Mitchell Street on the south side of Milwaukee (Photo: Jason Margolis)

“We debated that. And honestly a lot of people told us that because the neighborhood was becoming lower income, that we ought to relocate. And as a family we decided that the neighborhood had been good to us. We had been in the neighborhood for all these years and we just couldn’t leave, and that we would change, rather than try and change our clientele.”

Today, Mitchell Bank has large banners in front welcoming customers in Spanish. Inside the lobby, there’s a shrine to Our Lady of Guadalupe, the patron saint of Mexico. Maloney said he hires only bilingual staff, people like Jackie Martinez. She was born and raised in Milwaukee, but her parents are Mexican immigrants.

Martinez said many immigrants from Latin America don’t trust banks because of their experiences back home.

“They go in, open accounts, and all of a sudden the banks are not there anymore. Or they go in, they can’t retrieve their money, or fees have eaten up their money. So they’re saying, ‘It’s probably going to happen to me here in the US. I’m in a country that I’m not familiar with.’ So it’s our job to take them by the hand and say, ‘No it doesn’t work like that here in the US.’”

Martinez holds workshops at local churches and community centers to explain how American banking works and the services they offer. At one point, Mitchell Bank opened a branch inside the local high school and hired students to work as tellers. Martinez said the students, who often have a better grasp of the language and culture here, were able to explain American banking to their parents.

James Maloney, chairman Mitchell Bank (Photo: Jason Margolis)

“The first family that opened an account, our first year, brought money that was wrapped in aluminum foil. I mean, instead of having it at home in the fridge, I’m assuming if it was in foil wrap, they came and opened an account with us. I’m like, ‘Wow. You’re bringing it here, you’re trusting us.’”

Still, Mitchell Bank faces some stiff competition in the neighborhood. Neon signs advertising “checks cashed” light up Mitchell Street. At these locations, immigrants can also send remittances to their home countries. And they can easily borrow cash, but at an exorbitant rate of interest. When annualized, interest rates can easily reach 500 percent or more.

For many immigrants, though, check cashing stops are the easiest option, and the one they trust. You don’t need an American ID to use this service. That’s not the case at traditional banks.

“You need to have a taxpayer ID number or a social security number to have an interest-bearing account,” said Anna Paulson, the director of financial research at the Federal Reserve Bank of Chicago. “You know, people might not have that document, right?”

Especially if they’re here illegally.

James Maloney estimates that 35 to 40 percent of the people living in the Mitchell Bank neighborhood are undocumented. His bank issues individual taxpayer identification numbers, which are sponsored by the IRS. He said Mitchell Bank was the first in the nation to grant mortgages to the undocumented.

“If you’re going to be a Latino bank, and you’re going to serve the Latino community, you have to serve everybody,” said Maloney. “We’re not the immigration police, it’s not our job to figure out what somebody’s immigration status is.”

Maloney is working within the law. Still, not everyone likes the idea of a bank providing loans to people who broke the law to come here.

“We get letters suggesting that I should be put in jail and things like that,” said Maloney.

Maloney said he’s also been applauded for his work. And from a banking perspective, Maloney says lending money to immigrants – documented or undocumented – has been a good bet.

Payday loan service offered on Mitchell Street (photo: Jason Margolis)

“If the economy was good, it was the best loans that we made. Everyone paid on time.”

Prior to the recession, loans to immigrants, in general, were uncommonly stable.

“People have found that these immigrant customers have been really good at paying back loans,” said Anna Paulson with the Chicago Federal Reserve. “Maybe partly because they don’t have access to other sources of credit, so it’s a lot harder to run up the credit card bill, and run up the mortgage, and take out the home equity line of credit.”

Paulson said banks that lend to immigrant customers have, however, run into trouble with loan repayments in the past few years since the economy tanked. James Maloney said they’ve seen this at Mitchell Bank.

But, that’s been the case most everywhere, whether the borrower is a new arrival to America or not.

President Obama at the Pentagon (Photo: White House Live Stream)

President Obama made a rare appearance at the Pentagon on Thursday to unnveil a new military strategy, one driven by shrinking budgets.

The president spoke about “turning the page on a decade of war.” He said we’ve succeeded in defending our nation and taking the fight to our enemies, and said we are safer and stronger. Then the president said, we have the opportunity and responsibility to look ahead to the force that we will need in the future.

“That’s why I called for this comprehensive defense review to clarify our strategic interests in a fast-changing world and to guide our defense priorities and spending over the coming decade. Because the size and the structure of our military and defense budgets have to be driven by a strategy, not the other way around.”

That strategy will likely include a smaller Army and Marine Corps, with a greater emphasis on Asia and the Middle East.

The president gave few specifics. He said concrete details will come in the next few weeks with the release of the Pentagon budget. But he did give a preview of sorts.

“We’ll be able to ensure our security with smaller conventional ground forces. We’ll continue to get rid of outdated cold war era systems so that we can invest in the capabilities that we need for the future including intelligence, surveillance, and reconnaissance, counter terrorism, countering weapons of mass destruction, and the ability to operate in environments where adversaries try to deny us access.”

These changes are driven, in large part, by nearly $500 billion in defense cuts set to take place over the next 10 years.

The president tried to pre-empt his critics today, saying the military budget will still be larger than the next 10 countries combined, even larger than during the last years of the Bush Administration.

“Some will no doubt say the spending reductions are too big. Others will say that they’re too small. It will be easy to take issue with a particular change in a particular program. But I encourage all of us to remember what President Eisenhower once said, that each proposal must be weighed in light of a broader consideration, the need to maintain balance in and among national programs.”

After the president spoke, Defense Secretary Leon Panetta took the podium. He reiterated the president’s words, that a smaller military doesn’t mean a weaker military.

“I do not believe, and I’ve said this before, that we have to choose between our national security and fiscal responsibility.”

Panetta said America’s rising debt is also a national security risk, and that the US has to maintain its economic strength, to support its military might.

Panetta said the Army and Marine Corps will no longer need to be sized to support large-scale, long-term security operations.

“The United States will emphasize building the capacity of our partners and allies to more effectively defend their own territory, their own interests, through a better use of diplomacy, development, and security force assistance.”

But Panetta warned, as he has before, that further cuts to the Pentagon budget would severely weaken military capabilities. It’s already facing the $500 billion cut, and the Pentagon could lose another $500 billion because the so-called “Congressional Supercommittee” failed to come up with a debt reduction agreement last fall. That triggered additional cuts to the military budget.

“That would force us to shed missions and commitments and capabilities that we believe our necessary to protect core US national security interests,” Panetta said. “And it would result in what we think would be a demoralized and hollow force.”

Many in Congress, particularly Republicans, are vowing to undo new cuts to the military budget. President Obama has promised to veto any legislation that would do that, unless Congress comes up with a way to also trim the deficit.

Other topics, like foreign policy or national security, are rarely mentioned on the GOP campaign trail. And there’s a name that rarely comes up: George W. Bush.

None of the Republican candidates has been eager to embrace the Bush legacy, which includes gaping budget deficits, near-record low approval ratings, and two wars.

“They (the Republican candidates) don’t want the election to be about the Bush doctrine, the Monroe doctrine or the Cold War. They want it to be about Barack Obama and the economy,” said Stu Rothenberg, editor of the Washington newsletter, The Rothenberg Political Report.

Rothenberg said until the Republican candidates are forced to address foreign policy in detail, they won’t.

One candidate though does like to talk about foreign policy: Ron Paul.

“The constitution gives us no authority to police the world or get involved in internal affairs of other nations,” said Paul at a recent speech. “Sure, there are a lot of countries around the world that aren’t doing the right things. But if we want to change the world for the positive, what we need to do is change ourselves, set an example and let them emulate us when we get our house in order.”

Paul advocates cutting all foreign aid, including assistance to Israel. When Paul was asked at a recent debate what the US should do to prevent threats from Islamic extremists in Somalia and the Middle East, he said, “Why don’t we mind our own business?”

This isolationist approach has appealed to some voters. But it’s also turned off a lot of Christian conservatives in Iowa, among them Steve Deace, a popular Christian conservative radio host in Iowa.

I met Deace at his home in West Des Moines. He said he’d be “fine” with any of three Republican candidates: Ron Paul, Michele Bachman or Rick Santorum. But Deace can’t totally get on board the Paul bandwagon.

Steve Deace (Photo: Steve Deace)

“What Christian voters are having a hard time reconciling with Ron Paul is this idea that if we just trade goods and services with our enemies, they will like us,” said Deace. “And I think Dr. Paul is too smart to believe something that naïve.”

Deace can’t accept Paul’s hands off stance on the Middle East. For example, Paul said he would not support an attack on Iran to prevent it from acquiring a nuclear weapon. Deace finds that troubling.

“I think this idea that, well, it doesn’t matter if the nation that is the central hub of Islamic terrorism acquires a weapon of mass destruction or not, I think that is, that’s too cavalier for a lot of Christian voters to accept.”

Ron Paul knows many conservatives feel this way. On his Web site, Paul has a 13-minute video detailing his stance on national security. It’s titled: “You like Ron Paul, except on foreign policy.”

The video has images of the hijacked planes hitting the twin towers on September 11th. Then Paul weighs in.

“They don’t come here to attack us because we’re rich and we’re free. They come and they attack us because we’re over there.”

Political analyst Stu Rothenberg said talk like this probably disqualifies Paul for most Iowa Republican voters. Rothenberg said if Paul were to combine his libertarian stances on social and economic issues with a more traditional Republican view on foreign policy, it might sell.

“But in a sense, that would be a very different candidate than what Ron Paul is and has become,” said Rothenberg. “And part of the reason he (Paul) attracted so much early attention, was these folks who were attracted to his foreign policy agenda.”

When it comes to foreign policy, it’s hard to argue that Ron Paul is pandering for a vote. Whether this translates into votes tonight in Iowa… We’ll know shortly.

It’s a challenge though to stand out from the hundreds of other American communities that are going after those same foreign euros, yen, and renminbi. So, what makes an American town stand out?

Consider the case of Fort Dodge, Iowa: a success story in the making.

The city has bled jobs to cheaper foreign manufacturing locations for decades. The latest blow came in 2009 when appliance maker Electrolux announced it was shutting its factory in nearby Webster City and moving to Juarez, Mexico.

“We’ve looked into data of how many people have traveled from Fort Dodge proper over to Webster City to work at Electrolux, and we’ve estimated it at around 700 over the last few years have lost their jobs in that Electrolux closing,” said Fort Doge Mayor Matt Bemrich.

That’s a big blow for a city of 25,000.

Fort Dodge Mayor Matt Bemrich (Photo: Jason Margolis)

Bemrich said, “It definitely affected families and people who had worked there for a number of years; you had generational employment there. So yea, it was devastating. But instead of crying about it, for lack of a better term, we went out and aggressively said, ‘Well, what do we do to replace those jobs?’”

One way to replace those jobs is take advantage of globalization. In October, Fort Dodge reeled in a big fish: a South Korean company, Cheil Jedang, or CJ, said it will invest $324 million in a new plant near Fort Dodge that makes additives for livestock feed. It’s expected to create some 200 local jobs.

CJ executive John Kang said in an e-mail that the company chose Fort Dodge primarily because Iowa has cheap corn. And there’s a facility nearby to help process that corn to make its product. The company was also interested in transportation logistics and access to qualified workers, which Kang said is still a concern.

Still, CJ could’ve chosen any number of Midwestern locations with corn and a wet mill. Fort Dodge city manager David Firk said to really seal the deal, Fort Dodge had to sell itself.

“We have to be competitive. It comes down to: Is this a place you want to live? Whether it’s the person making a decision on bringing a new industry here, as top level executives, do they want to live there? Can they get his or her best and brightest people to move to any city, let’s say move to Fort Dodge?”

John Kang with CJ said housing for Korean employees was a concern when choosing an American location.

Mayor Matt Bemrich says when the South Koreans came to visit, he saw how much quality of life issues matter. He said the folks from CJ were pretty excited about the golfing options.

Downtown Fort Dodge (Photo: Jason Margolis)

“They were just amazed. In South Korea land being such a huge commodity there, and the available land in this region of the United States, we have a lot of golf courses.”

Maybe so. But there are lots of golf courses in Iowa, and everywhere in America.

John Kang with CJ said the golf courses in Fort Dodge were nice, but not a factor in the company’s decision.

David Swenson, an economist at Iowa State University, says medium-sized communities all over the Midwest are marketing quality of life benefits to attract businesses. But distinguishing smaller communities in one state from another is difficult.

“And there’s nothing magical about Iowa that foreign investment would be particularly attracted to. We don’t have the kind of combination of assets and productivity that would necessarily send out a very, very strong message to foreign investors.”

Swenson says in the end, foreign firms locate where it makes sense economically, not aesthetically.

So I asked Iowa Governor Terry Branstad if there’s anything he can do to make Iowa stand out for foreign investment?

“Well first of all, you gotta build the relationship. Relationships are so important. And also with leaders.”

It might sound odd to emphasize the personal. But that’s the way business still gets done in much of the world. Just having a meal with a Chinese businessman goes a long way toward establishing trust.

Branstad said he has a leg up in the relationship building department: He served as governor of Iowa for 16 years in the 1980’s and 1990’s, before being re-elected again in 2010. Branstad likes to tell the story about his meeting with Xi Jinping in Iowa 1985. At the time, Xi was a low-level Chinese official. He’s expected to become the next president of China. Branstad met with him again recently in Beijing.

“And he has a very positive feeling about Iowa. And he had the itinerary from his visit here 26 years ago. He said this, he said I was in your office at the state capitol of Des Moines, on the 26th day of April, 1985. And he said, he stayed with a family down in Muskateen who had two sons in college and a 13-year-old daughter. He was very impressed with the friendliness, the hospitality, and the way he was treated in Iowa.”

Branstad is confident that he can leverage that personal relationship into Chinese investment in Iowa. He has also turned his sights to South Korea, especially with the recent passage of the US-South Korean free trade agreement.

It’s quite possible there will be more Korean investment in Iowa beyond Fort Dodge. After all, there’s no better advertising than word-of-mouth.

Knocked Down by Globalization, Newton, Iowa Rebuilds

Downtown Newton (Photo: Jason Margolis)

Storm Lake, Iowa: A Meatpacking Town Fueled by Immigrant Labor

Storm Lake, Iowa (Photo: Jason Margolis)

How to Lure Foreign Money: Lessons from Fort Dodge, Iowa

A farm near Fort Dodge, Iowa (Photo: Jason Margolis)

Listen/download the three part series

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Apathy in Iowa

A farmhouse somewhere in Iowa (Photo: Jason Margolis)

Storm Lake is a city of some 10,000 tucked in the corn fields of northwestern Iowa. The main employers are a turkey and hog processing plant.

Storm Lake’s demographics run counter to the state. Iowa’s population is 91 percent white. In Storm Lake, the school district is 22 percent white. The students are a mix of mostly Latinos, along with Southeast Asians and Africans. Many here, like Sara Huddleston, proudly say this mix is working.

“We call ourselves the conquistadores of this little town in the middle of nowhere,” said Huddleston, who was among the very first Latinos to come here from Mexico back in 1989.

Sara Huddleston (Photo: Jason Margolis)

Sara Huddleston is living proof of the tolerance in Storm Lake: She was elected as Iowa’s first Latino city council member a decade ago.

Huddleston says when she moved here there were no ethnic grocery stores or Mexican restaurants. Today, she and her husband Matt Huddleston proudly say there are plenty to choose from. Juanita’s is their Mexican restaurant of choice.

“Everybody of different classes, different colors, different ages, they all go to Juanita’s. Everybody goes there,” said Sara Huddleston.

Her husband Matt added, “You have immigrants from Africa, and Eastern Europe, you have the Latinos, native born Iowans, everybody is in there, pretty much at the same time.”

This infusion of immigrants is also helping Storm Lake’s economy. Rural towns throughout the Midwest are dying. Storm Lake is not.

“Do we have some issues? Yes,” said Police Chief Mark Prosser, who took me on a ride through town. “But do we have growing school districts? Yes. Do we have an expanding medical center? Yes. Are we building new businesses? Yes. All because of our immigrant growth here.”

Yet the Congressman who represents Storm Lake is one of the most outspoken opponents of illegal immigration. Five years ago, Republican Steve King spoke in Congress about building a wall along the Mexican border and putting wire on top.

King said, “We could also electrify this wire with the kind of current that wouldn’t kill somebody, but it would simply be a discouragement for them to be fooling around with it. We do that with livestock all the time.”

Tyson Foods' hog processing plant in Storm Lake (Photo: Jason Margolis)

King is popular in western Iowa and Storm Lake. He’s been elected to Congress five times, winning his last race with two thirds of the vote.

David Swenson, an economist at Iowa State University, said there’s a disconnect between King’s popularity and his stance on immigration.

“I would argue that Steve King’s position puts him at great odds with many of the needs of many of his, ironically, supporters, like many of the rural agriculture leaders, many of the animal operations, the food and food processing industry,” said Swenson.

“These are all major businesses in western Iowa. Probably many of the officers and the people in those firms are conservative and conservative leaning. Yet they know darn well that their businesses thrive because they have access to this cheap labor.”

Tyson Foods is one of the two major employers in Storm Lake. The company says it uses all the available tools provided by the government, and more, to verify documents of the people it hires.

A Tyson spokesman said starting pay at the hog processing plant in Storm Lake is $11 an hour. That’s $4 above minimum wage. Tyson employees also get benefits like medical and dental insurance, paid vacations and a retirement savings plan.

That’s not enough to entice native Iowans to gut hogs though, says Police chief, Mark Prosser.

“It’s difficult work, hard work, repetitive work, monotonous work,” said Prosser. “Sometimes there’s the perception, and even criticism of shifting demographics that people categorized as ‘those people’ are taking jobs from the people who are native to this area, born and raised here, and that’s just not the case. That’s a myth. We don’t have lines at our packing plants trying to get jobs.”

Congressman Steve King disputes this. “When they say there are jobs that Americans won’t do, that’s not true, that’s a lie that’s been perpetrated against the American people.”

“Every job in this country is being done by Americans, there’s no job they won’t do,” said King. “But you need to pay them what it’s worth. And I would like to see a tighter labor supply in this country, so that a person could get out of bed, go to work, and make enough money to pay for a modest house, educate their children, and plan for retirement. It’s used to be that way.”

Art Cullen grew up in Storm Lake and talks about the white picket fences of his youth. He’s now the editor of the newspaper The Storm Lake Times. He’s no fan of Steve King and his stance on immigration.

Art Cullen (Photo: Storm Lake Times)

“I think he’s awful,” Cullen said.

But Cullen agrees with the Congressman on at least one point: The meatpacking plants, run by Tyson and Sara Lee, aren’t paying enough. Cullen says, sure immigrants keep this economy going, but the economic model isn’t bringing the town prosperity.

“When you’re living on $11 to $13 an hour, it’s really tough to get by. And it makes it tough for a newspaper to sell newspapers, when people can’t afford to buy a newspaper,” said Cullen.

I was curious what workers at the meatpacking plants thought, so I went to the Mexican restaurant Juanita’s.

The people I met said they like it here in Storm Lake, they’re treated well, there are festivals celebrating different cultures. Still, they want to see immigration reform. I asked what they thought of Congressman Steve King. The answer I got from a young woman named Sonia is what most everybody said.

“I haven’t paid too much attention.”

Sonia’s reaction was explained to me this way: Most Latino immigrants don’t trust politicians back home, so they don’t bother listening. Same goes for here too.

But not everywhere in Iowa is prospering. Rural manufacturing towns continue to struggle. Young people have been leaving these small communities in droves since the 1980’s.

Take the case of Netwon in central Iowa, population 15,000. It was the quintessential one-company town – Fred Maytag began building his washing machines here in 1893. It was a good run: company and town prospered together for more than a century.

In the past decade though, the company shifted jobs to southern states and Mexico. By 2007, Maytag, which was acquired by Whirlpool, closed its doors in Iowa for good.

“Definitely that was a demoralizing blow to the town,” said Darrell Sarmento, who directs the Greater Newton Area Chamber of Commerce. “Not just from an economic standpoint, but at one point in its heyday, Newton was the washing machine capital of the world. So that was a lot of the town’s identity.”

Towns don’t die quickly. Housing prices fall, sewage systems and roads fall apart. Crime rates creep up. Newton is trying to avoid that fate and not become like dozens of other Midwestern manufacturing towns that have lost industry to cheaper foreign labor markets.

Jasper County Courthouse in Newton (Photo: Jason Margolis)

Over and over, you hear that the best way to avoid that downward spiral is to invest in education. That’s a message that community leaders in Newton are embracing.

I took a tour of the old, cavernous Maytag factory with Terry Norton, director of the career academy for DMACC, Des Moines Area Community College. He pointed at old railings along the ceilings used to move heavy equipment and other relics from a bygone era.

Then we entered a different part of the old factory where DMACC has done some remodelling. Here, students were being trained for higher-skill trades like welding, autobody repair, nursing, and cooking.

DMACC isn’t your typical college campus – laid off Maytag workers have skewed the demographics a bit older.

“Let’s see, I would’ve been 47-years-old, and I made the decision to go back to school,” said Jenny Michael, a former assistant to the general counsul at Maytag.

Michael got a degree in business administration. She’s working again. But I asked her how her lifestyle compares today with her days at Maytag.

“People don’t give raises as easily,” said Michael. “I work part-time now, as opposed to full time before, but that’s been a benefit to me.”

Still, Michael is one of the lucky ones. Economist David Swenson at Iowa State University said the transition to life after Maytag has been rough for people in their 40’s and 50’s.

“Many try to go back to school, we have federal programs that try to help them retrain, re-skill, re-pot themselves back into the economy. The success rate isn’t that great,” said Swenson. “It works best for younger people. It works not so well for older people. And what happens if these workers do find work? They very, very often find work at even less than half of what they were making before.”

Swenson says towns like Newton have to diversify their economies and their workforce. Frank Liebel, executive director of the Newton Development Corporation, said that’s already happening, and that the mourning period from the loss of Maytag is coming to an end.

“We’ve created almost 1,200 new jobs since Maytag closed,” said Liebel. “Our goal is to diversify our community. Let’s try to go out and get 10 companies that employ 200 people instead of one company that employs 2,000 or 3,000.”

One piece of the puzzle is the Iowa Speedway, which opened its doors in Newton five years ago. It’s Iowa’s only professional sports complex, a place where “the action is non-stop, where you start your day tailgating and end it partying,” promises a pumped-up advertisement.

Community leaders highlight the speedway as a way to put Newton back on the map. But it can’t turn the local economy around by itself.

August Bergman Inn (Photo: Jason Margolis)

“When the racetrack is running, and there are people at the speedway, everybody is full. That’s four weekends a year,” said John Gerken. He and his wife own the August Bergman Inn in Newton, a charming bed and breakfast built a century ago. “You don’t make it on four weekends a year.”

A handful of smaller companies have set up shop in the area, staffed partly by former Maytag employees. They’re building things like wind blades and spotlights that use low-energy LED’s for theater lighting.

Garrett Young founded Prism Projection. He showed me his new lighting system, reaching out and tapping a spotlight. “If it was a traditional fixture, if I reached out and touched it, I would get a very serious burn, probably leave some skin on it. Whereas this, a baby could touch it and it wouldn’t be an issue.”

He’s just the kind of guy the area is trying to attract, a 29-year-old Ph.D. in plasma physics who relocated from New Jersey. Young says he chose to start his company in Iowa mostly because he got funding from a private investor. He also liked that the town of Sully, right next door to Newton, just gave him his office space, a big barn-like structure.

Garrett Young, founder Prism Projection (Photo: Jason Margolis)

“It used to be a gymnasium, and it wasn’t being utilized,” said Young. “The community bought it back from the people that were using it and basically then gave it to us so that we could start this company here.”

I asked him though, as his company grows, what’s to stop him from eventually building his spotlights in Mexico or China? He looks down at a semiconductor board he holds in the palm of his hand and says this is the future of manufacturing in America. He said the actual construction is so mechanized that he doesn’t need low-wage workers.

“We hired the highly-skilled engineers that designed the schematic and the components that need to go on there. And then we have a machine that places these components, a thousand components a minute, and so why not do it here in the US?”

Young’s company only employs 20 people. It may very well continue to grow, but he’ll continue to hire highly-skilled workers.

If towns like Newton, Iowa have a future in manufacturing, that’s where it’s at. Like it or not, the days of joining the middle class in Iowa by tightening screws on washing machines are over.

The basic gist of the play is that four fictional presidential candidates, with many traits similar to the real-life candidates, desperately try to outdo each other to get the “average” Iowan to like them, and subsequently, vote for them. (Check out the song “Anything for a Vote” below.) The play ends with the main characters apathetic and largely disgusted by the politicians, their pandering, and shall we kindly say, their half-truths.

I saw the play after a week in Iowa and thought it summed up the mood of the electorate perfectly. I was there to work on a few global economics stories that will be broadcast soon, but I couldn’t help asking nearly everybody I met – from mayors, to shop owners, to random people in diners – the same question: Which candidates, and their messages, are resonating with you?

In total, I probably posed this question 40 or 50 times. I didn’t find a single person, not one, from either political persuasion, who expressed genuine excitement for any candidate. (To be equally harsh toward the Democrats, I didn’t find anybody who voiced a passionate defense of President Obama.) That’s not to say that everybody hated the candidates, though many did. They were just, well, apathetic.

I asked David Swenson, an economist at Iowa State University who also studies the caucuses, if the disinterest I was sensing was an accurate reflection of Iowan voters? Yes, it was.

“This caucus is different,” said Swenson. “Attention has been diffused across many more platforms, many more states, many more opportunities to articulate their message. They’ve (the candidates) spent less time here, with fewer advertisements, fewer people on the ground. And the caucuses this time, in Iowa, the presence is just much less significant.”

In other words, Iowans are being ignored relative to previous election cycles. But the shun goes much deeper than that.

“Historically the candidates have brought a goodie bag of ideas that they thought would sell well in Iowa, and the ideas tended to lean towards farm policy, favorable policies for ethanol, favorable policies for corn and corn producers,” said Swenson. “The candidates aren’t offering as many goodies as they have in the past.”

So, while I enjoyed the song “Anything for a Vote” very much, perhaps a better song might’ve been: “Not So Much, This Time, for a Vote.”

Jason Margolis and Doug Crane inspecting paper that will become $100 bills. (Photo: Peter Hopkins)

The World’s Jason Margolis has more about how the financial uncertainty in the world today is impacting companies that make money, by making money.

Doug Crane (Photo: Peter Hopkins)

Doug Crane: “He made bank note paper at the time for Paul Revere to print continental currency on. And that’s sort of a humbling aspect of our roots.”

Since 1801, Crane & Co.’s mill has been located in the town of Dalton in western Massachusetts. The company is the sole provider of paper notes for the US government. They take a blend of cotton and linen, add security features like watermarks with Ben Franklin’s image, then send stacks of paper to the US Bureau of Engraving and Printing where it becomes money.

At the mill, huge rolls of paper unwind above our heads. They’re producing hundreds today.

Doug Crane: “You can touch this right here. It’s sort of fun to touch. That’s hundreds of dollars going past your fingertips.”

More like hundreds of thousands of dollars. Each roll of paper will become $800,000. And there are dozens of rolls on the factory floor.

Overall, this mill produces about 18 million pounds of bank note paper each year. Crane also provides paper for 18 other currencies at its mill in Sweden. Doug Crane says it’s a good time to be in the currency business.

Doug Crane: “Well the demand sort of ebbs and flows, and certainly there’s been a stronger demand on currency and on certain denominations in particular since the economic uncertainty has really spread across the world.”

Crane says there’s been a significant uptick in demand for $100 bills in particular. That’s a note people like to stash away during times of uncertainty, especially people outside of the US.

It’s not just Ben Franklins being horded. The company Fortress Paper prints the euro and the Swiss franc at its mill near Zurich. Chad Wasilenkoff is company CEO.

Chad Wasilenkoff: “With the global crisis going on, these printing presses are running fast and furious around the world, so it’s very robust times there.”

Wasilenkoff says they’re expecting to produce 40 percent more paper for the euro next year. That’s partly because old euros need to be replaced, but also because of the financial instability in Europe.

Chad Wasilenkoff: “People are reluctant to keep as much money in the banks, and they’re pulling it out and going back to the old form of sticking it under the mattress. I mean, if you had your cash sitting in a Greece bank, you might be a little reluctant, and you’d want to have some extra reserves sitting around just in case.”

Historical evidence confirms this behavior says economist Michael Walden at North Carolina State University. Yes, our bank accounts are insured to a point by our governments, both in Europe and North America. Still, Walden says it’s understandable that people hold onto a kernel of fear.

Michael Walden: “I think people in these times like to simply have more cash on hand. I think that just fulfils a basic primal need we have when there is heightened financial fear.”

That’s not to say we’ll see bank runs like in the Great Depression, or even what happened just three years ago in Iceland when people were walking around Reykjavik with bags of foreign currency.

Robert Howell at Dartmouth’s Tuck School of Business thinks the worst is behind us.

Robert Howell: “I certainly think that the financial leadership in Europe and China, and certainly in the United States, are doing everything and will do everything they can to prevent a run on the banks worldwide. I don’t think we’re going to get to the point, where everybody is trying to put cash under the mattresses.”

Jason Margolis: “So your mattress is not getting any thicker?”

Robert Howell: “No, no it isn’t.”

Chad Wasilenkoff (Photo: Fortress Paper)

Chad Wasilenkoff: “Demand for bank notes would definitely go up. So obviously the most likely to leave the eurozone first would be Greece. So they would have to get, whether it was drachmas again, or whatever they would decide, produced and they would have to create reserves.”

That said, Wasilenkoff doesn’t want too much economic uncertainty. After all, even though he makes money by making money, like any business, he still needs a stable economy to operate.

Back in Dalton, Doug Crane says pretty much the same thing about a potential euro collapse.

Doug Crane: “Well, it certainly would create a short-term need for new bank notes. If you were to ask if the currency industry is hoping for something like this, I think the answer is no, not really.”

He says in the long run, currency makers, like him, need people to have trust in their product. That is, have trust in cash.

The World’s Jason Margolis reports from Crystal City, Virginia, a neighborhood in the shadow of the Pentagon.

Hamburger Hamlet has been grilling up burgers and steaks in Crystal City for 27 years. District manager Steven Korbett knows who pays the bills.

Steven Korbett: “It’s probably 80 percent contractors, defense contractors, military, and government employees.”

When I asked Korbett if he was worried about the Pentagon losing another 10 percent from its budget, his answer, well, not exactly surprising.

Steven Korbett: “Absolutely.”

What else would he say?

At this point, I thought I knew this tale already: Another story about local businesses getting hurt by government cuts.

Then I started to encounter people like David Anderson. He’s the general manager of Jaleo, a trendy tapas restaurant. I asked Anderson if he was worried about cuts to the military budget.

David Anderson: “I mean it’s great. We have a great story to tell here in Jaleo. And we are really excited for the opportunity of new companies and people to come to the area. And it’s actually kind of exciting.”

I repeated the question, thinking maybe he’d misunderstood me.

David Anderson: “Like I said, we have a great story and we’re optimistic so it’s exciting to have new people, fresh faces and new companies come to the area.”

Outdoor Movie Night (Photo: Crystal City Business Improvement District)

I thought Anderson was just putting on a positive face even when confronted by the bleakest of economic news. But then I spent some time walking around Crystal City with Angie Fox. She’s president of the Crystal City Business Improvement District. Her job is to be optimistic. And she is.

Angie Fox: “We are changing the way people see, perceive, and experience Crystal City. A lot of repositioning, a reinvention, a transformation, those are words that we like to use.”

Crystal City has been dealing with a shrinking military presence for a while now. In 2005, the Base Realignment and Closure Commission, better known as BRAC, decided to move 13,000 jobs away from the area. It’s been a long, slow departure that’s still ongoing. The bright side is that it’s given civic leaders a long time to rethink Crystal City.

We stopped in front of a 1960’s-era government building. I saw ugly architecture. So did Fox, but also mixed with potential.

Angie Fox: “So it still feels very much like that old concrete brutalist architecture; it is a phenomenal place for a farmers market.”

Crystal City Farmers Market (Photo: Crystal City Business Improvement District)

And now, there’s a weekly farmers market right in front. They also have a new performing arts theatre, outdoor movie night, and lots of public art. It’s all part of a bigger plan to make Crystal City a neighborhood where people live and play, and not just work.

Angie Fox: “In the winter, we are doing a 1k wine walk and a 1k beer walk, so basically you have seven or eight stations, almost 30 different wines. And people literally get race numbers and they kind of walk from station to station, we call it a sip and stumble.”

Community leaders are hoping their strategy works. But defense analyst Loren Thompson with the nearby Lexington Institute says there’s no way around it. This is a military town.

Loren Thompson: “If there was a substantial cut in weapons spending, there would be a major local impact, it wouldn’t make the people here poorer then the rest of America, but it would make them a good deal less affluent.”

Still, Thompson says it’s hard to feel too bad for the people in Crystal City, and the Virginia and Maryland counties that neighbor Washington. It’s been a good run. The defense budget has basically doubled in the past 10 years.

Loren Thompson: “If there is one good thing, one benefit that could come out of a defense downturn in Washington DC is that maybe the people who live here could have a little more empathy for the rest of the country. This really is like a bubble here. People don’t understand what it’s like in most of the country because it is so affluent here and so much money comes here from other places.”

Maybe so. But that’s cold comfort to some. The walls of the Crystal City Sports Pub are plastered with decades of sports memorabilia. I asked owner Art Dougherty if he followed the deliberations of the Congressional Super Committee.

Art Dougherty: “I’ve been listening in, but to be honest with you, you’re already so disgusted with the whole economy as is, and everything. I don’t know. I think a lot of people are very turned off by this government. Like I said, there are definitely going to be businesses going to be failing because of this. There’s no question about it. You just hope you’re not the one.”

The big loser would be the Pentagon. It’s slated to be hit with an additional $500 billion in cuts. How that might affect military readiness is one debate. But there’s also the question of how defense cuts would affect the wider economy.

The World’s Jason Margolis takes a look.

800,000 jobs lost. That’s what many Republicans estimate would happen if the current military budget is cut by $500 billion.

I asked Michael O’Hanlon if that sounds about right. He’s author of the new book “The Wounded Giant: America’s Armed Forces in an Age of Austerity.” He started working thru the numbers.

Michael O’Hanlon: “We have about a million and a half people in uniform in the active force. We have about another million in the national guard and reserve. So that’s two-and-a-half million total.”

Michael O’Hanlon: “Roughly another 3 million who are in defense industry or the contractor workforce…”

Michael O’Hanlon: “And then on top of that of course you have all the people locally who near a military base run a hot dog stand or a sandwich shop…”

So when you add it all up….

Michael O’Hanlon: “You’ve got 10 million jobs that depend on the department of defense in one way or another at this moment.”

And if the Pentagon’s budget is cut by 10 percent, roughly what the automatic cuts would amount to…

Michael O’Hanlon: “So yes, you could in theory, in the short term at least, lose a million jobs or more.”

That’s a scary number, especially in a down economy. But that doesn’t necessarily mean a million jobs would be erased from the overall economy.

The money saved on military spending could be spent elsewhere. Stephen Biddle at the Council on Foreign Relations says consider the sandwich maker near a military base who loses his job.

Stephen Biddle: “If you spend less on defense and in exchange you spend more on, let’s say, education. And the result of that increase in education expenditure downstream is some well-educated person who otherwise wouldn’t have been, opens a successful software company in New Jersey, hires a bunch of people, those people will eat sandwiches at lunch.”

Of course that’s down the line a few years.

And Biddle says it’s hard for policymakers to think this way. After all, the sandwich maker near a military base is a real person, with a real story. The hypothetical sandwich shop in New Jersey is an economic statistic.

And further, what if that dollar saved on defense spending isn’t put toward the education budget?

Stephen Biddle: “Maybe they take that defense cut and they use it to reduce deficits. It’s generally believed that the higher the federal deficit, the more disadvantageous interest rates are in the economy.”

So, cutting defense spending could lead to easier borrowing for small businesses and potential homebuyers.

Point being, there are clear economic losers if military spending is cut. But there are also winners. They’re just harder to see.

Overall, Biddle says, military spending isn’t the best way to stimulate the economy.

For instance, a great deal of military spending goes toward buying capital equipment, things like tanks, guns and fighter planes. Now compare an Air Force purchase with a commercial airliner.

Stephen Biddle: “When United Airlines buys an airliner, they’re making an investment in a piece of capital equipment that’s going to generate more income and more economic activity in the United States when they sell tickets to fly people from point to point in the airliner. When the Air Force buys an F-35 – unless they’re going to sell joyrides in the cockpit, which they’re probably not going to – that’s not a purchase of capital equipment that’s going to generate more income and more economic activity within the United States.”

That’s not to say military spending doesn’t help the economy in many ways. Loren Thompson with the Lexington Institute says it all depends on what you’re trying to accomplish.

Loren Thompson: “If you’re trying to stimulate technological innovation, defense spending is very important.”

Things like satellites, jet engines, and the Internet – drivers of the modern economy – all got started by the military. But…

Loren Thompson: “If you’re trying to create jobs, large numbers of jobs, it’s not as efficient because the money tends to go into a relatively small number of high-paying jobs, rather than a larger number of jobs in areas like construction or education.”

Michael O’Hanlon agrees that military spending is not the best job creator… in the long term.

Michael O’Hanlon: “But in the short term, when we’re in this kind of a fix, and we’re almost looking for excuses to stimulate the economy – and of course the 2009 stimulus bill did just that – it makes sense to be attentive to the fact that any kind of cut in government spending could have a negative effect right now. So you’ve got to balance these two concerns.”

Of course, these are all economic arguments. And at the end of the day, policymakers are most vocal about what it takes to keep the nation safe. In recent years, however, there’s been little acknowledgment of the costs.

Even now, some members of Congress who want to lower the deficit are, at the same time, talking about repealing the automatic cuts to the military before they’ve even happened.