ABSTRACT
A major transformation of the economy is needed to shift from debt-driven militarism to publicly supported efforts to meet Americans' needs equitably and sustainably. To create sustainable economic growth, the American economy requires large-scale public investments. Military cutbacks are withdrawing an enormous amount of money from the US economy. Bill Clinton's approach to investment, deficits, and conversion, while heartening after twelve years of Republican style borrow-and-spend policies, stops short of restructuring the US economy to fit the global needs of the twenty-first century. Military spending has imposed trade-offs on budget priorities, leading the nation to make fewer productivity-enhancing public investments. The fiscal deficit of the federal government is the most prominent economic constraint on reinvesting the peace dividend. Excessive public borrowing for chronic deficit financing tends to crowd out private borrowing as the cost of capital increases. Some economists maintain that the deficit can be reasonably ignored for the time being.
