Defense Contracting and Domnestic Politics

Scholars have investigated the relationship between defense spending and domestic political constraints. Because of a two-year time lag, however, it is difficult to make a theoretical link between the aggregate defense budget and domestic politics. We focus on defense contract awards because of their rapid turn-around. We advance the referendum model to account for variations in the timing of defense contracts within administrations. The referendum model posits that government policies are reflective of approval ratings and that the President uses defense contracts to counter sagging approval and/or a weak economy This is a subtle but important alternative to political business cycle (PBC) models which constrain political manipulation of the defense budget to the electoral cycle. An empirical model is tested using pooled time-series analysis which allows us to assess variation within administrations. The analysis reveals that presidential approval, war, presidential reelection, and unemployment are determinants of defense contracting.