Tillerson said Saudi Arabia's direct investment in the U.S. would bring "hundreds of thousands" of jobs to American workers. Earlier, Trump said it had been a "tremendous day; tremendous investments for the United States. Hundreds of billions of investments into the United States, and jobs jobs jobs."While this will be the headline story, note what else Tillerson said:
Tillerson also said the new defense deal — which includes upgrades to Saudi communications, missile defense, maritime, border and cyber security — lowers the demands on the U.S. military. “This huge arms sales package reduces the burden on the United States to provide the same equipment to our own military forces,” he said. “It will strengthen Saudi security forces for the future so Saudi Arabia is more capable of carrying a greater share of the burden.”Deficit hawks may see this as good news but let’s step back for a moment. The $109 billion in arms sales is for the next decade amounting to an additional $11 billion in new exports on a per annum basis. So we are talking about only 0.06% of GDP in new exports but this only gets worse if we take Tillerson at his word that as the Saudis spend more on their own defense, we spend less. In other words, exports rise by $11 billion per year and Federal purchases fall by $11 billion per year. Good news from a deficit hawk perspective but no net increase in U.S. aggregate demand. So Trump’s “jobs, jobs, jobs” amounts to nothing but his usual political posturing.