On the Road to Ruin

Historians have detailed a strong, almost symbiotic link between between a nation's fiscal health and it's military standing.

By the same token, many have also shown that when there is a disconnect between strategic and other goals, on the one hand, and a nation's economic and financial wellbeing, on the other, that often signals that the country in question is on the road to ruin. This condition is generally referred to as military -- or, in the case of empires, imperial -- overstretch.

In recent years, a number of well-known and respected researchers have come to the conclusion that the U.S. is suffering from this invariably fatal cancer, which historians seem to agree played a starring role in the fall of the 700-year old Roman empire, among others.

One in particular, whose latest book, Nemesis, The Last Days of the American Republic, I have read and would heartily recommend, is Chalmers Johnson. In "Tomgram: Chalmers Johnson, How to Sink America," which appears at Tomdispatch.com, a project of The Nation Institute, and which is edited by Tom Engelhardt, Mr. Chalmers notes his deadly serious concerns about the future of our nation.

Within the next month, the Pentagon will submit its 2009 budget to Congress and it's a fair bet that it will be even larger than the staggering 2008 one. Like the Army and the Marines, the Pentagon itself is overstretched and under strain -- and like the two services, which are expected to add 92,000 new troops over the next five years (at an estimated cost of $1.2 billion per 10,000), the Pentagon's response is never to cut back, but always to expand, always to demand more.

After all, there are those disastrous Afghan and Iraqi wars still eating taxpayer dollars as if there were no tomorrow. Then there's what enthusiasts like to call "the next war" to think about, which means all those big-ticket weapons, all those jets, ships, and armored vehicles for the future. And don't forget the still-popular, Rumsfeld-style "netcentric warfare" systems (robots, drones, communications satellites, and the like), not to speak of the killer space toys being developed; and then there's all that ruined equipment out of Iraq and Afghanistan to be massively replaced -- and all those ruined human beings to take care of.

You'll get the gist of this from a recent editorial in the trade magazine Aviation Week & Space Technology:

"The fact Washington must face is that nearly five years of war have left U.S. forces worse off than they have been in a generation, yes, since Vietnam, and restoring them will take budget-building unlike any in the past."

Even on the rare occasion when -- as in the case of Boeing's C-17 cargo plane -- the Pentagon decides to cancel a project, there's Congress to remember. Contracts and subcontracts for weapons systems, carefully doled out to as many states as possible, mean jobs, and so Congress often balks at such cuts. (Fifty-five House members recently warned the Pentagon of a "strong negative response" if funding for the C-17 is excised from the 2009 budget.) All in all, it adds up to a defense menu for a glutton.

Already, Secretary of Defense Robert Gates has said that 2009 funding is "largely locked into place." The giant military-industrial combines -- Lockheed Martin, Northrop Grumman, Boeing, Raytheon -- have been watching their stocks rise in otherwise treacherous times. They are hopeful. As Ronald Sugar, Northrop CEO, put it: "A great global power like the United States needs a great navy and a great navy needs an adequate number of ships, and they have to be modern and capable" -- and guess which company is the Navy's largest shipbuilder?

There should be nothing surprising in all this, especially for those of us who have read Chalmers Johnson's Nemesis, The Last Days of the American Republic, the final volume of his Blowback Trilogy. Published in 2007, it is already a classic on what imperial overstretch means for the rest of us. The paperback of Nemesis is officially out today, just as global stock markets tumble. It is simply a must-read (and if you've already read it, then get a copy for a friend). In the meantime, hunker in for Johnson's latest magisterial account of how the mightiest guns the Pentagon can muster threaten to sink our own country. (For those interested, click here to view a clip from a new film, "Chalmers Johnson on American Hegemony," in Cinema Libre Studios' Speaking Freely series in which he discusses military Keynesianism and imperial bankruptcy.) Tom

Going Bankrupt: Why the Debt Crisis Is Now the Greatest Threat to the American Republic
By Chalmers Johnson

The military adventurers of the Bush administration have much in common with the corporate leaders of the defunct energy company Enron. Both groups of men thought that they were the "smartest guys in the room," the title of Alex Gibney's prize-winning film on what went wrong at Enron. The neoconservatives in the White House and the Pentagon outsmarted themselves. They failed even to address the problem of how to finance their schemes of imperialist wars and global domination.

As a result, going into 2008, the United States finds itself in the anomalous position of being unable to pay for its own elevated living standards or its wasteful, overly large military establishment. Its government no longer even attempts to reduce the ruinous expenses of maintaining huge standing armies, replacing the equipment that seven years of wars have destroyed or worn out, or preparing for a war in outer space against unknown adversaries. Instead, the Bush administration puts off these costs for future generations to pay -- or repudiate. This utter fiscal irresponsibility has been disguised through many manipulative financial schemes (such as causing poorer countries to lend us unprecedented sums of money), but the time of reckoning is fast approaching.

There are three broad aspects to our debt crisis. First, in the current fiscal year (2008) we are spending insane amounts of money on "defense" projects that bear no relationship to the national security of the United States. Simultaneously, we are keeping the income tax burdens on the richest segments of the American population at strikingly low levels.

Second, we continue to believe that we can compensate for the accelerating erosion of our manufacturing base and our loss of jobs to foreign countries through massive military expenditures -- so-called "military Keynesianism," which I discuss in detail in my book Nemesis: The Last Days of the American Republic. By military Keynesianism, I mean the mistaken belief that public policies focused on frequent wars, huge expenditures on weapons and munitions, and large standing armies can indefinitely sustain a wealthy capitalist economy. The opposite is actually true.

Third, in our devotion to militarism (despite our limited resources), we are failing to invest in our social infrastructure and other requirements for the long-term health of our country. These are what economists call "opportunity costs," things not done because we spent our money on something else. Our public education system has deteriorated alarmingly. We have failed to provide health care to all our citizens and neglected our responsibilities as the world's number one polluter. Most important, we have lost our competitiveness as a manufacturer for civilian needs -- an infinitely more efficient use of scarce resources than arms manufacturing. Let me discuss each of these.

The Current Fiscal Disaster

It is virtually impossible to overstate the profligacy of what our government spends on the military. The Department of Defense's planned expenditures for fiscal year 2008 are larger than all other nations' military budgets combined. The supplementary budget to pay for the current wars in Iraq and Afghanistan, not part of the official defense budget, is itself larger than the combined military budgets of Russia and China. Defense-related spending for fiscal 2008 will exceed $1 trillion for the first time in history. The United States has become the largest single salesman of arms and munitions to other nations on Earth. Leaving out of account President Bush's two on-going wars, defense spending has doubled since the mid-1990s. The defense budget for fiscal 2008 is the largest since World War II.

Before we try to break down and analyze this gargantuan sum, there is one important caveat. Figures on defense spending are notoriously unreliable. The numbers released by the Congressional Reference Service and the Congressional Budget Office do not agree with each other. Robert Higgs, senior fellow for political economy at the Independent Institute, says: "A well-founded rule of thumb is to take the Pentagon's (always well publicized) basic budget total and double it." Even a cursory reading of newspaper articles about the Department of Defense will turn up major differences in statistics about its expenses. Some 30-40% of the defense budget is "black," meaning that these sections contain hidden expenditures for classified projects. There is no possible way to know what they include or whether their total amounts are accurate.

There are many reasons for this budgetary sleight-of-hand -- including a desire for secrecy on the part of the president, the secretary of defense, and the military-industrial complex -- but the chief one is that members of Congress, who profit enormously from defense jobs and pork-barrel projects in their districts, have a political interest in supporting the Department of Defense. In 1996, in an attempt to bring accounting standards within the executive branch somewhat closer to those of the civilian economy, Congress passed the Federal Financial Management Improvement Act. It required all federal agencies to hire outside auditors to review their books and release the results to the public. Neither the Department of Defense, nor the Department of Homeland Security has ever complied. Congress has complained, but not penalized either department for ignoring the law. The result is that all numbers released by the Pentagon should be regarded as suspect.

In discussing the fiscal 2008 defense budget, as released to the press on February 7, 2007, I have been guided by two experienced and reliable analysts: William D. Hartung of the New America Foundation's Arms and Security Initiative and Fred Kaplan, defense correspondent for Slate.org. They agree that the Department of Defense requested $481.4 billion for salaries, operations (except in Iraq and Afghanistan), and equipment. They also agree on a figure of $141.7 billion for the "supplemental" budget to fight the "global war on terrorism" -- that is, the two on-going wars that the general public may think are actually covered by the basic Pentagon budget. The Department of Defense also asked for an extra $93.4 billion to pay for hitherto unmentioned war costs in the remainder of 2007 and, most creatively, an additional "allowance" (a new term in defense budget documents) of $50 billion to be charged to fiscal year 2009. This comes to a total spending request by the Department of Defense of $766.5 billion.

But there is much more. In an attempt to disguise the true size of the American military empire, the government has long hidden major military-related expenditures in departments other than Defense. For example, $23.4 billion for the Department of Energy goes toward developing and maintaining nuclear warheads; and $25.3 billion in the Department of State budget is spent on foreign military assistance (primarily for Israel, Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, the United Arab Republic, Egypt, and Pakistan). Another $1.03 billion outside the official Department of Defense budget is now needed for recruitment and reenlistment incentives for the overstretched U.S. military itself, up from a mere $174 million in 2003, the year the war in Iraq began. The Department of Veterans Affairs currently gets at least $75.7 billion, 50% of which goes for the long-term care of the grievously injured among the at least 28,870 soldiers so far wounded in Iraq and another 1,708 in Afghanistan. The amount is universally derided as inadequate. Another $46.4 billion goes to the Department of Homeland Security.

Missing as well from this compilation is $1.9 billion to the Department of Justice for the paramilitary activities of the FBI; $38.5 billion to the Department of the Treasury for the Military Retirement Fund; $7.6 billion for the military-related activities of the National Aeronautics and Space Administration; and well over $200 billion in interest for past debt-financed defense outlays. This brings U.S. spending for its military establishment during the current fiscal year (2008), conservatively calculated, to at least $1.1 trillion.

Military Keynesianism

Such expenditures are not only morally obscene, they are fiscally unsustainable. Many neoconservatives and poorly informed patriotic Americans believe that, even though our defense budget is huge, we can afford it because we are the richest country on Earth. Unfortunately, that statement is no longer true. The world's richest political entity, according to the CIA's "World Factbook," is the European Union. The EU's 2006 GDP (gross domestic product -- all goods and services produced domestically) was estimated to be slightly larger than that of the U.S. However, China's 2006 GDP was only slightly smaller than that of the U.S., and Japan was the world's fourth richest nation.

A more telling comparison that reveals just how much worse we're doing can be found among the "current accounts" of various nations. The current account measures the net trade surplus or deficit of a country plus cross-border payments of interest, royalties, dividends, capital gains, foreign aid, and other income. For example, in order for Japan to manufacture anything, it must import all required raw materials. Even after this incredible expense is met, it still has an $88 billion per year trade surplus with the United States and enjoys the world's second highest current account balance. (China is number one.) The United States, by contrast, is number 163 -- dead last on the list, worse than countries like Australia and the United Kingdom that also have large trade deficits. Its 2006 current account deficit was $811.5 billion; second worst was Spain at $106.4 billion. This is what is unsustainable.

It's not just that our tastes for foreign goods, including imported oil, vastly exceed our ability to pay for them. We are financing them through massive borrowing. On November 7, 2007, the U.S. Treasury announced that the national debt had breached $9 trillion for the first time ever. This was just five weeks after Congress raised the so-called debt ceiling to $9.815 trillion. If you begin in 1789, at the moment the Constitution became the supreme law of the land, the debt accumulated by the federal government did not top $1 trillion until 1981. When George Bush became president in January 2001, it stood at approximately $5.7 trillion. Since then, it has increased by 45%. This huge debt can be largely explained by our defense expenditures in comparison with the rest of the world.

The world's top 10 military spenders and the approximate amounts each country currently budgets for its military establishment are:

1. United States (FY08 budget), $623 billion
2. China (2004), $65 billion
3. Russia, $50 billion
4. France (2005), $45 billion
5. Japan (2007), $41.75 billion
6. Germany (2003), $35.1 billion
7. Italy (2003), $28.2 billion
8. South Korea (2003), $21.1 billion
9. India (2005 est.), $19 billion
10. Saudi Arabia (2005 est.), $18 billion

World total military expenditures (2004 est.), $1,100 billion
World total (minus the United States), $500 billion

Our excessive military expenditures did not occur over just a few short years or simply because of the Bush administration's policies. They have been going on for a very long time in accordance with a superficially plausible ideology and have now become entrenched in our democratic political system where they are starting to wreak havoc. This ideology I call "military Keynesianism" -- the determination to maintain a permanent war economy and to treat military output as an ordinary economic product, even though it makes no contribution to either production or consumption.

This ideology goes back to the first years of the Cold War. During the late 1940s, the U.S. was haunted by economic anxieties. The Great Depression of the 1930s had been overcome only by the war production boom of World War II. With peace and demobilization, there was a pervasive fear that the Depression would return. During 1949, alarmed by the Soviet Union's detonation of an atomic bomb, the looming communist victory in the Chinese civil war, a domestic recession, and the lowering of the Iron Curtain around the USSR's European satellites, the U.S. sought to draft basic strategy for the emerging cold war. The result was the militaristic National Security Council Report 68 (NSC-68) drafted under the supervision of Paul Nitze, then head of the Policy Planning Staff in the State Department. Dated April 14, 1950 and signed by President Harry S. Truman on September 30, 1950, it laid out the basic public economic policies that the United States pursues to the present day.

In its conclusions, NSC-68 asserted: "One of the most significant lessons of our World War II experience was that the American economy, when it operates at a level approaching full efficiency, can provide enormous resources for purposes other than civilian consumption while simultaneously providing a high standard of living."

With this understanding, American strategists began to build up a massive munitions industry, both to counter the military might of the Soviet Union (which they consistently overstated) and also to maintain full employment as well as ward off a possible return of the Depression. The result was that, under Pentagon leadership, entire new industries were created to manufacture large aircraft, nuclear-powered submarines, nuclear warheads, intercontinental ballistic missiles, and surveillance and communications satellites. This led to what President Eisenhower warned against in his farewell address of February 6, 1961: "The conjunction of an immense military establishment and a large arms industry is new in the American experience" -- that is, the military-industrial complex.

By 1990, the value of the weapons, equipment, and factories devoted to the Department of Defense was 83% of the value of all plants and equipment in American manufacturing. From 1947 to 1990, the combined U.S. military budgets amounted to $8.7 trillion. Even though the Soviet Union no longer exists, U.S. reliance on military Keynesianism has, if anything, ratcheted up, thanks to the massive vested interests that have become entrenched around the military establishment. Over time, a commitment to both guns and butter has proven an unstable configuration. Military industries crowd out the civilian economy and lead to severe economic weaknesses. Devotion to military Keynesianism is, in fact, a form of slow economic suicide.

On May 1, 2007, the Center for Economic and Policy Research of Washington, D.C., released a study prepared by the global forecasting company Global Insight on the long-term economic impact of increased military spending. Guided by economist Dean Baker, this research showed that, after an initial demand stimulus, by about the sixth year the effect of increased military spending turns negative. Needless to say, the U.S. economy has had to cope with growing defense spending for more than 60 years. He found that, after 10 years of higher defense spending, there would be 464,000 fewer jobs than in a baseline scenario that involved lower defense spending.

Baker concluded:

"It is often believed that wars and military spending increases are good for the economy. In fact, most economic models show that military spending diverts resources from productive uses, such as consumption and investment, and ultimately slows economic growth and reduces employment."

These are only some of the many deleterious effects of military Keynesianism.

Hollowing Out the American Economy

It was believed that the U.S. could afford both a massive military establishment and a high standard of living, and that it needed both to maintain full employment. But it did not work out that way. By the 1960s, it was becoming apparent that turning over the nation's largest manufacturing enterprises to the Department of Defense and producing goods without any investment or consumption value was starting to crowd out civilian economic activities. The historian Thomas E. Woods, Jr., observes that, during the 1950s and 1960s, between one-third and two-thirds of all American research talent was siphoned off into the military sector. It is, of course, impossible to know what innovations never appeared as a result of this diversion of resources and brainpower into the service of the military, but it was during the 1960s that we first began to notice Japan was outpacing us in the design and quality of a range of consumer goods, including household electronics and automobiles.

Nuclear weapons furnish a striking illustration of these anomalies. Between the 1940s and 1996, the United States spent at least $5.8 trillion on the development, testing, and construction of nuclear bombs. By 1967, the peak year of its nuclear stockpile, the United States possessed some 32,500 deliverable atomic and hydrogen bombs, none of which, thankfully, was ever used. They perfectly illustrate the Keynesian principle that the government can provide make-work jobs to keep people employed. Nuclear weapons were not just America's secret weapon, but also its secret economic weapon. As of 2006, we still had 9,960 of them. There is today no sane use for them, while the trillions spent on them could have been used to solve the problems of social security and health care, quality education and access to higher education for all, not to speak of the retention of highly skilled jobs within the American economy.

The pioneer in analyzing what has been lost as a result of military Keynesianism was the late Seymour Melman (1917-2004), a professor of industrial engineering and operations research at Columbia University. His 1970 book, Pentagon Capitalism: The Political Economy of War, was a prescient analysis of the unintended consequences of the American preoccupation with its armed forces and their weaponry since the onset of the Cold War. Melman wrote (pp. 2-3):

"From 1946 to 1969, the United States government spent over $1,000 billion on the military, more than half of this under the Kennedy and Johnson administrations -- the period during which the [Pentagon-dominated] state management was established as a formal institution. This sum of staggering size (try to visualize a billion of something) does not express the cost of the military establishment to the nation as a whole. The true cost is measured by what has been foregone, by the accumulated deterioration in many facets of life by the inability to alleviate human wretchedness of long duration."

In an important exegesis on Melman's relevance to the current American economic situation, Thomas Woods writes:

"According to the U.S. Department of Defense, during the four decades from 1947 through 1987 it used (in 1982 dollars) $7.62 trillion in capital resources. In 1985, the Department of Commerce estimated the value of the nation's plant and equipment, and infrastructure, at just over $7.29 trillion. In other words, the amount spent over that period could have doubled the American capital stock or modernized and replaced its existing stock."

The fact that we did not modernize or replace our capital assets is one of the main reasons why, by the turn of the twenty-first century, our manufacturing base had all but evaporated. Machine tools -- an industry on which Melman was an authority -- are a particularly important symptom. In November 1968, a five-year inventory disclosed (p. 186) "that 64 percent of the metalworking machine tools used in U.S. industry were ten years old or older. The age of this industrial equipment (drills, lathes, etc.) marks the United States' machine tool stock as the oldest among all major industrial nations, and it marks the continuation of a deterioration process that began with the end the Second World War. This deterioration at the base of the industrial system certifies to the continuous debilitating and depleting effect that the military use of capital and research and development talent has had on American industry."

Nothing has been done in the period since 1968 to reverse these trends and it shows today in our massive imports of equipment -- from medical machines like proton accelerators for radiological therapy (made primarily in Belgium, Germany, and Japan) to cars and trucks.

Our short tenure as the world's "lone superpower" has come to an end. As Harvard economics professor Benjamin Friedman has written:

"Again and again it has always been the world's leading lending country that has been the premier country in terms of political influence, diplomatic influence, and cultural influence. It's no accident that we took over the role from the British at the same time that we took over… the job of being the world's leading lending country. Today we are no longer the world's leading lending country. In fact we are now the world's biggest debtor country, and we are continuing to wield influence on the basis of military prowess alone."

Some of the damage done can never be rectified. There are, however, some steps that this country urgently needs to take. These include reversing Bush's 2001 and 2003 tax cuts for the wealthy, beginning to liquidate our global empire of over 800 military bases, cutting from the defense budget all projects that bear no relationship to the national security of the United States, and ceasing to use the defense budget as a Keynesian jobs program. If we do these things we have a chance of squeaking by. If we don't, we face probable national insolvency and a long depression.

Chalmers Johnson is the author of Nemesis: The Last Days of the American Republic, just published in paperback. It is the final volume of his Blowback Trilogy, which also includes Blowback (2000) and The Sorrows of Empire (2004).

[Note: For those interested, click here to view a clip from a new film, "Chalmers Johnson on American Hegemony," in Cinema Libre Studios' Speaking Freely series in which he discusses "military Keynesianism" and imperial bankruptcy. For sources on global military spending, please see: (1) Global Security Organization, "World Wide Military Expenditures" as well as Glenn Greenwald, "The bipartisan consensus on U.S. military spending"; (2) Stockholm International Peace Research Institute, "Report: China biggest Asian military spender."]

Copyright 2008 Chalmers Johnson

Comments

[Rocky]

I would also recommend Mr. Chalmers book "Nemesis". What is amazing about our current economic situation is that the "family values" folks have little or nothing to say about our military spending and what effects it will have on their children's and grand children's economic well being, or lack thereof. Blessed are the children, for they shall inherit the national debt.

[Rocky]

I would also recommend Mr. Chalmers book "Nemesis". What is amazing about our current economic situation is that the "family values" folks have little or nothing to say about our military spending and what effects it will have on their children's and grand children's economic well being, or lack thereof. Blessed are the children, for they shall inherit the national debt.

[Brian]

Let me get this straight: The government that is supposedly so wasteful of a spender when buying a military, will suddenly become the model of apolitical prudence when:

"...trillions spent on them could have been used to solve the problems of social security and health care, quality education and access to higher education for all, not to speak of the retention of highly skilled jobs within the American economy."

Color me skeptical.

[Independent Accountant]

This is nonsense. I remember Eisenhower's 18 January 1961 speech in which he mentioned the military-industrial complex. I'm that old. Why is this nonsense? In the 1960s we spent about 10% of GDP on defense. Now it's 3.6%. Does this ignoramus really believe Chinese and Russian military expenditure claims? My estimates of Russian and Chinese military expenditures are about triple the official fkigures. What a fool! In the 1960s we had 3.2 million men in the military with 179 million Americans. Now we have 1.5 million with 302 million Americans. What is bankrupting the US is: welfare, welfare, welfare. We have an Education Department? Why? We have a $53 trillion social security and medicaid actuarial deficit, etc. etc. Does anyone remember the War on Powerty which began under Lyndon Johnson? What does this ingoramus author think the Chinese are doing with their submarine fleet? I could go on and on. Who provides medical care, schooling, etc, for our 12-15 million illegal aliens and their children? Enough. Our miliary spending is too low. Way too low.

[farang]

Brian:

Are you suggesting ("The government that is SUPPOSEDLY so wasteful a spender when buying a military...") the military does NOT waste tax payer dollars?

I would suggest that a LOWERING of our taxes by eliminating 60% of this WASTEFUL, UNNECESSARY Defense spending would free up local governments and their citizens to spend it on education, health care, etc.

Or, are you suggesting it is just Americans too stupid to provide the basic services for their citizens?

Not quite certain what you mean, no one wants to give the savings to the lobbyist's to spend through their paid-for D.C. whores. We'll keep it ourselves to pay our bills, thank you very much.

The PERCEPTION we need a huge military is a false one, Brian.

Unless it saved us on 9/11/01? Did it?

[farang]

Independent Accountant:

Please provide your ultra-secret accounting numbers of the Chinese Defense spending for us all to peruse ("My estimates of Russian and Chinese military expenditures are about triple the official fkigures."), so we can be as informed as you are, please.

And, since you feel our defense spending is "...too low. Way too low.", we will be happy to collect additional taxes from YOU to send on to those frugal budgeteers at the Pentagon.

As someone that worked a decade at a major defense contractor in San Jose, I can tell ya, I'll be happy to debate this issue with you anytime, anywhere.

You seem to be a "bit vague" on HOW you will FUND more defense spending at a time we are NINE TRILLION in debt and GROWING. While the Chinese decline to purchase any more toxic investments from us, and are quietly dumping the trillion or so in reserves they are holding.

You want more debt. Then YOU pay for it.

I want diplomacy with our competitors. What, you think China wants to what? Invade it's prime customer? Bwahahahaha, do you look in your closet and under your bed before you go to sleepie???

Perhaps, just perhaps if the LIARS and Thieves weren't in charge, we wouldn't be burning a BILLION+ a DAY in Iraq, with NO ROI except increasing animosity for illegal and immoral invasion/occupation. I guess the Pentagon has found a way to GROW it's own opposition, and THAT is about ALL it is competent to perform.

Get a clue, this ain't Faux News here buddy.

I'll win. You'll go broke (have gone broke.)

[roger pasa]

Brian
I think your emotions are in control not your intellect,by the way I remember president Roosevelt speeches (I AM THAT OLD)

[Sackerson]

Should we also see how the figures for the major countries stack up in terms of purchasing power parity, actual numbers of men under arms, tanks, planes etc?

[Teri Pittman]

I'd like to know why discussions of military spending never start with talking about the troops in the other part of the world, like Japan, Korea, Yugoslavia, Germany. We do still have bases and troops in all of those. If we were to start cutting somewhere, I'd say that would be a pretty good place to start.

It's also easy in hindsight to say we should have done this or that. It's easy for us now to forget that the world went through two wars with Germany in pretty short order. A lot of that spending went to make sure that we wouldn't have to deal with yet another world war. I'd say that we were pretty successful with that part. And I'd agree with the posters about the figures for Russia and China. If there are hidden costs in our figures, there are bound to be a lot more in closed societies like those.

[Aaron Krowne]

Independent Accountant:

Did you even read the article?

If indeed we're pouring $1.1 trillion down the sink hole of "defense" in a year, then that is nearly 10% of the $12 trillion national product ($13 trillion sans borrowings, which don't count as "product" in any real world I've heard of).

But do you honestly buy the government "headline" propaganda economic statistics?

If the GDP (national product) were to be properly deflated by the accumulated mis-reporting of inflation since 1980, it would probably be no more than about $7 trillion. That would make defense spending almost 16% of the national product.

By the way, that's an INCOME to PRODUCT comparison, which is oranges to apples and makes the ratio appear quite low. Each dollar is counted MULTIPLE times in a national product computation, so the actual size of the war spending sector relative to the entire economy could easily be 30 or 40%. Maybe more.

My background is in computers and math and I can assure you there is little opportunity left in those fields outside the defense industry. At least, not in this country. As someone who refused to "go there" a few years ago when looking for a job, that left me with few options -- and relatively low pay (defense contracting pays very well, of course, as it enjoys the the political patronage dynamics and lack of auditing discussed in the article. Which you didn't read.)

I am tired of people who will be dead soon supporting this rapacious complex, which my generation will have to pay for.

[Dan]

Aaron,
I'm surprised by your comments, since I know your someone that understands how the world’s central Banks control economies with the money supply (M1, M2, M3,). The Pentagon is just another mechanism by which the government injects liquidity (inflation) into the economic system. And taxes and/or debt (bonds) are how they neutralize the inflation (sterilize). There is a real problem here in the international community is buying up most of these bonds and not we Americans. Hence, undoing the work of our central bank.
The real problem is we have a government that assumes markets know best and leave the hen house unguarded. And 99% of the other countries out there practice economic manipulation on a massive scale. Fly to Narita Japan sometime, its easy to convert Dollars into Yen at the airport, it’s a different story converting it back the other way.
Most countries in the world do not practice Free Trade and probably never will. As for sources of inflation in the world, look for who is sitting on stockpiles of our bonds. The fantastic economic growth in China, and India, is due to their central bank printing money at warp factor speeds. In China there money supply is growing by 6% to 9% per month and inflation is accelerating. In India people are melting down Rupees for the steel, the steel is worth more than there currency.
Interest rates in Japan are at 0.5% because is devalues the Yen for their exports. That interest rate doesn’t help the Japanese; they simply borrow in Yen, convert it and invest in other countries with it. Hence, a source of international inflation. The Chinese buying up MBS (Mortgage Backed Securities) accomplished the same thing. It devalues the Yuan and gives us more credit to keep on spending.

We are at a turning point. It is time for the rest of these countries to become consumers and we’ll be providers. The Value of our currency is a reflection of our credit worthiness. As long as the international community continues to be obstinate, our economic system will continue to be dysfunctional and the Dollar will fall. Eventually products produced here will be cheap and they (other countries) can cash in those IOU’s (Bonds).

You see, when it comes to Currency, Bonds, Stocks, Real Estate, etc, it is really relative. What is the intrinsic value of something at any point in time? Its like every time I hear someone pontificating about the problems with Social Security. There is no problem with the solvency of Social Security, the government prints all the currency it needs. The real problem is inflation and the government only has two ways of neutralizing it, taxes and debt (bonds). And allot of governments out there are more than willing too undo those actions, and probably never will buy our goods and services.

Note: That pile of $850B of T-Bills the Central Bank of Japan is sitting on is mostly 10-year notes. Over 70% of those notes stopped paying interest years ago.

[Aaron Krowne]

Dan,

I'm not really seeing the contradiction between my points and yours. The government not only spends vast amounts of money on militarism; it creates some of that money out of thin air. Granted.

And I was in Narita last year, and had no problem converting Yen to Dollars.