Friday, June 10, 2011
I received an interesting email from a professor at one of the top American military colleges. He asked about my recent post regarding the cause of America's debt.
The good professor asked what I thought real contributions to the debt are from the wars in Iraq and Afghanistan, the Bush-Obama tax cuts, bailouts and other sources.
The short answer is that it is currently impossible to come up with an accurate estimate which all parties will accept.
Initially, there so many different direct and indirect costs which the government has incurred in bailing out the large banks that economists would have a hard time agreeing even on what categories of expenditures - let alone individual expenses - should be included in the bailout costs.
For example, as I pointed out in January 2010:
Reuters notes:U.S. securities regulators originally treated the New York Federal Reserve's bid to keep secret many of the details of the American International Group bailout like a request to protect matters of national security, according to emails obtained by Reuters.
The national security claim may seem outlandish, but it is nothing new.
As Business Week wrote on May 23, 2006:President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations.
AP noted in July 2010:
For at least a year, the Homeland Security Department detoured requests for federal records to senior political advisers for highly unusual scrutiny, probing for information about the requesters and delaying disclosures deemed too politically sensitive.
***Career employees were ordered to provide Secretary Janet Napolitano's political staff with information about the people who asked for records — such as where they lived, whether they were private citizens or reporters — and about the organizations where they worked.
If a member of Congress sought such documents, employees were told to specify Democrat or Republican.
The special reviews at times delayed the release of information to Congress, watchdog groups and the news media for weeks beyond the usual wait, even though the directive specified the reviews should take no more than three days.***
Two exceptions required White House review: requests to see documents about spending under the $862 billion stimulus law and the calendars for Cabinet members.
Moreover, Congressman Ron Paul wrote in 2009:
I've always been convinced that the Exchange Stabilization Fund is involved in stock, commodity, and currency transactions by manipulating price.(For more on the Exchange Stabilization Fund, see this, this and this. For more on the President's Working Group, see this and this.)
As part of the ignored President’s Working Group on Financial Markets (Plunge Protection Team), the Treasury, along with the Fed, SEC, and CFTC, will continue to rescue the market any way possible. Unfortunately, it’s more like that its powers will be used to bail out friends at the expense of the rest of us.
So the bottom line is that there is simply not enough publicly-available information to calculate how much money the government has spent on all of the various recent bailouts, loans, guarantees and other programs to prop up the giant banks. Indeed, while the Treasury (like the military) is part of the U.S. government, the Federal Reserve is largely a private organization, owned by the big banks. So even if top Federal Reserve economists asked for all of the military's expenditures, or top military brass asked for all of the Fed's expenditures, I'm not sure either would fully share.
Debt Is Our Top National Security Threat
Of course, the very fact that the military professor wrote to me about debt touches on several very important issues. And while I've got the good professor's ear, I might be so bold as to offer some advice on military strategy. (I was born in America, lived here all my life, and love this country. And I - like the prof - want to protect my country by reducing the danger of the debt trap.)
Initially, as I've repeatedly noted (see this and this), our top military and intelligence officials say that debt is the main threat to our national security, and have said that the Pentagon must cut spending.
In other words, the good people tasked with defending our country say that debt is a bigger threat to United States national security than terrorists or rogue nations.
Bang for the Buck
Military leadership is tasked with finding the most cost-effective ways to protect our nation ... especially during an economic downturn. My interest - like those of the military leadership - is to protect the American people at the least possible cost.Many in the military are dedicated to doing what's right for the country and its people (yes, I know ... there is a lot of politics in the military; but there are still a huge number of dedicated folks).
Indeed, as I pointed out in April, top military leadership has indicated a major change in approach:
I've said for years that the war on terror is weakening America.
As I noted last year:
The very hawkish and pro-war Rand Corporation - released a study in 2008 called "How Terrorist Groups End: Lessons for Countering al Qa'ida".
The report confirms that the war on terror is actually weakening national security. As a press release about the study states:"Terrorists should be perceived and described as criminals, not holy warriors, and our analysis suggests that there is no battlefield solution to terrorism."
Former U.S. National Security Adviser Zbigniew Brzezinski told the Senate that the war on terror is "a mythical historical narrative". And Newsweek has now admitted that the war on terror is wholly unnecessary.***
As American reporter Gareth Porter writes in Asia Times:Three weeks after the September 11, 2001, terror attacks, former US defense secretary Donald Rumsfeld established an official military objective of not only removing the Saddam Hussein regime by force but overturning the regime in Iran, as well as in Syria and four other countries in the Middle East, according to a document quoted extensively in then-under secretary of defense for policy Douglas Feith's recently published account of the Iraq war decisions. Feith's account further indicates that this aggressive aim of remaking the map of the Middle East by military force and the threat of force was supported explicitly by the country's top military leaders.Feith's book, War and Decision, released last month, provides excerpts of the paper Rumsfeld sent to President George W Bush on September 30, 2001, calling for the administration to focus not on taking down Osama bin Laden's al-Qaeda network but on the aim of establishing "new regimes" in a series of states...***General Wesley Clark, who commanded the North Atlantic Treaty Organization bombing campaign in the Kosovo war, recalls in his 2003 book Winning Modern Wars being told by a friend in the Pentagon in November 2001 that the list of states that Rumsfeld and deputy secretary of defense Paul Wolfowitz wanted to take down included Iraq, Iran, Syria, Libya [yes, Libya], Sudan and Somalia [and Lebanon].***When this writer asked Feith . . . which of the six regimes on the Clark list were included in the Rumsfeld paper, he replied, "All of them."***The Defense Department guidance document made it clear that US military aims in regard to those states would go well beyond any ties to terrorism. The document said the Defense Department would also seek to isolate and weaken those states and to "disrupt, damage or destroy" their military capacities - not necessarily limited to weapons of mass destruction (WMD)...Rumsfeld's paper was given to the White House only two weeks after Bush had approved a US military operation in Afghanistan directed against bin Laden and the Taliban regime. Despite that decision, Rumsfeld's proposal called explicitly for postponing indefinitely US airstrikes and the use of ground forces in support of the anti-Taliban Northern Alliance in order to try to catch bin Laden.Instead, the Rumsfeld paper argued that the US should target states that had supported anti-Israel forces such as Hezbollah and Hamas.***A senior officer on the Joint Staff told State Department counter-terrorism director Sheehan he had heard terrorist strikes characterized more than once by colleagues as a "small price to pay for being a superpower".
I've previously noted that the rational for a large-scale war in Afghanistan doesn't make sense:
The U.S. admits there are only a small handful of Al Qaeda in Afghanistan. As ABC notes:U.S. intelligence officials have concluded there are only about 100 al Qaeda fighters in the entire country.
With 100,000 troops in Afghanistan at an estimated yearly cost of $30 billion, it means that for every one al Qaeda fighter, the U.S. will commit 1,000 troops and $300 million a year...
This week, two senior members of the U.S. joint chiefs of staff - Captain Wayne Porter of the U.S. Navy and Colonel Mark Mykleby of the Marine Corps - agreed that America is on the wrong track. As Fareed Zakaria summarized their report yesterday:That the United States has embraced an entirely wrong set of priorities, particularly with regard to its federal budget. We have overreacted to Islamic extremism. We have pursued military solutions instead of political ones.***
We are underinvesting in the real sources of national power - our youth, our infrastructure and our economy. The United States sees the world through the lens of threats, while failing to understand that influence, competitiveness and innovation are the key to advancing American interests in the modern world... Above all we must invest in our children. Only by educating them properly will we ensure our ability to compete in the future.
It's likely that the essay had some official sanction, which means that the Chairman of the Joint Chiefs of Staff or perhaps even Secretary of Defense Robert Gates had seen it and did not stop its publication.
Washington needs to make sure that the United States does not fall into the imperial trap of every other superpower in history, spending greater and greater time and money and energy stabilizing disorderly parts of the world on the periphery, while at the core its own industrial and economic might is waning.
We have to recognize that fixing America's fiscal problems - paring back the budget busters like entitlements and also defense spending - making the economy competitive, dealing with immigration and outlining a serious plan for energy use are the best strategies to stay a superpower, not going around killing a few tribal leaders in the remote valleys and hills of Afghanistan.
The bottom line is that many of the top military leadership are looking for more bang for the buck. And in those priority changes, they are pretty closely aligned with the views of the American people.
So what's the answer?
Studies show that freedom and democracy promote economic growth.
On the other hand, many of the world's leading economists say that the failure to follow the rule of law destroys economies. As I wrote last year:
What's the hole that is swallowing up the economy? The failure to follow the rule of law.
We will never grow our way out of this debt crisis until the rule of law is restored to America. And so one of the most effective way for our military leadership to minimize the danger from the number 1 threat to our national security - the debt crisis - is for military leaders to support freedom, democracy and the rule of law in America ... and ignore the call of tyranny from those politicians who may dream of despotic power.
Oil, Prosperity and National Security
I happen to know that some high-level military leaders are eager to find ways to move alternative energy and energy conservation forward.
Well, as I wrote last year:
But there comes a point where using the military to secure oil costs more than it's worth, because the military has to use so much oil just to get there ... and then to fight.That might be why the military is one of the main entities sponsoring research into such things as fusion energy.
Why are oil companies like BP being allowed to drill so deeply in hazardous conditions under the Gulf? In other words, why has the government been so supportive of deepwater drilling in the Gulf?
[Because oil is a national security issue.]
But let's take a step back and ask why the government considers oil a national security priority in the first place.
Well, as professor of national security affairs at the Naval War College Mackubin T. Owens writes:
The concern of these lawmakers [regarding the BP oil spill] is understandable, but lest they overreact, they need to place their valid concerns within the broader context of the nation’s economic health and energy security.
Americans currently consume about 22 million barrels of oil daily, of which about two-thirds is imported. The Department of Energy’s Energy Information Administration (EIA) expects imports to reach 70% by 2025. This means we send billions of dollars abroad in payment for foreign oil. This makes little sense when, according to the U.S. Minerals Management Service (MMS), there are vast reserves of oil and gas beneath Federal lands and coastal waters. And it is likely that even these estimates are low. For instance, in 1987, MMS estimated that there were 9 billion barrels of oil in the Gulf of Mexico. By 2007, once drilling had begun in deeper waters, MMS had revised its estimate upward to 45 billion.
In addition, the U.S. military is the largest consumer of oil in the world. And the government is eager to ensure that the military maintains access to oil.
As NPR reported in 2007:
All the U.S. tanks, planes and ships guzzle 340,000 barrels of oil a day, making the American military the single-largest purchaser and consumer of oil in the world.
If the Defense Department were a country, it would rank about 38th in the world for oil consumption, right behind the Philippines.
As Reuters pointed out in 2008:U.S. military fuel consumption dwarfs energy demand in many countries around the world, adding up to nearly double the fuel use in Ireland and 20 times more than that of Iceland, according to the U.S. Department of Energy.
And as I summarized last year:Indeed, Alan Greenspan, John McCain, George W. Bush, Sarah Palin, a high-level National Security Council officer and others all say that the Iraq war was really about oil.
Sara Flounders writes:
By every measure, the Pentagon is the largest institutional user of petroleum products and energy in general.
The Feb. 17, 2007, Energy Bulletin detailed the oil consumption just for the Pentagon's aircraft, ships, ground vehicles and facilities that made it the single-largest oil consumer in the world.
Even according to rankings in the 2006 CIA World Factbook, only 35 countries (out of 210 in the world) consume more oil per day than the Pentagon.
As I pointed out out last week:
Professor Michael Klare noted in 2007:Sixteen gallons of oil. That's how much the average American soldier in Iraq and Afghanistan consumes on a daily basis -- either directly, through the use of Humvees, tanks, trucks, and helicopters, or indirectly, by calling in air strikes. Multiply this figure by 162,000 soldiers in Iraq, 24,000 in Afghanistan, and 30,000 in the surrounding region (including sailors aboard U.S. warships in the Persian Gulf) and you arrive at approximately 3.5 million gallons of oil: the daily petroleum tab for U.S. combat operations in the Middle East war zone.And in 2008, Oil Change International released a report showing that [b]etween March 2003 and October 2007 the US military in Iraq purchased more than 4 billion gallons of fuel from the Defense Energy Support Center, the agency responsible for procuring and supplying petroleum products to the Department of Defense.
And economist Anita Dancs writes:Each year, our military devotes substantial resources to securing access to and safeguarding the transportation of oil and other energy sources. I estimate that we will pay $90 billion this year to secure oil. If spending on the Iraq War is included, the total rises to $166 billion.
In addition, as one of the top oil experts told me, we do have peak oil. So - for both military strength and economic reasons - we have to move from a petroleum-based military to one based on more abundant energy sources.
Indeed, I believe that getting past the era of energy scarcity would lead to unprecedented economic prosperity and long-term military strength.
Some of the most honorable, hard-working, dedicated people I know are current or former military. Some of them put their backsides on the line for us every day to keep us safe so that we can enjoy our Nascar races and our caffè lattes (notice the bipartisan theme to avoid the false dichotomy of conservative-versus-liberal?). Some of them walk their talk in a way which few others have the integrity or courage to do.
Remember, the good people who serve are not trying to run up costs ... unlike many private defense contractors and chickenhawk civilian commanders (did I say that out loud?)The bottom line is that while some want to launch new adventures for profit or for geostrategic reasons which have nothing to do with keeping the American people safe, most in the military do not.