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Wednesday
Feb202013

Budget Hawks Till Something Gets Cut In Their Districts

“Preventing future acts of international terrorism” is the most critical foreign-policy goal for Americans, according to Gallup. Next priorities: proliferation of nuclear weapons, energy supply, favorable trade policies, etc. Fighting off Soviet tanks rumbling towards Frankfurt didn’t make the list. Yet Congress, in its infinite wisdom, is still pushing weapon systems designed to do just that, whether the Pentagon wants them or not.

Based on this laudable principle, the US plowed $689 billion into defense in 2011, more than the next 16 biggest military spenders combined, and 40% of total worldwide military spending. Number two China spent $129 billion, number three Russia a measly $64 billion. Defense industry lobbying in the US greased the wheels with $129 million last year—for what must be enormous returns on investment.

Hence the deafening squealing about the looming automatic spending cuts, especially on the defense side. They would account for about half of the $1.2 trillion in “cuts” spread over a decade. The first $46 billion would get snipped this year. Brutal? The Congressional Budget Office estimated that defense spending would still grow by 2.4% annually over the decade. It would just grow less rapidly.

Congress doesn’t see it that way. “We’ve gone past cutting the meat—we’re into the bone,” griped House Armed Services Committee Chairman Howard “Buck” McKeon, a California Republican. Congress loves defense spending. It’s just too juicy. And they can wrap it—the money—in patriotism. To illustrate, Bloomberg took a gander at two of our heroes.

There’s Senate Budget Committee Chairwoman Patty Murray, an “anti-war Democratic senator from Washington State” who “voted against the Iraq war resolution and subsequent troop surges.” She’s spearheading the Senate’s efforts to bring the budget in line. Until it gets to Boeing.

Now $51 billion are on the table to replace the old aerial tankers with the KC-46, a modified version of the Boeing 767 passenger jet. It will be built in her state and may eventually create 11,000 jobs. The first $4.9 billion were already awarded. Of the 20 years she has been in the Senate, she spent 10 years shepherding the program through a tangle of issues and investigations.

“Champion for the Boeing Co.,” is how Boeing spokesman Doug Kennett endorsed her during her reelection campaign in 2010.

What motivated her? Not national security. Not the fight against terrorism. But the economy in her state, the money that came with it, and her reelection. She admitted it when she said, “Many defense programs, particularly in the aerospace industry, have a tremendous impact on our entire nation’s industrial base.”

That “industrial base” is composed of Lockheed Martin, Boeing, Northrop Grumman, and thousands of smaller companies that all feed on the huge corporate welfare trough filled by taxpayers who will have to deal with the resulting mountain of debt—and tax increases.

Then there’s Jim Jordan, an “anti-tax Republican representative from Ohio.” His favorite toy is the M1 Abrams tank, which entered service in 1980 to battle Soviet tanks in Europe. The Army and Marine Corps have about 6,000 of them. The Army wants to shut down production at the plant in Lima, Ohio, where old tanks are rebuilt and updated. Later, it would reopen it to build a redesigned tank. It would save over $2 billion, but 600 workers would lose their jobs.

“The conundrum we have is that we don’t need the tanks,” explained Army Chief of Staff General Raymond Odierno to the House Appropriations Committee last year.

But whether the Army needed them or not didn’t matter to Jordan. General Dynamics operated the plant, made money off it, and contributed to his campaign. So he fought successfully to keep it open. Jordan is a “budget hawk,” said a Republican voter in Lima, “until they want to cut something in his district.”

In addition to procurement, there are other issues spiraling out of control, including the military health-care system and staffing. While the Pentagon is cutting combat forces—trimming the Army by 72,000 over the next four years—the office of the Joint Chiefs of Staff has ballooned from 1,313 in 2010 to 4,244 in 2012.

“Not every defense dollar is sacrosanct,” said former Defense Secretary Robert Gates. “One need only spend 10 minutes walking around the Pentagon or any major military headquarters to see excess and redundancy.”

But it is sacrosanct in Washington. Defense spending is spread across all states, and the industry is so tightly woven into the fabric of Congress, and the amounts are so huge and campaign donations so important that cutting anything at all, even “waste”—another constituent’s income—or even something the Pentagon doesn’t want, may prove too much for our heroes in Congress.

But Americans aren’t blind; Congressional job approval ratings have been in the dumpster for years, hitting new lows of 10% twice in 2012, and hovering at 15% currently. Republicans practically despise Congress, with a mere 6% approving of it in January, a new low, though it has since edged up a bit.

Corporate insiders rotate in and out of various government agencies—nut just at the Department of Defense. An egregious example is the SEC, where Wall Street culture and personalities have come to dominate. Regulation and enforcement have become a joke. A principle so common that it has a name: “Regulatory Capture.” Read.... Wall Street Takes Over Its Regulator.

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