Thread: Bankruptsy jumps 40 percent 2007

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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
<http://www.commondreams.org/views07/0210-26.htm> of the New America
Foundation's Arms and Security Initiative and Fred Kaplan
<http://www.slate.com/id/2159102/pagenum/2/> , 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
<http://en.wikipedia.org/wiki/Military_budget_of_the_United_States>
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
<http://www.msnbc.msn.com/id/18053235/> 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 <http://antiwar.com/casualties/>
so far wounded in Iraq and another 1,708 in Afghanistan. The amount is
universally derided as inadequate
<http://www.commondreams.org/archive/2007/11/09/5119/> . 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,"
<https://www.cia.gov/library/publications/the-world-factbook/rankorder...>
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
<https://www.cia.gov/library/publications/the-world-factbook/rankorder...>
-- 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 <http://www.fas.org/irp/offdocs/nsc-hst/nsc-68.htm>
(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
<http://www.encyclopedia.com/doc/1G1-15594492.html> : "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
<http://www.encyclopedia.com/doc/1G1-15594492.html> $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 <http://www.cepr.net/content/view/1157/77/> :


"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
<http://www.lewrockwell.com/woods/woods81.html> 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 <http://www.brookings.edu/projects/archive/nucweapons/figure1.aspx>
. 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
<http://www.lewrockwell.com/woods/woods81.html> :


"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
<http://www.alternet.org/story/49418/> . 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
<http://www.nytimes.com/2007/12/26/business/26protonba.html?scp=2&sq=A...>
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
<http://www.alternet.org/story/49418/> :


"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
<http://www.amazon.com/dp/0805087281/ref=nosim/?tag=nationbooks08-20>
, just published in paperback. It is the final volume of his Blowback
Trilogy, which also includes Blowback
<http://www.amazon.com/dp/0805075593/ref=nosim/?tag=nationbooks08-20>
(2000) and The Sorrows of Empire
<http://www.amazon.com/dp/0805077979/ref=nosim/?tag=nationbooks08-20>
(2004).


[Note: For those interested, click here
<http://www.tomdispatch.com/p/chalmers_video> to view a clip from a
new film, "Chalmers Johnson on American Hegemony," in Cinema Libre
Studios' <http://www.cinemalibrestudio.com/> 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"
<http://www.globalsecurity.org/military/world/spending.htm> as well
as Glenn Greenwald, "The bipartisan consensus on U.S. military
spending" <http://www.salon.com/opinion/greenwald/2008/01/02/military_spending/>
; (2) Stockholm International Peace Research Institute, "Report: China
biggest Asian military spender."
<http://www.usatoday.com/news/world/2007-06-11-military-report_N.htm>
]

Are we supposed to read all that 'stuff'?

I started but suddenly got a severe left coast taste in my mouth; had to stop.

Kitz

Originally Posted by kitz

Are we supposed to read all that 'stuff'?


Kitz

I guess we can let you off this time.....

I try not to listen to any one articles veiw ,but rather gleen a overall perspective on what is being said .....It seems like no one is predicting a good next few years ,it sure does not mean the sky is falling today ,but rather the sky is slowly falling is the general feel I get from both sides of the fence and mostly the feel from the general public is not a bright one either.

What I did like about this article is that it contained reference material to go along with what was being said to exspand/confirm or atleast show what he was talking about and that it was just not his opinion,but rather a general view of how its shaping up to be.