James Landrith is...Taking The Gloves Off: syndicated

left-libertarian blogger, publisher, USMC veteran and civil liberties activist

 

The U.S. Can No Longer Afford Its Empire 
February 3, 2010
Ivan Eland

President Obama has presented Congress with a spending request of $3.8 trillion for the next fiscal year in 2011, but with a third of it not paid for with taxes, thus resulting in a $1.3 trillion deficit (a whopping 8.3 percent of GDP). The small piece of good news is that this deficit is smaller as a portion of the nation’s economic output than this year’s gargantuan 10.6 percent for FY 2010 (that $1.6 trillion deficit is a post-World War II record). Budget deficits of this magnitude have occurred before, but only during cataclysmic wars—the Civil War and World Wars I and II.

Contrary to the rhetoric of congressional Republicans, who are stridently criticizing Obama for his excessive spending, these budget deficits are largely the result of George W. Bush’s new entitlement program (Medicare prescription drug coverage), the usual Republican fake tax cuts (tax cuts without concomitant reductions in government spending), bank and insurance bailouts, and the conduct of two disastrous U.S. occupations of foreign countries. Of course, Obama is far from blameless.

Using the key statistic of deficits as a portion of GDP, when Obama took office during FY 2009, the budget deficit was more than 9 percent of GDP. Obama’s $787 billion stimulus package and bailout of car companies increased an already gaping deficit into the 10.6 percent post-World War II record. The 8.3 percent figure for FY 2001 starts a downward projection but is still much too high. In fact, all budget projections for years out past the current and requested years (in this case, FY 2010 and FY 2011) are usually malarkey, because policy changes are unpredictable in the “out years.”

However, if history is any guide, Obama, a Democrat, over the long term will probably be better on deficits than George W. Bush, a Republican (he couldn’t be much worse). That’s because, according to conservative economist John H. Wood of Wake Forest University, historically, U.S. budget deficits have been closed after a crisis has passed.

Democrat Bill Clinton, with tax increases, cuts in military spending, and robust economic growth, managed to defy predictions for indefinite deficits from the Republican Reagan/Bush Sr. years and turned them into budget surpluses ending with FY 2001, the year he left office. Obama now faces a similar task of cleaning up the fiscal mess from the junior Bush’s eight years.

Obama made his task harder by buying into the flawed Keynesian argument that increased government spending is good for the economy. His stimulus package and car company bailouts just dug the fiscal hole deeper. But now the good news is that he seems to have quit digging and may have turned the corner to smaller deficits as a percentage of GDP. Only time will tell, but the wake-up call of the loss of Ted Kennedy’s Senate seat in liberal Massachusetts (in addition to dramatically lowering the probability that Obama’s stealth budget-busting health care program will be enacted) may cause Obama to become a “deficit-reduction Democrat,” much like his forebear Clinton.

After the Cold War, Clinton cut the defense budget despite the prosecution of many frivolous small wars that were unneeded for U.S. security. So far, Obama continues to increase military spending while freezing only a small part of non-security spending. Nancy Pelosi, the speaker of the House, has prudently said the avoidance of cutting security spending is unacceptable.

And security spending is massive. According to Winslow Wheeler of the Center on Defense Information, the annual U.S. security budget—including spending on the wars, the Defense Department, the Department of Energy nuclear weapons programs, homeland security, veterans compensation, international affairs, non-DoD military retirement payments, and interest on the national debt accounted for by defense programs—is well over $1 trillion per year.

Cuts to such spending should not entail just slashing a few weapon systems—as was done in FY 2010 but not in FY 2011—but need to result from a total reassessment of the non-traditional post-World War II U.S. foreign policy of U.S. militarized interventionism. Such a policy should have been pronounced a failure when it caused the horrendous retaliatory terrorist attacks on 9/11. Instead, the tragedy triggered the initiation of a neoconservative hyper-version of this same foreign policy, the War on Terror (which includes two unneeded and counterproductive occupations of two Muslim countries), which statistics show made the problem of terrorism worse.

The Cold War is long over, and the concomitant rationale (dubious even then) for using an interventionist U.S. foreign policy to attempt to run the world is now obsolete and even dangerous in an era of blowback terrorism. Many empires throughout history have collapsed or withered away because their aspirations were too big for their wallets; the U.S. is in that perilous position now. Therefore, the United States should dramatically retract its defense perimeter, thus cutting the U.S. security budget by half and saving more than $500 billion a year. Of course, doing this will not cut even half the annual $1.3 trillion deficit. But it is a start on throwing dirt back in the cavernous budget hole.

New from Ivan Eland! THE EMPIRE HAS NO CLOTHES: U.S. Foreign Policy Exposed (Updated Edition) Most Americans don’t think of their government as an empire, but in fact the United States has been steadily expanding its control of overseas territories since the turn of the twentieth century. In The Empire Has No Clothes, Ivan Eland, a leading expert on U.S. defense policy and national security, examines American military interventions around the world from the Spanish-American War to the invasion and occupation of Iraq. Learn More »»

Holden Caulfield vs. Steve Jobs 
February 3, 2010
Alvaro Vargas Llosa

WASHINGTON—J.D. Salinger, the author of “The Catcher in the Rye,” the great novel about adolescent alienation, died the same day that Steve Jobs launched the iPad, a manifesto on the treasures that America offers its youth.

I first read “The Catcher in the Rye” in boarding school, when I was 14. As was the case with many kids of my generation, it fell into my hands at a time of personal crisis when a particular experience filled me with anger toward the world of adults. A fellow student had been sexually assaulted by someone who had sneaked into our dorm and quietly dragged him to the bathroom at knifepoint. The classmate woke the rest of us up two hours later to tell what had happened. The story of Holden Caulfield, who spends three days in New York after his expulsion from school despising the “phony” adult society, had a strangely comforting quality.

Holden’s meeting in New York with his 10-year-old sister Phoebe, the only living person for whom he has profound affection and whose hope to run away with him he turns down, movingly conveyed his protective nature toward innocent beings.

Years later, I reread the book on an airplane bound for Hong Kong. I became captivated once again, but this time I found Caulfield to be a self-centered phony himself. His meeting with Phoebe no longer revealed a protective soul but the opposite: a cowardly rejection of responsibility. It disproved the claim that he wanted to be a “catcher in the rye” and rescue children before they fell off a cliff.

The third time I read the book, I was on my way to speaking engagements in Europe. I still considered it to be a masterpiece, but by then I had difficulty reacting to Caulfield either admiringly or with enmity. He struck me as the kind of dysfunctional being that free countries produce from time to time for reasons that have little to do with society’s evils and much to do with an individual’s own demons. The 1950s, the decade whose sense of alienation “The Catcher in the Rye” supposedly symbolized, was one of extraordinary achievement in the United States. The postwar economy took off, 10 million households gained access to television, the first credit card (Diners Club) found its way to people’s wallets, life was so busy that fast-food chains sprang into action and families moved to the suburbs, and couples were so optimistic that the era was known for its baby boom.

Yes, rebellion was in the air. Rock ‘n’ roll and the celluloid anti-heroes and anti-heroines—James Dean, Marlon Brando, Ava Gardner, Kim Novak—were early harbingers of the nonconformism that the 1960s would turn into a religion. But all of that was creative; instead, Salinger’s fictional character, though perceptive, is sterile. The rebellious youth who began to emerge in the 1950s replaced traditional values with new ones, legitimate or not. Caulfield is not interested in replacing “phony” society with anything.

Which brings me to Steve Jobs. He was also an outcast—a college dropout. But he turned his disconnect with the conventions of adulthood into an epic poem that started when he and Steve Wozniak virtually invented the personal computer. They launched the Apple saga with no more than $1,300; last year the company had $43 billion in sales. Along the way, Jobs revolutionized personal computers, mobile communications, portable music and video, and has now integrated those functions into a fantastic new tool of personal freedom.

Jobs’ tale is the story of youth overpowering “phony” adults. And so are plenty more tales of entrepreneurial and innovative defiance. Thousands of small companies continually displace larger ones in the United States. In the 1960s, it would take 20 years for one-third of the Fortune 500 list to change. Now, it takes four years. Some of the greatest names in American capitalism—Microsoft, Gap, Hewlett-Packard, Polaroid, Burger King—were started by youthful nonconformists in the midst of recession.

Alienation is by no means a monopoly of free societies—a reason why alcoholism reached astronomical proportions in the Soviet Union. But free societies place at one’s disposal all sorts of possibilities to turn what feels alien into something more intimate or meaningful. How ironic that you will soon be able to read masterpieces on adolescent alienation such as “The Catcher in the Rye” on an iPad tablet, a monument to youthful liberation.

Bernanke Agonistes 
January 28, 2010
William F. Shughart II
The Washington Times

President Obama pulled out all the stops to clinch Senate approval of his nomination of Ben S. Bernanke to a second four-year term as chairman of the Federal Reserve. Now that the president seems to have enough votes for his nominee in hand, news of yet another “Louisiana Purchase” may be grabbing headlines soon.

Mr. Bernanke has become something of a lightning rod for critics on the left, who think his response to the financial crisis that triggered the recession has been too timid, and for those on the right, who charge that the Fed has been overly aggressive and will be unable to unwind its easy-money policy and unprecedented interventions into financial markets without dire economic consequences.

If nothing else, Mr. Bernanke has proved to be a consummate bureaucrat, spending most of his time in recent months lobbying for major expansions in the Fed’s regulatory powers, which, if granted, would take it far beyond the purposes for which it was created in 1913.

As a former Princeton University professor who established his academic reputation by publishing professionally respected papers on the causes of the Great Depression, Mr. Bernanke could have been a better steward of monetary policy. His research complements Milton Friedman and Anna J. Schwartz’s monumental “Monetary History of the United States” in showing that the widespread bank failures that followed the Fed’s “Great Contraction” of the money supply in 1928 caused credit markets to collapse as the customers of failed banks found it nearly impossible to borrow from surviving institutions that understandably were reluctant to lend to people they did not know.

The Fed’s easy-money policy of the mid-1920s fueled rampant real estate and stock-market speculation—and its later reversal of course caused the economy to contract sharply, helping to trigger the Great Depression.

Sound familiar?

Yet Mr. Bernanke denies that monetary policy had anything to do with inflating the recent real estate bubble or that his predecessor’s policy of curbing “irrational exuberance” by raising interest rates eventually popped it. He instead blames irresponsible bankers and lax banking regulations. He wants to transform the Fed into a kind of superregulator with responsibility for ferreting out sources of systemic risk that threaten the stability of the financial system, wherever it may rear its head, whether from commercial banks, mortgage lenders, hedge funds, insurance companies or stock brokerages.

In two valuable books published earlier this decade, “Reflections on the Great Depression” and “The Economics of the Great Depression,” Randall E. Parker of East Carolina University assembles the transcripts of interviews he conducted with dozens of economists from whom he sought professional opinions on the origins of the Great Depression and the lessons one should learn from it. While one might think the interviews produced twice as many opinions as the number of economists with whom Mr. Parker talked—and sharp differences certainly were revealed—there was unanimous agreement on one point: The Fed should not be an arbiter of stock prices or real estate values.

The Fed is supposed to have one and only one goal—to maintain a sound currency. It lost its direction early on, as its ineptness in responding to the events of 1929 through 1933 amply demonstrates.

Monetary policy may be enigmatic to most Americans, including policymakers. But it would not be far off the mark to interpret the Fed’s actions on Mr. Bernanke’s watch as being designed to enrich Wall Street, including the cradle of treasury secretaries, Goldman Sachs.

America needs a Fed chairman who will end its destabilizing influence in mismanaging the nation’s money and thereby avert cycles of boom and bust. Mr. Bernanke has demonstrated his inability to do that job.

Why Freeze Spending on Only Part of the Budget? 
January 27, 2010
Ivan Eland

The results of the special election for the Massachusetts Senate seat once held by Ted Kennedy reverberated like a “shot heard ’round the world”—or at least one heard ’round Washington. All the spending lately in Washington has apparently alienated the political independents that Barack Obama won in November 2008. And the president gets the message—or at least he is making a good show of it.

His new proposal is a severely qualified three-year spending freeze, covering only about an eighth of the federal budget. The proposal covers only “discretionary spending,” programs that Congress appropriates money for each year, and leaves out the faster growing entitlement programs, such as Social Security, Medicare, and Medicaid, which are ballooning on automatic pilot. Admittedly, entitlement programs are hard to cut, because . . . well . . . people feel entitled to their government handouts.

Yet Obama’s proposed spending freeze, which in fiscal year 2010 will save only a measly $10-$15 billion in a $3.5 trillion annual federal budget, doesn’t even cover all discretionary spending. Exempt are the Departments of Defense and Homeland Security and foreign aid. Yet DoD spending alone, with the Cold War long over, is the greatest in inflation-adjusted terms since World War II and has doubled since George W. Bush took office in 2001.

President Obama’s rationale for not including these security expenditures in his discretionary spending freeze is that he is prosecuting two wars. Aside from the obvious solution of ending the two conflicts—which are part of the “war on terror” but have had the counterproductive effect of increasing retaliatory terrorism—and cutting back the defense budget, defense spending could be reduced even if the two war efforts are sustained.

Just as Obama used the economic crisis to try to pass an unrelated and expensive health care bill, George W. Bush used the 9/11 attacks to conduct an unrelated invasion of Iraq, which he then used as an excuse to pump up the defense and non-defense budgets. Although Obama has deepened the national debt and budget deficit, most of the two are still mostly Bush’s, because his reckless spending lasted eight years and Obama’s has only been going for a year so far. Still, despite different political rhetoric, some things never change in Washington.

So why doesn’t Obama at least freeze security spending? Could it be that the “war on terror” requires Cold War-like resources to be successful? No, the intelligence, drones, and CIA and Special Forces operations to conduct a real, covert, and more effective war on terror are reasonably cheap. The real answer as to why there is no defense spending freeze: Because Democrats are always scared of being called “wimps” on national security issues—likely the same reason Obama had to support at least one overseas war and thus reluctantly escalated the Afghanistan conflict.

Even if the Afghan war is considered necessary, however, it has nothing to do with most of the defense budget. A large part of that budget is doled out to special interests, including defense industries and even uniformed service members.

So here are some suggestions of items that could be cut from the defense budget without harming national security. The Navy could cancel the CVN-79 aircraft carrier, terminate the building of littoral combat ships and LPD-26-class amphibious vessels, stop production of exorbitantly expensive DDG-1000 Zumwalt-class destroyers, and terminate production of SSN-774 Virginia-class submarines. The Navy has little relevance to the war on terror and, with existing equipment, has crushing dominance over any other fleet in the world. The Air Force should stop production of C-17 aircraft, which are expensive compared to sealift, and delay production of the F-35 Lightning II Joint Strike Fighter until flight tests have been satisfactory. The Marines should cancel the MV-22 Osprey aircraft; the range and speed advantages over existing helicopters are not worth the much higher cost.

The Army and Marines should end expansion of their forces. Adding more soldiers is very expensive because of added salaries, benefits, equipment, and support. If any presidential administration feels it needs to use military force against terrorists, it should be employed only sparingly after law enforcement methods have failed, and with a lighter footprint so that it doesn’t fuel the Islamist fire that it seeks to dampen. Thus, if the United States is not conducting counterproductive occupations of Muslim lands to ostensibly quell terrorism, the ground forces need not be augmented, and even can be reduced. This reduction should allow cutting the weapons and equipment that are purchased for such forces.

Finally, there are loads of pork in the foreign aid and homeland security budgets that could be extracted. At most (and even this is a stretch), Obama’s proposed limited spending freeze will result in a savings of only 3 percent of the ballooning budget deficits in the next 10 years. To avoid his predecessor’s reputation of “spending like a drunken sailor,” Obama must include massive entitlements and discretionary security spending in his budget cutting for it to be serious.

New from Ivan Eland! THE EMPIRE HAS NO CLOTHES: U.S. Foreign Policy Exposed (Updated Edition) Most Americans don’t think of their government as an empire, but in fact the United States has been steadily expanding its control of overseas territories since the turn of the twentieth century. In The Empire Has No Clothes, Ivan Eland, a leading expert on U.S. defense policy and national security, examines American military interventions around the world from the Spanish-American War to the invasion and occupation of Iraq. Learn More »»