News & Analysis
Too Tough to Cut?
Republican Party unity cracks over raising $14.3 trillion debt ceiling ... Conservative Republicans in the House are upping the pressure on their party leaders to take a firm stand against raising the federal debt ceiling. The Republican Study Committee (RSC) introduced legislation on Wednesday that it says would allow the Treasury Department to avoid a default on U.S. debt without expanding the borrowing limit. – The Hill
Dominant Social Theme: National security is worth every penny,
Free-Market Analysis: The arguments are finally joined, and we shall see if American democracy is actually able to effectuate anything other than more spending and higher indebtedness. The arguments go farther than the debt ceiling of course and include military spending as well. US indebtedness is said to be in the area of US$200 trillion if one includes a full gamut of obligations. States are facing bankruptcy as well (see other article this issue).
The brinksmanship is already in play, with both Democrats and Republicans jockeying for sound bites and generally threatening each other. It is said that a vote against raising the debt ceiling will result in economic ruin and America's obligations will cease to be met forever and ever. Republicans reply that there are plenty of ways for Treasury to maneuver without raising the debt ceiling.
Republicans want the Democrats to agree to firm spending cuts – to help balance the budget – before voting on raising the ceiling. Democrats are willing to talk but don't want to hold hostage the economic security of the nation, or so they argue. Here's some more from the article:
The bill is the latest indication that some Republicans are digging in their heels on the debt vote despite stern warnings from the Obama administration that failing to raise the ceiling would be disastrous for the country. It also signals a widening rift with GOP leaders who have suggested Republicans will ultimately have no choice but to approve the debt increase. Treasury Secretary Timothy Geithner warned lawmakers in a Jan. 6 letter of "catastrophic economic consequences" if Congress fails to raise the current $14.3 trillion debt limit, which the government is on pace to hit sometime this spring. But RSC Chairman Jim Jordan (Ohio) said Geithner's warning is nothing more than "a pitiful scare tactic."
The military budget is another area that Republicans are going to have to deal with; here the Republican party is divided yet again. Out of about a US$3 trillion federal budget, military spending accounts for perhaps US$700 to US$1 trillion – including overseas military bases, veterans benefits and the prosecution of America serial foreign wars. Cutting the military ought to be a reasonable-enough exercise, but institutional resistance is strong.
The New York Times recently carried an analysis entitled, "Republicans Split Over Plans to Cut Defense Budget" and observed that Republican gate-keepers in the House of Representatives were not apt to be overly enthusiastic cutters. "I will not support any measures that stress our forces," Howard P. McKeon, the Armed Services Committee chairman is quoted as saying. "I cannot say it strongly enough: I will not support any measures that stress our forces and jeopardize the lives of our men and women in uniform."
Some cuts have been announced already though. Secretary of Defense Robert Gates has already indicated that the Pentagon stands ready to cut spending by $78 billion over five years. But apparently, this would only slow the growth in the Pentagon budget, which would continue to expand until 2015. Tea Party-backed members of the House are not proving especially eager to cut military spending either. According to the Times, even new members are protective of various military projects that are ongoing in their own districts.
The war in Afghanistan ought to be a place where savings might occur, especially if operations are scaled back. But just yesterday Reuters reported the U.S. risks wasting $12 billion in Afghan army aid "if it does not come up with adequate plans for building and maintaining facilities for Afghanistan's growing security forces."
A new audit released on Wednesday by the special inspector general for Afghanistan reconstruction, or SIGAR, reported on the potential waste. "U.S. officials working to build up local police and soldiers, a key task in ensuring Afghanistan does not succumb to the Taliban when foreign forces withdraw, had failed to provide long-term construction plans for some 900 local security facilities."
Top Pentagon brass have made the case for significant progress in Afghanistan of late, indicating that the Taliban has been chased out of many regions where it once held sway. Additionally, training of the Afghan army and police force is ongoing, with the army beginning to take the lead in certain operations. But the larger issue remains: Without being able to pursue the Taliban into Pakistan, there is no way the war can be fully prosecuted. So far, despite enormous pressure, Pakistan has not made a commitment to fight the Taliban on its own soil.
Cuts of up to US$2.5 trillion have been suggested by the Republicans, but these have not included much in the way of military spending, certainly not when it comes to the war effort. In the Senate, Kentucky legislator Rand Paul has just proposed US$500 billion of cuts that include Pentagon spending. But it is difficult to see how practical attempts at reducing such spending will be, given an open-ended commitment to the Afghan theatre.
The Afghan war is obviously important to the Anglo-American power elite, which had hoped finally to pacify and Westernize the Pashtun tribes that occupy much of Afghanistan. The pacification is an important part of the Anglosphere's effort to create more globalized governance. In fact, the ability to continue the war in the face of growing public opposition should provide clear evidence as to how power-elite priorities will fare in an era of scant resources.
Conclusion: The truth-telling of the Internet is taking its toll on the viability of the war effort; and scaling back war-spending would deal a considerable blow to Anglosphere ambitions in the region. The spending debate itself, and its outcome, will provide insights into how resources are to be allocated in an era of austerity. It would also shed light on the elite's continued clout (or lack thereof) in the face of growing public opposition and fiscal restraints.
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Posted by Dizzyfingers on 01/30/11 03:19 PM
Quote: Posted by Wayne on 1/28/2011 7:35:27 PM
@Berthe
So you are concerned that your parents will be living with you without the government scam called Social Security?
Let me ask you a question... Unquote
Dear Wayne: Wayne, we would dearly love to opt out after paying in all our working lifetimes, opt-out never was allowed. When we inquired about opt out (receive no more checks and cease to pay into s.S.)we were told that we would have to pay in (again) 100% of the money we paid in originally. I'm not kidding.
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Posted by Archie1954 on 01/29/11 12:03 AM
Military spending at the current level is completely self defeating. It is in fact destroying the US. It has caused America to become indebted to the world, to cling to last century type social policies and an economy stripped of benefits to the ordinary American. Further it has allowed the pentagon to commence military adventures everywhere and by doing so, has harmed national security and created enemies by the millions.
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Posted by Wayne on 01/28/11 07:35 PM
@Berthe
So you are concerned that your parents will be living with you without the government scam called Social Security?
Let me ask you a question
Why don't all the concerned people such as yourselves just revolt against the Social Security scam, and invest in "proved" things that hold their value against inflation/currency depreciation to guarantee the resource availability to take care of your parents?
One wonders if the real fear may be that others won't be forced to pay for the concern.
I must ask because it would be a lot cheaper to provide directly for them, than to go through a government scam to accomplish the task.
For more on this read Harry Browne's "How To Live Free in an Unfree World"
He will explain the scam of giving the government $1 dollar for 10 cents worth of benefits.
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Posted by Doug Nusbaum on 01/28/11 11:03 AM
Perhaps those who support our current military size can explain why we need as many aircraft carrier battle groups as the rest of the world combined. That includes our "allies" in nato. We have more nuclear submarines than the rest of the world combined. Yep, nothing deters a would be terrorist like a nuclear submarine 1000 miles away.
But never fear. We know how to economize. Our soldiers families are on food stamps, and are being evicted from their homes which are lost to foreclosure. Nothing to keep a front line soldiers mind focused during combat than knowing that his family is being put out on the street.
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Posted by Vauung on 01/28/11 10:40 AM
@Berthe
"I've been hearing this 'Social Security is a Ponzi scheme' thing for 30 years now." That's because it is. Try to subtract the emotion and compare the two coldly. There's no difference.
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Posted by Berthe on 01/28/11 10:27 AM
I've been hearing this "Social Security is a Ponzi scheme" thing for 30 years now. The beneficiaries are your own parents and grandparents and if they didn't get Social Security, they'd be living in your home. Nowadays, Social Security is propping up the economy because people move in with their parents and grandparents and have a roof over their heads because of Social Security. Another "Great Depression" can't happen because of Social Security payments.
Unlike a Ponzi scheme, there really is a stream of new investors all the time. What is this insane military/intelligence/security state costing us? Americans would be fools to be complacent about Social Security cuts. There will be no budget savings; any extra money would go directly to the military/security/intelligence bottomless pit.
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Posted by RT Carpenter on 01/28/11 06:47 AM
You are right--Social Security is a Ponzi scheme. So let's stop paying the suckers--just do not tax the wealthy or touch their billion dollar estates. Let's pay the national bills with more IOUs and maybe a VAT tax on food.
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Posted by Vauung on 01/28/11 12:30 AM
@RT Carpented, Wayne
Social Security is such a perfect ideal-type Ponzi scheme that Charles Ponzi might as well have designed it himself. We should just talk about a 'Social Security Scheme'.
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Posted by Wayne on 01/28/11 12:29 AM
Just found this
Click to view link
You see, they can't cut, because it's a Ponzi scheme.
Any cuts will cause collapse of the entire edifice.
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Posted by Wayne on 01/28/11 12:19 AM
CORRECTION OF TYPO
That should be every two years.
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Posted by Wayne on 01/28/11 12:17 AM
True, it's a national disgrace.
But please remember that it was a scam from the beginning, with the original purpose of paying off the War Debt.
Roosevelt called it a Trust Fund to achieve passage of the bill,
but the money always went into the General Revenue Fund.
As it was a Ponzi scheme that was consistently enlarged by politicians seeking reelection, it's actually surprising that it lasted this long.
The supreme court has ruled at least twice that you have no legal right to Social Security, because there is no real Trust fund assets that could be claimed as yours.
Chalk it up as just another one of the long list of scams, such as the Income Tax, The Federal Reserve act, and the current military.
I add the current military, as the Constitution of the United States Of America forbids a standing army.
However, continuance of it's existence is rubber-stamped every to years by Congress via an attachment to their favorite pork barrel bills.
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Posted by John Danforth on 01/28/11 12:11 AM
Re Egypt:
The other day I mentioned about the proposition of a really large-scale Flash Mob. Looks like that's happening. The reaction of pulling the plug on communications is a great social experiment. See if it restores peace or if they burn the place down.
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Posted by John Danforth on 01/28/11 12:05 AM
"The price of gold just dropped $30 and silver went down a buck. WTF?"
As they keep saying on zerohedge, BTFD! (Buy the dips)mGuess I'll go buy a few more rolls of real quarters.
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Posted by RT Carpenter on 01/27/11 11:00 PM
These mideast wars do nothing for our "security", and only create hatred of Americans. These "missions" should be realisticly defined, and turned over to "special forces" who can speak local languages and work with friendly local groups.
It is a national disgrace not only to have seized paid-in Social Security trillions, but to now call it a mere "entitlement" which must be cut-- apparently ahead of real entitlements such as medicare, medicaid, food stamps and other forms of actual welfare.
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Posted by Zenbillionaire on 01/27/11 10:44 PM
Egypt isn't even a NATO member. Boy did I get that wrong...
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Posted by Vauung on 01/27/11 10:37 PM
More grist for the DB mill (from Reuters):
"The United States bluntly urged Egyptian President Hosni Mubarak on Wednesday to make political reforms in the face of protesters demanding his ouster, in a shift in tone toward an important Arab ally. ... In issuing a fresh call for reforms after a day of clashes between Egyptian police and protesters, Washington appeared to be juggling several interests: its desire for stability in a regional ally, its support for democratic principles and its fear of the possible rise of an anti-U.S. Islamist government."
Click to view link
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Posted by Zenbillionaire on 01/27/11 10:32 PM
@ John
"I envision columns of smoke towering above cities."
The price of gold just dropped $30 and silver went down a buck. WTF?
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Posted by Vauung on 01/27/11 10:29 PM
"I envision columns of smoke towering above cities." I'm pretty confident that your vision will be well-supported by video evidence within a few days (and probably hours).
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Posted by John Danforth on 01/27/11 10:23 PM
"It would surprise me greatly if the people of Egypt did not consider this an act of war."
I envision columns of smoke towering above cities.
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Posted by Zenbillionaire on 01/27/11 10:15 PM
@ Vauung
"the Egyptian government appears to have ordered service providers to shut down all international connections to the Internet"
It would surprise me greatly if the people of Egypt did not consider this an act of war.
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