. . . because much of the content relates both to Washington, D.C., and "outside the beltway" -- the heartland, specifically Iowa -- and because after going from Iowa to Washington via Texas and California I subsequently returned, From DC 2 Iowa.
Showing posts with label interest on national debt. Show all posts
Showing posts with label interest on national debt. Show all posts
War on the Cheap Is the Most Expensive (brought to you by FromDC2Iowa.blogspot.com*)
It's highly unlikely I would ever "join" the Tea Party, or know how to go about doing so, or where to find "it" should I change my mind.
But I do share at least one concern with many of those who do so identify themselves, and that is our nation's mounting debt. Any regular reader of this blog already knows that.
When I was in government I recall the year President Lyndon Johnson pulled out all the stops to keep the budget from going over $100 billion dollars. He thought there was something symbolic about that number. That's right, a budget in the "billions" not "trillions." President Obama's budget is 30 to 40 times that amount. The interest alone is multiples of what it took then to run every government agency and program, fund the new "Great Society" social programs, and the Viet Nam War.
Nations are reluctant to go to war when their people see and feel the costs. That's why those who have reasons for wanting war have reasons for wanting to hide the costs.
There's nothing like a draft to bring that cost to every kitchen table in America. Among those who honestly, analytically, and thoughtfully believed the Viet Nam War was a great mistake were those of draft age. But clearly there were young men and women, and their parents, whose objections were intensified by the prospect of family members, friends and neighbors having to travel thousands of miles abroad to fight in a war from which they might never return.
And it's one, two, three, What are we fighting for? Don't ask me, I don't give a damn, Next stop is Vietnam; And it's five, six, seven, Open up the pearly gates, Well there ain't no time to wonder why, Whoopee! we're all gonna die.
I can never forget watching on a military air base as soldiers boarded one plane, headed for Viet Nam, while a couple hundred yards away coffins of the fallen were being unloaded from another plane, and taken into the same hanger from which the solders had emerged.
It's easier for a nation to support a war politically if the military only takes volunteers, and since that's nowhere nearly enough men and women, "outsources" the rest of the tasks to high-priced mercenaries.
It's easier when, instead of rationing gasoline, tires, sugar, and other essential items in the war effort, the president responds to an attack on our country by encouraging everyone to go shopping.
It's easier when, instead of foxholes, trenches, and hand-to-hand combat, wars can be fought from 30,000 feet, where pilots are at relatively less risk -- or better still, with drones over Pakistan that don't even require pilots, and can be controlled like simulated objects in a video game by CIA operatives from thousands of miles away in the U.S..
It's easy for the wealthy to support a war, or be agnostic about it, when the president is simultaneously cutting their taxes -- instead of increasing them for a pay-as-you-go war.
It's hard to pick what's worst about war. But an aspect of those we're now fighting that gets all too little attention in the midst of the media's coverage of individual battles and "collateral damage" is the costs we're putting on our nation's maxed out credit card.
What are we thinking? What are our options? One possibility is a decimated dollar and the resulting wild, raging inflation -- a cruelty that is hard to imagine, and harder still to impose on those with fixed incomes. Another is to declare the nation bankrupt, and default on all our loans. The third is to leave it to multiple future generations to devote their lives to paying off the interest and debt we have run up with our irresponsible and immoral folly and merely left, like trash after a college football game, for someone else to pick up.
Meanwhile, the only folks who benefit from this are the same bankers to whom we gave the trillion-dollar bailouts (who earn the multi-billion-dollar interest on the government's bonds and T-bills), the munitions manufacturers, and the mercenary operations owners.
I usually would not use extensive excerpts from an article, but those that follow are such a useful contribution that I'm going to do so on this occasion.
More empires have fallen because of reckless finances than invasion. The latest example was the Soviet Union, which spent itself into ruin by buying tanks.
Washington's deficit (the difference between spending and income from taxes) will reach a vertiginous $1.6 trillion US this year. The huge sum will be borrowed, mostly from China and Japan, to which the U.S. already owes $1.5 trillion. Debt service will cost $250 billion.
To spend $1 trillion, one would have had to start spending $1 million daily soon after Rome was founded and continue for 2,738 years until today. [And see, Nicholas Johnson, "A $14 Trillion Opportunity Cost," January 27, 2010.]
Obama's total military budget is nearly $1 trillion. This includes Pentagon spending of $880 billion. Add secret black programs (about $70 billion); military aid to foreign nations like Egypt, Israel and Pakistan; 225,000 military "contractors" (mercenaries and workers); and veterans' costs. Add $75 billion (nearly four times Canada's total defence budget) for 16 intelligence agencies with 200,000 employees.
The Afghanistan and Iraq wars ($1 trillion so far), will cost $200-250 billion more this year, including hidden and indirect expenses. Obama's Afghan "surge" of 30,000 new troops will cost an additional $33 billion - more than Germany's total defence budget.
No wonder U.S. defence stocks rose after Peace Laureate Obama's "austerity" budget.
Military and intelligence spending relentlessly increase as unemployment heads over 10% and the economy bleeds red ink. America has become the Sick Man of the Western Hemisphere, an economic cripple like the defunct Ottoman Empire.
The Pentagon now accounts for half of total world military spending. Add America's rich NATO allies and Japan, and the figure reaches 75%.
China and Russia combined spend only a paltry 10% of what the U.S. spends on defence. There are 750 U.S. military bases in 50 nations and 255,000 service members stationed abroad, 116,000 in Europe, nearly 100,000 in Japan and South Korea.
Military spending gobbles up 19% of federal spending and at least 44% of tax revenues. During the Bush administration, the Iraq and Afghanistan wars - funded by borrowing - cost each American family more than $25,000.
Like Bush, Obama is paying for America's wars through supplemental authorizations -- putting them on the nation's already maxed-out credit card. Future generations will be stuck with the bill.
This presidential and congressional jiggery-pokery is the height of public dishonesty.
America's wars ought to be paid for through taxes, not bookkeeping fraud.
If U.S. taxpayers actually had to pay for the Afghan and Iraq wars, these conflicts would end in short order.
Clearly our war policies need more than "a fair, honest war tax," but that sure would be a good start on the return road to reality. _______________
* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson
The Sure-Fire Solution to Economic Pain (brought to you by FromDC2Iowa.blogspot.com* -- and Saturday Night Live, see below)
My Dad told the story of a Kansas farmer who was asked whether he believed in baptism. "Why of course I do," he said, "I've seen it done."
That's kind of how I am about credit. I've seen it done. And all about me I'm now watching the consequences of its having been done. And that's why I really don't believe in credit.
Mason Williams (the composer of "Classical Gas" and one-time head writer for the "Smothers Brothers Comedy Hour") once wrote the story of the automobiles in his life, which he called his "Auto-biography."
In a similar spirit here is how I would describe my own "Auto-biography" of Nicholas Johnson.
My first car was a 20-year-old Model A Ford I bought from a local farmer for $25.
I paid cash.
My second car required saving money for a year as a college student. It was a much fancier Model A, with four doors and a roof, and therefore cost $75.
I paid cash.
Over the years the cars got grander and more expensive. A two-door Chevy ($700), a Volvo ($600), and a couple others along the way.
I paid cash.
My current vehicle is a 1978 VW camper van, one of my most expensive ever at $2000.
But I still paid cash.
Is this because I'm wealthy? No; quite the opposite. When offered job choices I've never simply picked the one that paid the most. I've chosen the ones that would offer the most interesting new experience, the most fun, or the greatest opportunity for public service -- one of which was serving on the local school board, a job I once described as providing "no money, but at least you get a lot of grief."
(Don't get me wrong, this is not a "pitty poor me" blog entry. I've been blessed at every turn in a life that could not have been better: my parents, growing up in Iowa City, the University's schools, from the two-year-old group at the Iowa Child Welfare Station on through University High School, a top flight public university undergraduate and law school education when tuition was $50 and a couple part-time jobs plus managing an apartment house were enough to get you by (compared with today's near-$50 thousand at private colleges, with the accompanying student loan debt), the lucky accidents of the U.S. Court of Appeals and Supreme Court clerkships, and three presidential appointments, and being able to return in my later years to my home town, live in the house where I grew up (on which the mortgage has long since been paid -- if indeed it was not purchased for cash), and welcomed into the UI College of Law, a three-block walk from home, where I live with a former high school classmate who is, for me, the perfect wife -- in addition to our wonderful children, grandchildren and now great-grandchildren. No; all I am saying is that I have, by choice, purchased cars for which I could afford to pay cash, rather than paying interest to a bank on a newer, more expensive one.)
No; I've paid cash because, in attempting to control living costs, the elimination of interest payments always seemed to me to involve the greatest returns for the least effort -- with the least pain.
I don't confess this as a badge of honor. I'm fully aware most Americans will ridicule my choices and think me a fool.
I merely mention it to give you some insight as to why I might be questioning the behavior and choices of those who propelled us into this global economic collapse -- and who now propose that the way out of the pit we're in is to go back to making more credit available, to recreate the economic structure and behavior that got us into this mess.
Why should every small business, home and automobile be owned in largest measure by a bank's shareholders? And for what? So we can have our stuff a few months before we'd have it if we saved first and then paid cash? Rented a few more years before buying a home? Drove a little older car?
Why should one of our largest expenses -- as taxpayers as well as consumers -- be the transfer of our hard-earned dollars (in the form of interest payments) to bankers and investors who have contributed neither goods nor services to our economy? Banks were getting "bailouts" from the federal government -- that is, you and me as taxpayers -- long before they brought down our economy. Do you know what one of (if not the) largest expenses of the federal government is? That's right, interest payments from you and me to those wealthy enough to loan their money to our government -- some $412 billion in the FY2008 budget! Federal Budget Spending and the National Debt. I'd say that's a pretty nice income for what Senator Bob Dole once described as "indoor work with no heavy lifting."
And our payments to those folks are only going to increase as our government continues its present "solution," this glide path to economic hell: getting us out of a economic mess created by credit and debt by taking on more credit and debt.
[Credit: "Don't Buy Stuff: The sure-fire way to get out of debt," NBC Saturday Night Live, Season 31, Episode 12, aired February 4, 2006, available from hulu.com.]
I don't expect anyone to agree with me. But I think Saturday Night Live had it right: "The sure-fire way to get out of debt"? "Don't buy stuff you can't afford."
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Related Blog Entries on Global Economy and Bailouts
Nicholas Johnson, "Don't Buy Stuff," March 6, 2009
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* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson
