Can We Cut Military Spending by $ 1.0 trillion?
The Obama administration’s deficit commission is due to report out on its recommendations to put the US on firm financial footing, but apparently some don’t like the trial balloons they’re seeing. Conventional wisdom points to entitlements and the old bogeyman, welfare, being the major problems when it’s actually military appropriations that are sucking up the tax dollars. The reason that social security and Medicare taxes are specifically earmarked when deducted from your paycheck relates to the fact that they’re supposed to be strictly held to fund those benefits. Instead those funds were raided to fund general government expenditures including wild military spending. Hence, the looming crisis in the social security entitlement is at least partly attributable to the money being used for expenditures other than what those taxes were earmarked for. This held down overall income tax rates, hence masking the cost of maintaining the wild and unnecessary levels of military expenditures.
The chart above breaks down the percentage of worldwide military expenditure by major power. Our nation not only spends nearly half of the worldwide military expenditures, but likely drives a good portion of the remaining half with weapons exports subsidized by the US taxpayer. You’ll note that big bad Iran is nowhere to be seen on the chart. They have a infinitesimal sliver of the 14.7% of spending attributed to the “rest of the world”, yet we’re gearing up to attack them.
When it comes to the fiscal solvency of the US, this is the elephant in the room that no one discusses. Instead, we have to hear about the supposedly ruinous health care legislation or other nonsense that really impacts nothing. This situation is no more sustainable that the Wall Street derivative machine and ultimately relies heavily not on domestic savings but those of China and OPEC. In other words, our domestic savings is insufficient to fund the war machine, so we rely on China, the Saudi’s and others to buy our government debt so as to finance our military expenditures, interventions and incursions in various parts of the globe. There will come a day where they will no longer do that and when they do, this game is up. That day may be coming sooner rather than later in light of our saber rattling with China with the recent war games with South Korea and the talk of neutralizing China’s new anti carrier missile. China is certainly not going to finance a war machine that threatens it which makes the whole recent scenario with them pure insanity. All they have to do is stop buying treasuries, or worst, sell off their holdings. Either step would result in a dramatic rise in long term rates and would reverberate across the entirety of the economy, but most directly on the fiscal condition of the US government itself.
The US needs to cut all of the military spending as a matter of survival more than anything else. This is the only real choice.
There are few people who tell the truth about this on either side of the aisle, but it seems that Barney Frank and Ron Paul have come together with a proposal to the debt commission on cutting the military spending by $ 1.0 trillion, which former Reagan assistant treasury secretary Paul Craig Roberts discusses in the video below. Roberts and others suggest that we’re running out of time on this as that cut needs to occur within the next 2-3 years and not over ten as suggested by Barney and Paul. I should point out here that Roberts, like the disaffected David Stockman, was one of the architects of Reaganomics and now regrets his involvement and disowns the current version of the GOP.