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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Category: Defense
February 22, 2013 at 10:07 AM

Sequester and the economy

Where to begin on the sequester? The $85 billion in automatic, across-the-board federal budget cuts set to kick in on March 1 are an entirely artificial crisis manufactured by the Congress, specifically the Tea Party-dominated House of Representatives. The deficit and debt are not the biggest economic problem facing the country. Not by a long shot: There’s persistent high unemployment, slow growth, lack of investment in 21st century infrastructure, bad trade deals, inadequate tax revenues and the hollowing out of the middle-class by an oligarchy that has gamed the system to its advantage. Inflation remains tame. Interest rates are at historic lows. So there’s no evidence β€” none β€” that the deficit and debt (which are coming down, by the way) are hurting the economy.

The sequester, on the other hand, has the potential to shock a slow economy back into recession. The slow recovery is already partly the result of federal austerity. These cuts will do even more damage. Austerity is not working in Europe. It won’t work here. To be sure, we need to make the transition from Military Keynesianism to a peacetime economy and invest in America rather than in blowing things up and making more enemies overseas. We need to get control of health costs, which are the long-term threat to the budget. But the House, whose red-state members are in districts that are almost entirely net takers from the taxpayer, seems disinclined to back away from the brink. What do you think? You can make multiple answers.

Read on for the best links of the week and the haiku:

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Comments | More in Debt, Defense, Deficit, Federal debt/deficit

October 15, 2012 at 10:30 AM

In Afghanistan, the things we didn’t carry

Compelling new reporting on the Afghanistan war by the Seattle Times’ Hal Bernton raises many issues and questions. On the economic front, we must wrestle with the opportunity costs.

The Oxford Dictionary of Economics defines this as “the cost of something in terms of an opportunity foregone. Opportunity cost is given by the benefits that could have been obtained by choosing the best alternative opportunity.” Remember that the George W. Bush toppled the Taliban on the cheap, with Special Forces riding horses and funding war lords. This regime change was forced after Afghanistan was used as a training camp for al-Queda. But then the administration inserted combat troops (and started a totally unnecessary war with Iraq) and we’ve been on this imperial misadventure ever since. It has been continued under President Obama.

According to the Cost of War site, the two conflicts currently have drained us to the tune of $1.4 trillion, including $575 billion in Afghanistan. Nobel Prize-winning economist Joseph Stiglitz and Harvard’s Linda Blimes have estimated that the conflicts will end up costing $3 trillion or more. Waste and fraud have been rampant. Veterans costs will soar into the far future. The land forces have been stretched to the breaking point. In exchange, we will end up with even less stable states than when we began. We are no more safe; we are arguably less so.

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Comments | More in Defense, Deficit

June 28, 2012 at 9:35 AM

The military-industrial Complex complex || Jon Talton

The drumbeat of fear has begun about potential defense cutbacks. For example, the National Association of Manufacturers released a report saying the nation will lose 1 million jobs if the automatic sequester goes into effect (the “fiscal cliff”) next year. This would include 25,000 jobs in Washington state.

The sequester will probably never happen. America spends more on defense than the next 14 or 19 nations, depending on methodology, and is the world’s largest arms dealer. It is winding down two wars that lasted longer than American involvement in World War II and in both Iraq and Afghanistan the results are disappointing, to put an optimistic spin on it. The money to wage these wars was largely borrowed from Red China, which our defense establishment is now teeing up as the next “enemy.”

The real lesson of these scary reports is that the American economy is far too dependent on military Keynesianism. In the past, when wars ended the economy shifted back to a peacetime footing. Sometimes that did cause recessions on the way to more productive growth (a peacetime economy produces more healthy returns than blowing things up). Now we’re being told that’s impossible. That sound you hear is Dwight Eisenhower spinning in his grave.

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January 30, 2012 at 9:45 AM

The Pentagon’s giant sucking sound

Those draconian Obama defense cuts are actually not. As Fred Kaplan reports in Slate, the real spending reduction proposed for fiscal 2013 is a mere 1 percent less than the actual spending in FY 2012. More details have yet to emerge, but the obvious winners are technology and special operations; the losers the ground forces.

And none of this accounts for the many hidden places for defense spending, such as the State Department, which is spending heavily on its own drone fleet and security contractors. According to the New York Times, 5,000 private security contractors, along with drones, are protecting 11,000 embassy employees in Iraq alone. Mission accomplished.

Mr. Obama’s line about using money spent on wars for nation-building at home was also a bit disingenuous. The $1.3 trillion-and-rising cost was mostly borrowed, including from China. Conservatively, the United States spends more on its military than the next 14 biggest military powers in the world. This is Ike’s Military Industrial Complex in full flower. It distorts the economy and until its really addressed, America can’t recover and compete.

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Comments | More in Aerospace/Boeing, Defense


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