Imperial Overstretch

Black Budgets Beyond Control?

With the Second World War, our nation emerged as the richest and most powerful on earth and a self-designated successor to the British Empire. But as enthusiastic as some of our wartime leaders, particularly President Franklin D. Roosevelt, were for the task, the American people were not. They demanded that the country demobilize its armies and turn the nation's attention to full employment and domestic development. Peace did not last long, however. The Cold War and a growing conviction that vital interests, even national survival, demanded the "containment" of the Soviet Union helped turn an informal empire begun during World War II into hundreds of installations around the world for the largest military we ever maintained in peacetime.

As of September 2001, the Department of Defense acknowledged at least 725 American military bases existed outside the United States. Actually, there are many more, since some bases exist under leaseholds, informal agreements, or disguises of various kinds. It includes expensive, permanent garrisons built between 1999 and 2001 in such unlikely places as Kosovo, Kyrgyzstan, and Uzbekistan.

Resorts and Learjets
America's modern empire of bases also has its entertainment and getaway spots, such as the armed forces' ski and vacation center at Garmisch in the Bavarian Alps, its resort hotel in downtown Tokyo, and the 234 military golf courses it operates worldwide, not to mention the seventy-one Learjets, thirteen Gulfstream IIIs, and seventeen Cessna Citation luxury jets used to fly admirals and generals to such spots. At a cost of $50 million apiece, each Gulfstream accommodates twelve passengers plus two pilots, one flight engineer, a communications systems operator, and a flight attendant.

The raw monetary figures have been literally astronomic. From Reagan's 1983 "Star Wars" speech to 2006, depending on which expert you listen to, the Unitd States has spent between $92.5 billion and $130 billion on the basic problem of shooting down an ICBM in flight— and that's without even once having succeeded in doing so. One comprehensive analysis of the ultimate cost of the entire ballastic missile defense system by its distinctly theoretical date of completion in 2015—and excluding its most expensive and problematic component, a space-based laser—is $1.2 trillion.

Staggering Debt
On February 6, 2006, the Bush administration submitted to Congress a $439 billion defense appropriation budget for fiscal 2007. At the same time, the deficit in the United States' current account—the imbalance in the trading of godos and services as well as the shortfall in all other cross-border payments from interest income and rents to dividends and profits on direct investments—underwent its fastest-ever quarterly deterioration. In the fourth quarter of 2005, the deficit hit a staggering $225 billion, up from $185.4 billion in the previous quarter.

For all of 2005, the current account deficit was $805 billion, 6.4 percent of national income. In 2005, the U.S. trade deficit, the largest component of the current account deficit, soared to an all-time high of $725.8 billion, the fourth consecutive year that America's trade debts set records. The trade deficit with China alone rose to $201.6 billion, the highest imbalance ever recorded with any country. Meanwhile, since mid-2000, the country has lost nearly three million manufacturing jobs.

Among the creditors that finance these unprecedented sums, the two largest are the central banks of China (with $853.7 billion in reserves) and Japan (with $831.58 billion in reserves), both of which are the managers of the huge trade surpluses these countries enjoy with the United States. This helps explain why our debt burden has not yet triggered what standard economic theory would dictate: a steep decline in the value of the U.S. dollar followed by a severe contraction of the American economy when we found we could no longer afford the foreign goods we like so much. So far, both the Chinese and Japanese governments continue to be willing to be paid in dollars in order to sustain American purchases of their exports.

Corporate "Outsourcing" - Crony Contracts
Many other aspects of imperialism and militarism are undermining America's constitutional system. By now, for example, the privatization of military and intelligence functions is totally out of control, beyond the law, and beyond any form of congressional oversight. It is also incredibly lucrative for the owners and operators of so-called private military companies—and the money to pay for their activities ultimately comes from taxpayers through government contracts. Any accounting of these funds, largely distributed to crony companies with insider connections, is chaotic at best. Jeremy Scahill, author of Blackwater: The Rise of the World's Most Powerful Mercenary Army, estimates that there are 126,000 private military contractors in Iraq, more than enough to keep the war going, even if most official U.S. troops were withdrawn. "From the beginning," Scahill writes, "these contractors have been a major hidden story of the war, almost uncovered in the mainstream media and absolutely central to maintaining the U.S. occupation of Iraq."

America's massive "military" budgets, still on the rise, are beginning to threaten the U.S. with bankruptcy, given that its trade and fiscal deficits already easily make it the world's largest net debtor nation. Spending on the military establishment—sometimes mislabeled "defense spending"—has soared to the highest levels since World War II, exceeding the budgets of the Korean and Vietnam War eras as well as President Ronald Reagan's weapons-buying binge in the 1980s. According to calculations by the National Priorities Project, a nonprofit research organization that examines the local impact of federal spending policies, military spending today consumes 40 percent of every tax dollar.

Black Budgets
Equally alarming, it is virtually impossible for a member of Congress or an ordinary citizen to obtain even a modest handle on the actual size of military spending or its impact on the structure and functioning of our economic system. Some $30 billion of the official Defense Department (DOD) appropriation in the current fiscal year is "black," meaning that it is allegedly going for highly classified projects. Even the open DOD budget receives only minimal scrutiny because members of Congress, seeking lucrative defense contracts for their districts, have mutually beneficial relationships with defense contractors and the Pentagon. President Dwight D. Eisenhower identified this phenomenon, in the draft version of his 1961 farewell address, as the "military-industrial-congressional complex." Forty-six years later, in a way even Eisenhower probably couldn't have imagined, the defense budget is beyond serious congressional oversight or control.

The DOD always tries to minimize the size of its budget by representing it as a declining percentage of the gross national product. What it never reveals is that total military spending is actually many times larger than the official appropriation for the Defense Department...

This spending helps sustain the national economy and represents, essentially, a major jobs program. However, it is beginning to crowd out the civilian economy, causing stagnation in income levels. It also contributes to the hemorrhaging of manufacturing jobs to other countries. On May 1, 2007, the Center for Economic and Policy Research released a series of estimates on "the economic impact of the Iraq war and higher military spending." Its figures show, among other things, that, after an initial demand stimulus, the effect of a significant rise in military spending (as we've experienced in recent years) turns negative around the sixth year.

Sooner or later, higher military spending forces inflation and interest rates up, reducing demand in interest-sensitive sectors of the economy, notably in annual car and truck sales. Job losses follow. The nonmilitary construction and manufacturing sectors experience the largest share of these losses. The report concludes, "Most economic models show that military spending diverts resources from productive uses, such as consumption and investment, and ultimately slows economic growth and reduces employment."