Decades of Catering to Rich Special Interests Comes A-Calling

American Nazis in the 1930s

Pearl Harbor

Vietnam War

Afghan War

Decades of Catering to Rich Special Interests Comes A-Calling

The Price of Guns AND Butter

One of the most basic economic principles tells us that when at war, all policies, priorities, sacrifices and tax levels must be shifted to supporting the conflict. It is generally viewed as a time of higher taxes and patriotic austerity to pay for the war effort. The concept falls under the notion of “guns or butter,” and its opposite, ”guns and butter,” is viewed by virtually all American economists as an intolerable reliance based on incurring massive deficits (borrowed money). As of June 14, 2024, the national debt totaled $34.7 trillion, and with interest rates rising, the annual federal budget for 2023 allocated $659 billion as interest payments (non-discretionary) on that deficit. The trouble with providing tax cuts and amplifying other expenditures during expensive conflicts (which I suspect should include the pandemic), is that this form of operating a nation becomes an addictive “deficit building” bad habit.

This “addiction” started in the mid-to-late 1960s, pretending that the cost of the Vietnam War wouldn’t change any of our other budget-financed priorities. Vastly higher military expenses, no change in spending or taxing policies. After the 9/11/01 attack on the World Trade Center and the Pentagon, once again, federal policies favored lower taxes and limited fiscal austerity. The wars in Iraq, Afghanistan amplified and extended our deficit, notwithstanding the late Clinton years where deficit reduction (from tax “surpluses”) was implemented. Without ever really paying for those “wars,” some extremely unpopular, Congress and the governing administrations placated the electorate, often by embellishing social expenditures, amping up the “whatever you want” “cost-plus” military budget… while cutting taxes.

Incurring deficits was now an addiction. “Guns and butter” has been institutionalized, and we have slorped on an era of extremely low interest rates… which obviously ended in 2022 as the Fed began a steady increase in those rates, now a global reality. We adopted a steady pattern of “kicking the can down the road,” letting our infrastructure deteriorate to clearly horrible and dangerous… a slam to American productivity. With our military-industrial government-vendor complex (against which President Eisenhower warned us) carefully spread across the nation’s Congressional districts, the mutual back-scratching epidemic in Congress promoted a lot of wasteful military spending. But the world has changed. Terrorists, foreign and domestic, are most willing to take advantage of governmental missteps. They’ve grown stronger. We haven’t.

A July report from a bi-partisan assemblage of high-level experts, from members of Congress, former ambassadors, etc. – The Commission on National Defense Strategy – paints a picture of a nation unprepared for the dangers that we face, mired in unproductive internecine polarized debate, having distorted priorities that our enemies, internal and external, are building their strategies around. The Report’s summary on foreign threats reads:

The threats the United States faces are the most serious and most challenging the nation has encountered since 1945 and include the potential for near-term major war. The United States last fought a global conflict during World War II, which ended nearly 80 years ago. The nation was last prepared for such a fight during the Cold War, which ended 35 years ago. It is not prepared today. China and Russia are major powers that seek to undermine U.S. influence. The 2022 National Defense Strategy (NDS) recognizes these nations as the top threats to the United States and declares China to be the “pacing challenge,” based on the strength of its military and economy and its intent to exert dominance regionally and globally. The Commission finds that, in many ways, China is outpacing the United States and has largely negated the U.S. military advantage in the Western Pacific through two decades of focused military investment. Without significant change by the United States, the balance of power will continue to shift in China’s favor. China’s overall annual spending on defense is estimated at as much as $711 billion, and the Chinese government in March 2024 announced an increase in annual defense spending of 7.2 percent. Russia will devote 29 percent of its federal budget this year on national defense as it continues to reconstitute its military and economy after its failed initial invasion of Ukraine in 2022. Russia possesses considerable strategic, space, and cyber capabilities and under Vladimir Putin seeks a return to its global leadership role of the Cold War.

As David Leonhardt, writing his The Morning (a New York Times news feed) on September 23rd, notes the growing and deeply antidemocratic alliances forming against the United States and her allies: “This anti-American alliance presents a threat because its members are not satisfied with the status quo. That’s why Russia invaded Ukraine and Iran’s proxies have been so aggressive in Israel, Lebanon, Syria and Yemen. It’s why China has rammed Philippine boats in the South China Sea and President Xi Jinping has directed China’s military to be ready to invade Taiwan by 2027. China, Russia and Iran all want more control over their regions than they now have.

“One of the bipartisan group’s central arguments is that American weakness has contributed to the new instability. ‘This is not a report encouraging the U.S. to go to war,’ Jane Harman, the former Democratic congresswoman from California and the commission’s chair, told me. ‘It’s a report making sure the U.S. can deter war.’

“If the U.S. doesn’t do more to deter aggression, living standards in this country could suffer, Harman and her colleagues argued. Iran-backed attacks in the Red Sea have already raised shipping costs, while Russia’s invasion of Ukraine has made energy more expensive. A war in Taiwan could cut off access to the semiconductors that power modern life… Harman told me that she believed the warning signs today were similar to those in the run-up to both Pearl Harbor and 9/11 — serious and underestimated.” Equally horrifying to me are the anti-democratic MAGA forces that seem to be siding with our obvious enemies, reminiscent of the American Nazi movement that rose in the 1930s that was only extinguished by the Japanese attack on Pearl Harbor. To incite political passion, unscrupulous American political factions are willing to sacrifice the nation, completely ignoring George Santayana’s admonition: those who do not study history are condemned to repeat its mistakes.

I’m Peter Dekom, and fact, science and history averse political leadership is quite capable of decimating the United States of America either completely or simply turning us into an also-ran former global powerhouse.