David Stockman: "We are at the point of no return..."

[mhgaffney]

A new political alignment is taking place in our country. It's why I post Paul Craig Roberts' stuff on the OM.

The local rightards don't get this. They keep trying to portray things in right left terms -- but they are clueless.

Check out this recent article about David Stockman, Reagan's former budget director. He is no lefty -- yet he agrees with the lefties like me calling for an end to the wars.

MHG

RAW STORY Exclusive: America has ‘reached the point of no return,’ Reagan budget director warns

http://www.rawstory.com/rs/2011/01/a...irector-warns/
The Obama administration's $78 billion cut to US defense spending is a mere "pin-prick" to a behemoth military-industrial complex that must drastically shrink for the good of the republic, a former Reagan administration budget director recently told Raw Story.

"It amounts to a failed opportunity to recognize that we are now at a historical inflection point at which the time has arrived for a classic post-war demobilization of the entire military establishment," David Stockman said in an exclusive interview.

"The Cold War is long over," he continued. "The wars of occupation are almost over and were complete failures -- Afghanistan and Iraq. The American empire is done. There are no real seriously armed enemies left in the world that can possibly justify an $800 billion national defense and security establishment, including Homeland Security."

Short of that, he suggested, the United States has "reached the point of no return" with its artificial creation of wealth, and will eventually face a sharp economic decline.

Stockman last fall criticized the extension of the Bush tax cuts while the federal government continued to borrow money abroad to pay for its public welfare and warfare programs. His solution to deficit spending -- a huge across-the-board tax increase -- is contrary to the current anti-tax ideology shared among tea party activists as well as fiscal conservatives in the Republican Party.



Stockman, who was appointed by President Ronald Reagan in 1981 to run the Office of Management and Budget, offered two models for the US military's compulsory demobilization: the one after World War I in 1920 and the one after World War II in 1946.

Calling today's military spending running at 5.4 percent of GDP "simply an absurd level that begs for radical contraction and surgery," he said that a "reasonable target" to shrink the defense establishment would be 3 percent of GDP by 2015.

What budget cuts?

Republicans, who were elected to a majority in the House of Representatives on promises to cut government spending, promised to cut $100 billion from the budget in their first year. Relatively few have proposed significant decreases in defense spending, and GOP leadership has outright dismissed the possibility.

Some prominent members of the House GOP caucus have even suggested the sum of their austerity measures could fall to only $30 billion, if that.

Republicans in Congress have instead championed their success in extending President George W. Bush's tax cuts for the wealthiest Americans. The Congressional Research Service reported (PDF) that extending debased tax rates to the wealthy will add an additional $5.08 trillion to the US deficit over the next 10 years.

The Bush-era tax rates that Republicans had set to expire were continued for another two years in a legislative compromise that cleared the way for a series of Democratic legislative victories in Congress. President Obama vowed to press the issue again in 2012.

Among their first actions as the House majority, Republicans also pushed for a repeal of President Obama's health care reform laws, even as the Senate's Democratic majority vowed to block the measure. Repeal of the laws would cost an additional $230 billion, according to the Congressional Budget Office (PDF), and would likely drive the number of uninsured Americans to over 54 million by 2019.

But with the US national debt ballooning past $14 trillion in recent days, even a debasement of the military-industrial complex might be too little, too late.

Some analysts have warned the next debt crisis could be municipal bonds, where a $2 trillion market bubble currently exists. One, who correctly predicted the Citigroup credit crunch, even suggested that over 100 US cities may default in the process.

But very few, if anyone, in Congress, the National Security Council, the State or Defense Departments have even dared to publicly raise the prospect of reducing the military establishment and its spending to offset the national debt, Stockman said.

"Unless you have a profound change in foreign policy, you're not going to have the possibility of a radical change in defense spending. The later follows from the former," he said.

"This is a profound disappointment that there's not even a debate -- a serious debate about dramatic change in our imperialist foreign policy and war-making establishment in this administration -- allegedly the most left-wing administration that we've had in modern time."

"I don't have much hope that what needs to be done will be done until it's finally forced on us by a world bond market crisis, which will happen sooner or later," Stockman added.

The 'Ponzi scheme' of 'artificial prosperity'

Stockman, who described himself as a libertarian during a recent interview with Reason.tv, told Raw Story that the economy got into this mess because of the public and private sectors' addiction to "guns and butter Keynesianism," an economic policy that amounts to a Ponzi scheme that has ballooned since 1990.

"If we see what's going on carefully, we've reached the final unmasking of the Keynesian illusion, that Keynesianism is really nothing but borrowing, stealing from the future to induce consumption today," he said. "There are no multipliers. Every one of these programs we've had from 'cash for clunkers' to housing purchase credits have disappeared as soon as they expired and simple shifted activities in time by a few months."

Stockman explained that before 1980, it took about $1.50 of new borrowing -- public or private -- to generate $1 of GDP growth. By the mid-1990s, it was $2.50 or $3 of borrowing for a $1 of GDP growth. By 2007, before the big collapse and meltdown finally came, $7 of public and private debt was added to the national balance sheet in order to get $1 of GDP growth.

"When you get to the point of $7 of borrowing to get $1 of income, you're obviously on an unsustainable path and pretty close to hitting the wall, which more or less we have," he said.

"So the addicts in Washington are now unfortunately terrified to stop all this borrowing whether it's for guns or butter for fear of the economy will collapse.... That's why we're just at the beginning of solving this massive financial collapse we had in 2008 and not in the process of healthy recovery as some of the pals in the White House or on Capitol Hill or on Wall Street would have you believe."

America's "massive debt-created, artificial prosperity" is unprecedented in history, he continued. The dependence on consumption supported by public and private borrowing, not income, is a new stage for Western Europe as well.

A global public debt crisis was inevitable and likely unstoppable, given the political conditions, Stockman added.

"We've reached a point of no return. The size of the government. The massive size of the deficits and the national debt that has been created. The precedents that have been established for bailouts and intervention in every sector of the economy. The K Street lobbying system which totally dominates the Congress. All of these are very unhealthy developments.

"And I'm not sure how they are going to be reversed or eliminated," he concluded. "It may be a permanent way of life. Then, if it is, it'll be both a corruption of democracy and a serious weakening of the private capitalistic economy."

With additional reporting and editing by Stephen C. Webster.

[baja]

These cuts will come to pass the question is will it be done rationally with a plan covering several years of downturns or will it be a forced chaotic event that happens suddenly with catastrophic consequences?

[DenverBrit]

Stockman is exactly right about the Military industrial complex.

It's obscenely bloated and loaded with corruption.
But who has the balls to take it on and get it reduced to a manageable and relevant size?

The country needs another Eisenhower:

[cutthemdown]

With China building there military it's not the time to cut back. If anything we should add troops. I do agree though we should wind Afghanistan down. Obama's surge has been a dismal failure. I guess it's the generals fault for having a poor plan that won't work in a dog **** country like Afghanistan. I mean we are talking about a country where they screw little boys as matter of culture.

The only way to put them under control is how Taliban did it by cutting off heads. Well our version would be blowing up whole villages where no one is really left alive. Just send Marines into the outskirts of a village. If they come under attack then you call in fuel air bomb strikes on that village. Village destoryed and move on. By the time you do that 40 or 50 times the war would be over. But instead they are trying to win with small arms fire? no tanks to speak of? No airstrikes that threaten civilians? cmon you can't ever win like that.

So yeah I agree just end the war and bring the troops home. Then work on building military up even stronger.

[Obushma]

Originally Posted by cutthemdown

I guess it's the generals fault for having a poor plan that won't work in a dog **** country like Afghanistan. I mean we are talking about a country where they screw little boys as matter of culture.

Yeah it's crazy, we actually have corporations here in the USA that sell those little boys to the Afghan police our military is training. Definitely just need to "wind it down" though.

The only way to put them under control is how Taliban did it by cutting off heads. Well our version would be blowing up whole villages where no one is really left alive. Just send Marines into the outskirts of a village. If they come under attack then you call in fuel air bomb strikes on that village. Village destoryed and move on. By the time you do that 40 or 50 times the war would be over. But instead they are trying to win with small arms fire? no tanks to speak of? No airstrikes that threaten civilians? cmon you can't ever win like that.

Christ, no wonder they hate us because of our freedoms. Any chance you'd be willing to go over there and help your fellow Americans out? Infantry, maybe those guys who drive around looking for roadside bombs? Hell, you might even get lucky and get moved up the ladder to when you retire you can work for DynCorp.

[baja]

Originally Posted by cutthemdown

With China building there military it's not the time to cut back. If anything we should add troops. I do agree though we should wind Afghanistan down. Obama's surge has been a dismal failure. I guess it's the generals fault for having a poor plan that won't work in a dog **** country like Afghanistan. I mean we are talking about a country where they screw little boys as matter of culture.

The only way to put them under control is how Taliban did it by cutting off heads. Well our version would be blowing up whole villages where no one is really left alive. Just send Marines into the outskirts of a village. If they come under attack then you call in fuel air bomb strikes on that village. Village destroyed and move on. By the time you do that 40 or 50 times the war would be over. But instead they are trying to win with small arms fire? no tanks to speak of? No airstrikes that threaten civilians? cmon you can't ever win like that.

So yeah I agree just end the war and bring the troops home. Then work on building military up even stronger.

No need to worry about China's military thy can destroy the USA any time they want to without firing shot, just dump dollars and stop loaning us money. That will turn the USA into a third world country.

[mhgaffney]

Originally Posted by cutthemdown

With China building there military it's not the time to cut back. If anything we should add troops. I do agree though we should wind Afghanistan down. Obama's surge has been a dismal failure. I guess it's the generals fault for having a poor plan that won't work in a dog **** country like Afghanistan. I mean we are talking about a country where they screw little boys as matter of culture.

The only way to put them under control is how Taliban did it by cutting off heads. Well our version would be blowing up whole villages where no one is really left alive. Just send Marines into the outskirts of a village. If they come under attack then you call in fuel air bomb strikes on that village. Village destoryed and move on. By the time you do that 40 or 50 times the war would be over. But instead they are trying to win with small arms fire? no tanks to speak of? No airstrikes that threaten civilians? cmon you can't ever win like that.

So yeah I agree just end the war and bring the troops home. Then work on building military up even stronger.

Before the war began in 1979 -- Afghanistan had a Sufi tradition known for moderation and tolerance.

30 yeas of war has destroyed the country.

We are there because the US elite believe that whoever controls central Asia controls the whole Asian continent. And whoever controls Asia controls the planet.

It's about controlling China, Russia and India.

It's a US power play to dominate the world.

9/11 was only the pretext.

[SoCalBronco]

Gaff, be honest, do you FAP to PCR-type articles?

[mhgaffney]

SoCal,

We are drowning in acronyms. Please spell out your question. (FAP = ?)

[Bronco Yoda]

For those interested.

http://www.countercurrents.org/lendman190110.htm

[Boomhauer]

Originally Posted by baja

These cuts will come to pass the question is will it be done rationally with a plan covering several years of downturns or will it be a forced chaotic event that happens suddenly with catastrophic consequences?

Probably the later. There's an incredible amount of waste due to local jobs/interest of the Legislators that are nearly immune to cuts, so essential programs will probably be axed if a numeric goal is pursued.
Programs of shear waste include C-17 and F-18 production, Stryker, MRAP and B-52 maintinence, scatter-gun FCS development that's being wound down, two seperate LCS aquisitions, apparently overweight JLTV competition, and most of all - the counterproductive bidding wars ongoing in the Middle East.

[TailgateNut]

Originally Posted by cutthemdown

With China building there military it's not the time to cut back. If anything we should add troops. I do agree though we should wind Afghanistan down. Obama's surge has been a dismal failure. I guess it's the generals fault for having a poor plan that won't work in a dog **** country like Afghanistan. I mean we are talking about a country where they screw little boys as matter of culture.

The only way to put them under control is how Taliban did it by cutting off heads. Well our version would be blowing up whole villages where no one is really left alive. Just send Marines into the outskirts of a village. If they come under attack then you call in fuel air bomb strikes on that village. Village destoryed and move on. By the time you do that 40 or 50 times the war would be over. But instead they are trying to win with small arms fire? no tanks to speak of? No airstrikes that threaten civilians? cmon you can't ever win like that.

So yeah I agree just end the war and bring the troops home. Then work on building military up even stronger.

What one should expect from Mr. Rock-em Sock-em

[TailgateNut]

Originally Posted by ThyNatural

Yeah it's crazy, we actually have corporations here in the USA that sell those little boys to the Afghan police our military is training. Definitely just need to "wind it down" though.







Christ, no wonder they hate us because of our freedoms. Any chance you'd be willing to go over there and help your fellow Americans out? Infantry, maybe those guys who drive around looking for roadside bombs? Hell, you might even get lucky and get moved up the ladder to when you retire you can work for DynCorp.

He is just a cheerleader for the MIC and "loves him some war". To much of a "kitty" to actually serve.

[orinjkrush]

our foreign entanglements have necessitated our operational military costs.
but they pale in comparison to our federal entitlements.
what is needed is a review of entitlements. those that are earned and those that are not.
too many people receive too much largess without having earned any of it.
GI entitlements are earned.

[mhgaffney]

OK -- just so you don't include social security -- which is NOT an entitlement.

It is paid for -- directly out of your and my paychecks.

The SS was set up on a sound basis -- until the politicos raided the SS fund.

The answer would be to prosecute the people who did this.

Of course --the lunatic right wants to destroy SS -- and every other social program. They want everything privatized -- even the air we breathe and the water we drink.

[Jay3]

We need to close bases, lots of them. Lather, rinse, repeat.

Military bases are like giant pork barrel projects -- previous politicians loved to bring them home to their states, and current ones don't want them touched.

We could spend a lot less if we reduced the footrpint of the military, and maintain a lot of the same core capability, just not the spread out reach of it.

If you support reduction in military spending, support base closings. That's something that left, right, hawk, and dove ought to be able agree upon.

Do that first.

[Boomhauer]

Originally Posted by mhgaffney

OK -- just so you don't include social security -- which is NOT an entitlement. ...

Of course SS is an entitlement and must be cut, just like welfare, Medicare, Medicaid, education, farm subsidies, green subsidies, ethnic subsidies, etc. Military spending, as well as National Security and clandestine ops, is on the chopping block with them, just like investor-class tax relief programs.

Decades have been spent fattening the Government and it's time for liposuction ... with a chainsaw.

[mhgaffney]

Boom,

You do not know how to listen. Evidently you watch too much FOX.

SS is not an entitlement. The funds come out of YOUR paycheck every month. It is YOUR money -- that is put aside -- and later returned to you when you retire.

I expect you are another example of the dumbed down American who always votes against his own interests.

MHG

[orinjkrush]

many receive SS entitlements without having contributed (spouses, children, our parents etc.)
reducing our military commitments is key to reducing military needs.
fairness should be built into our entitlement systems: you get what you have contributed plus interest.
we should appropriate all bankster profits for the foreseeable future, in the national interest. (they have not earned any of them, they are unfair exploitation, nothing more than financial predation.) usury should be banned. making products and services should be rewarded, not credit default swaps and securitization of insanity.

[Jay3]

Originally Posted by mhgaffney

Boom,

You do not know how to listen. Evidently you watch too much FOX.

SS is not an entitlement. The funds come out of YOUR paycheck every month. It is YOUR money -- that is put aside -- and later returned to you when you retire.

I expect you are another example of the dumbed down American who always votes against his own interests.

MHG

It's an entitle, disguised as a pension plan. It redistributes wealth. Many receive back an amount that would never result from their contribution. Many receive back far less that their contribution would justify.

It is a program designed to get us accustomed to the idea of collective security, of the idea that getting back our own money is something we should look to the government for.

It performs horribly as a program, and is the single greatest loss of opportunity in government programs. If we set it up right, it could really empower the lower classes to have intergenerational capital.

[mhgaffney]

Jay,

I can tell you are young -- and not collecting SS.

You sound like GW trying to sell the public on his plan (correction: scam) to replace SS with an alternative based on the stock market (correction: Russian roulette).

No thank you. The second operative word in SS is security. The idea here is to keep down risk.

If Bush had had his way -- our old folks would have lost everything when the derivative bubble went splat -- and would be selling apples or begging for hand outs on the street corner.

40-50% of the US economy is either speculation or illicit activity (money laundering etc)

[Jay3]

Originally Posted by mhgaffney

Jay,

I can tell you are young -- and not collecting SS.

You sound like GW trying to sell the public on his plan (correction: scam) to replace SS with an alternative based on the stock market (correction: Russian roulette).

No thank you. The second operative word in SS is security. The idea here is to keep down risk.

If Bush had had his way -- our old folks would have lost everything when the derivative bubble went splat -- and would be selling apples or begging for hand outs on the street corner.

40-50% of the US economy is either speculation or illicit activity (money laundering etc)

No, I'm 41 and quite aware of how it works. You're free to read up on all of the entitlement aspects of Social Security, how it pays benefits in excess of contributions (as it should, it serves a needed purpose). And you're free to do the math about how well it performs when one considers how much it takes out of every man's paycheck.

Any normal retirement plan pays the accumulated wealth to the retiree on death. If he dies at 66 before it's spent up, he has some wealth to devise to his heirs. In Social Security, the government says "thank you for your money! The government wins this one!"

What it means is the working man never gets the wealth accumulation that is possible with all that money, while those who are well paid have designed an entirely different approach for themselves -- a 401(k) style defined contribution plan, whereby the accumulated value is never dissipated.

And so once again, government throws up hurdles to class mobility.

[Odysseus]

Originally Posted by DenverBrit

Stockman is exactly right about the Military industrial complex.

It's obscenely bloated and loaded with corruption.
But who has the balls to take it on and get it reduced to a manageable and relevant size?

The country needs another Eisenhower:

IKE was widely panned back in his day for things that we consider now to be common sense. IKE's speech is amazing to me because it's pure common sense but it is the opposite of what "we the people" are doing, supporting, or paying for.

The thread regarding banks controlling things and what is happening with currency is every bit related to what is going on in Afghanistan.

The biggest thing the military needs to do is get ride of mid level officers, install direct chain of command leadership, focus on the what the Non Commissioned officers are concerned about and instead of working with the lowest bidder on contractors focus on performance as the measurable. There needs to be a criteria for a QUALITY military instead of having piles of new raggedy equipment.

I do not think base closures is as critical an issue as establishing what is the end game size of our military. We keep cutting the wrong things and getting rid of things that we will need. Military needs a team of Project Managers who do bottom up evaluation. There needs to be a complete audit of how contractors are being used and instead of applying them everywhere come up with a way that a soldier (who contracted to be that) can do the job he signed up to do or better yet have an opportunity to be all that he can be.

[Odysseus]

Originally Posted by Jay3

We need to close bases, lots of them. Lather, rinse, repeat.

Military bases are like giant pork barrel projects -- previous politicians loved to bring them home to their states, and current ones don't want them touched.

We could spend a lot less if we reduced the footrpint of the military, and maintain a lot of the same core capability, just not the spread out reach of it.

If you support reduction in military spending, support base closings. That's something that left, right, hawk, and dove ought to be able agree upon.

Do that first.

The entire military is a gianormous pork barrel project. Fraud? Waste? Abuse? How do you know? We don't have any kind of quality audit. Why go with lowest contractor? Why not build a Six Sigma process where you evaluate BEST offer and opportunity?

I am against base closings. I would rather focus on building the right bases in in the right locations with the NATIONAL interest as the main focus instead of the current political Catch 22..

[Odysseus]

Originally Posted by Jay3

No, I'm 41 and quite aware of how it works. You're free to read up on all of the entitlement aspects of Social Security, how it pays benefits in excess of contributions (as it should, it serves a needed purpose). And you're free to do the math about how well it performs when one considers how much it takes out of every man's paycheck.

Any normal retirement plan pays the accumulated wealth to the retiree on death. If he dies at 66 before it's spent up, he has some wealth to devise to his heirs. In Social Security, the government says "thank you for your money! The government wins this one!"

What it means is the working man never gets the wealth accumulation that is possible with all that money, while those who are well paid have designed an entirely different approach for themselves -- a 401(k) style defined contribution plan, whereby the accumulated value is never dissipated.

And so once again, government throws up hurdles to class mobility.

I don't think there are 10 posters on this board who know what to do with $500,000 if you gave it to them. Retirement is a very tricky business. How much is our dollar worth in 20 years? I can't get people to get on the same page about money because we have such a wide strata of incomes, solutions, and/or problems that the real issue is staggering.

That all said give ME my freaking money. I am more than happy to sort this out for myself and yes you are right. Class mobility is a critical issue rather than restoring the middle class. We don't have the baby boom anymore. We don't have the industrial backbone or national will power to even possibly consider that. The divide between haves and have nots will continue go expand in the face of options that are being clearly ignored.

I like your points and I wish that people were able to talk about these issues without devolving to personal attacks over literally nothing. We have become a nation of infants and there isn't a tit big enough in the world to get either party to stop crying and start taking action.