Within the next month, the Pentagon will submit
its 2009 budget to Congress and it's a fair
bet that it will be even larger than the staggering 2008 one. Like the Army
and the Marines, the Pentagon itself is overstretched and under strain – and
like the two services, which are expected to add
92,000 new troops over the next five years (at an estimated cost of $1.2
billion per 10,000), the Pentagon's response is never to cut back, but always
to expand, always to demand more.
After all, there are those disastrous Afghan and Iraqi wars still eating taxpayer
dollars as if there were no tomorrow. Then there's what enthusiasts like to
call "the next war" to think about, which means all those big-ticket weapons,
all those jets, ships, and armored vehicles for the future. And don't forget
the still-popular, Rumsfeld-style "netcentric warfare" systems (robots,
satellites, and the like), not to speak of the killer space toys being developed;
and then there's all that ruined equipment out of Iraq and Afghanistan to be
massively replaced – and all those ruined human beings to take care of.
You'll get the gist of this from a recent editorial in the trade magazine
Week & Space Technology:
"The fact Washington must face is that nearly five years of war have left
U.S. forces worse off than they have been in a generation, yes, since Vietnam,
and restoring them will take budget-building unlike any in the past."
Even on the rare occasion when – as in the case of Boeing's C-17 cargo plane
– the Pentagon decides to cancel a project, there's Congress to remember. Contracts
and subcontracts for weapons systems, carefully doled out to as many states
as possible, mean jobs, and so Congress often balks
at such cuts. (Fifty-five House members recently warned the Pentagon of a "strong
negative response" if funding for the C-17 is excised from the 2009 budget.)
All in all, it adds up to a defense menu for a glutton.
Already, Secretary of Defense Robert Gates has said that 2009
funding is "largely locked into place." The giant military-industrial combines
– Lockheed Martin, Northrop Grumman, Boeing, Raytheon – have been watching their
stocks rise in otherwise treacherous times. They are hopeful. As Ronald Sugar,
Northrop CEO, put
it: "A great global power like the United States needs a great navy and
a great navy needs an adequate number of ships, and they have to be modern and
capable" – and guess which company is the Navy's largest shipbuilder?
There should be nothing surprising in all this, especially for those of us
who have read Chalmers Johnson's Nemesis:
The Last Days of the American Republic, the final volume of his Blowback
Trilogy. Published in 2007, it is already a classic on what imperial overstretch
means for the rest of us. The paperback of Nemesis is officially out
today, just as global stock markets tumble. It is simply a must-read (and if
you've already read it, then get a copy for a friend). In the meantime, hunker
in for Johnson's latest magisterial account of how the mightiest guns the Pentagon
can muster threaten to sink our own country. (For those interested, click
here to view a clip from a new film, "Chalmers Johnson on American Hegemony,"
in Cinema Libre Studios' Speaking
Freely series in which he discusses military Keynesianism and imperial bankruptcy.)
Why the debt crisis is now the greatest threat to the American republic
by Chalmers Johnson
The military adventurers of the Bush administration
have much in common with the corporate leaders of the defunct energy company
Enron. Both groups of men thought that they were the "smartest guys in the room,"
the title of Alex Gibney's prize-winning
film on what went wrong at Enron. The neoconservatives in the White House
and the Pentagon outsmarted themselves. They failed even to address the problem
of how to finance their schemes of imperialist wars and global domination.
As a result, going into 2008, the United States finds itself in the anomalous
position of being unable to pay for its own elevated living standards or its
wasteful, overly large military establishment. Its government no longer even
attempts to reduce the ruinous expenses of maintaining huge standing armies,
replacing the equipment that seven years of wars have destroyed or worn
out, or preparing for a war
in outer space against unknown adversaries.
Instead, the Bush administration puts off these costs for future generations
to pay – or repudiate. This utter fiscal irresponsibility has been disguised
through many manipulative financial schemes (such as causing poorer countries
to lend us unprecedented sums of money), but the time of reckoning is fast approaching.
There are three broad aspects to our debt crisis. First, in the current fiscal
year (2008) we are spending insane amounts of money on "defense" projects that
bear no relationship to the national security of the United States. Simultaneously,
we are keeping the income tax burdens on the richest segments of the American
population at strikingly low levels.
Second, we continue to believe that we can compensate for the accelerating
erosion of our manufacturing base and our loss of jobs to foreign countries
through massive military expenditures – so-called "military Keynesianism," which
I discuss in detail in my book Nemesis:
The Last Days of the American Republic. By military Keynesianism, I
mean the mistaken belief that public policies focused on frequent wars, huge
expenditures on weapons and munitions, and large standing armies can indefinitely
sustain a wealthy capitalist economy. The opposite is actually true.
Third, in our devotion to militarism (despite our limited resources), we are
failing to invest in our social infrastructure and other requirements for the
long-term health of our country. These are what economists call "opportunity
costs," things not done because we spent our money on something else. Our public
education system has deteriorated alarmingly. We have failed to provide health
care to all our citizens and neglected our responsibilities as the world's number-one
polluter. Most important, we have lost our competitiveness as a manufacturer
for civilian needs – an infinitely more efficient use of scarce resources than
arms manufacturing. Let me discuss each of these.
The Current Fiscal Disaster
It is virtually impossible to overstate the profligacy of what our government
spends on the military. The Department of Defense's planned expenditures for
fiscal year 2008 are larger than all other nations' military budgets combined.
The supplementary budget to pay for the current wars in Iraq and Afghanistan,
not part of the official defense budget, is itself larger than the combined
military budgets of Russia and China. Defense-related spending for fiscal 2008
will exceed $1 trillion for the first time in history. The United States has
become the largest single salesman of arms and munitions to other nations on
Earth. Leaving out of account President Bush's two ongoing wars, defense spending
has doubled since the mid-1990s. The defense budget for fiscal 2008 is the largest
since World War II.
Before we try to break down and analyze this gargantuan sum, there is one important
caveat. Figures on defense spending are notoriously unreliable. The numbers
released by the Congressional Reference Service and the Congressional Budget
Office do not agree with each other. Robert Higgs, senior fellow for political
economy at the Independent Institute, says,
"A well-founded rule of thumb is to take the Pentagon's (always well publicized)
basic budget total and double it." Even a cursory reading of newspaper articles
about the Department of Defense will turn up major differences in statistics
about its expenses. Some 30-40 percent of the defense budget is "black," meaning
that these sections contain hidden expenditures for classified projects. There
is no possible way to know what they include or whether their total amounts
There are many reasons for this budgetary sleight-of-hand – including a desire
for secrecy on the part of the president, the secretary of defense, and the
military-industrial complex – but the chief one is that members of Congress,
who profit enormously from defense jobs and pork-barrel projects in their districts,
have a political interest in supporting the Department of Defense. In 1996,
in an attempt to bring accounting standards within the executive branch somewhat
closer to those of the civilian economy, Congress passed the Federal Financial
Management Improvement Act. It required all federal agencies to hire outside
auditors to review their books and release the results to the public. Neither
the Department of Defense nor the Department of Homeland Security has ever complied.
Congress has complained, but not penalized either department for ignoring the
law. The result is that all numbers released by the Pentagon should be regarded
In discussing the fiscal 2008 defense budget, as released to the press on Feb.
7, 2007, I have been guided by two experienced and reliable analysts: William
D. Hartung of the New America Foundation's Arms and Security Initiative
and Fred Kaplan, defense
correspondent for Slate.com. They agree that the Department of Defense requested
$481.4 billion for salaries, operations (except in Iraq and Afghanistan), and
equipment. They also agree on a figure of $141.7 billion for the "supplemental"
budget to fight the "global war on terrorism" – that is, the two ongoing wars
that the general public may think are actually covered by the basic Pentagon
budget. The Department of Defense also asked for an extra $93.4 billion to pay
for hitherto unmentioned war costs in the remainder of 2007 and, most creatively,
an additional "allowance" (a new term in defense budget documents) of $50 billion
to be charged to fiscal year 2009. This comes to a total spending request by
the Department of Defense of $766.5 billion.
But there is much more. In an attempt to disguise the true size of the American
military empire, the government has long hidden major military-related expenditures
in departments other than Defense. For example, $23.4 billion for the Department
of Energy goes
toward developing and maintaining nuclear warheads; and $25.3 billion in
the Department of State budget is spent on foreign military assistance (primarily
for Israel, Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, the United Arab Republic,
Egypt, and Pakistan). Another $1.03 billion outside the official Department
of Defense budget is now needed
for recruitment and reenlistment incentives for the overstretched U.S. military
itself, up from a mere $174 million in 2003, the year the war in Iraq began.
The Department of Veterans Affairs currently gets at least $75.7 billion, 50
percent of which goes for the long-term care of the grievously injured among
the at least 28,870 soldiers so
far wounded in Iraq and another 1,708 in Afghanistan. The amount is universally
derided as inadequate.
Another $46.4 billion goes to the Department of Homeland Security.
Missing as well from this compilation is $1.9 billion to the Department of
Justice for the paramilitary activities of the FBI; $38.5 billion to the Department
of the Treasury for the Military Retirement Fund; $7.6 billion for the military-related
activities of the National Aeronautics and Space Administration; and well over
$200 billion in interest for past debt-financed defense outlays. This brings
U.S. spending for its military establishment during the current fiscal year
(2008), conservatively calculated, to at least $1.1 trillion.
Such expenditures are not only morally obscene, they are fiscally unsustainable.
Many neoconservatives and poorly informed patriotic Americans believe that,
even though our defense budget is huge, we can afford it because we are the
richest country on Earth. Unfortunately, that statement is no longer true. The
world's richest political entity, according to the CIA's
World Factbook, is the European Union. The EU's 2006 GDP (gross domestic
product – all goods and services produced domestically) was estimated to be
slightly larger than that of the U.S. However, China's 2006 GDP was only slightly
smaller than that of the U.S., and Japan was the world's fourth richest nation.
A more telling comparison that reveals just how much worse we're doing can
be found among the "current accounts" of various nations. The current account
measures the net trade surplus or deficit of a country plus cross-border payments
of interest, royalties, dividends, capital gains, foreign aid, and other income.
For example, in order for Japan to manufacture anything, it must import all
required raw materials. Even after this incredible expense is met, it still
has an $88 billion per year trade surplus with the United States and enjoys
the world's second highest current account balance. (China is number one.) The
United States, by contrast, is number
163 – dead last on the list, worse than countries like Australia and the
United Kingdom that also have large trade deficits. Its 2006 current account
deficit was $811.5 billion; second worst was Spain at $106.4 billion. This is
what is unsustainable.
It's not just that our tastes for foreign goods, including imported oil, vastly
exceed our ability to pay for them. We are financing them through massive borrowing.
On Nov. 7, 2007, the U.S. Treasury announced that the national debt had breached
$9 trillion for the first time ever. This was just five weeks after Congress
raised the so-called debt ceiling to $9.815 trillion. If you begin in 1789,
at the moment the Constitution became the supreme law of the land, the debt
accumulated by the federal government did not top $1 trillion until 1981. When
George Bush became president in January 2001, it stood at approximately $5.7
trillion. Since then, it has increased by 45 percent. This huge debt can be
largely explained by our defense expenditures in comparison with the rest of
The world's top 10 military spenders and the approximate amounts each country
currently budgets for its military establishment are:
1. United States (FY08 budget), $623 billion
2. China (2004), $65 billion
3. Russia, $50 billion
4. France (2005), $45 billion
5. Japan (2007), $41.75 billion
6. Germany (2003), $35.1 billion
7. Italy (2003), $28.2 billion
8. South Korea (2003), $21.1 billion
9. India (2005 est.), $19 billion
10. Saudi Arabia (2005 est.), $18 billion
World total military expenditures (2004 est.), $1,100 billion
World total (minus the United States), $500 billion
Our excessive military expenditures did not occur over just a few short years
or simply because of the Bush administration's policies. They have been going
on for a very long time in accordance with a superficially plausible ideology
and have now become entrenched in our democratic political system where they
are starting to wreak havoc. This ideology I call "military Keynesianism" –
the determination to maintain a permanent war economy and to treat military
output as an ordinary economic product, even though it makes no contribution
to either production or consumption.
This ideology goes back to the first years of the Cold War. During the late
1940s, the U.S. was haunted by economic anxieties. The Great Depression of the
1930s had been overcome only by the war production boom of World War II. With
peace and demobilization, there was a pervasive fear that the Depression would
return. During 1949, alarmed by the Soviet Union's detonation of an atomic bomb,
the looming communist victory in the Chinese civil war, a domestic recession,
and the lowering of the Iron Curtain around the USSR's European satellites,
the U.S. sought to draft basic strategy for the emerging cold war. The result
was the militaristic National
Security Council Report 68 (NSC-68) drafted under the supervision of Paul
Nitze, then head of the Policy Planning Staff in the State Department. Dated
April 14, 1950, and signed by President Harry S. Truman on Sept. 30, 1950, it
laid out the basic public economic policies that the United States pursues to
the present day.
In its conclusions, NSC-68 asserted,
"One of the most significant lessons of our World War II experience was that
the American economy, when it operates at a level approaching full efficiency,
can provide enormous resources for purposes other than civilian consumption
while simultaneously providing a high standard of living."
With this understanding, American strategists began to build up a massive munitions
industry, both to counter the military might of the Soviet Union (which they
consistently overstated) and also to maintain full employment as well as ward
off a possible return of the Depression. The result was that, under Pentagon
leadership, entire new industries were created to manufacture large aircraft,
nuclear-powered submarines, nuclear warheads, intercontinental ballistic missiles,
and surveillance and communications satellites. This led to what President Eisenhower
warned against in his farewell address of Jan. 17, 1961: "The conjunction of
an immense military establishment and a large arms industry is new in the American
experience" – that is, the military-industrial complex.
By 1990, the value of the weapons, equipment, and factories devoted to the
Department of Defense was 83 percent of the value of all plants and equipment
in American manufacturing. From 1947 to 1990, the combined U.S. military budgets
$8.7 trillion. Even though the Soviet Union no longer exists, U.S. reliance
on military Keynesianism has, if anything, ratcheted up, thanks to the massive
vested interests that have become entrenched around the military establishment.
Over time, a commitment to both guns and butter has proven an unstable configuration.
Military industries crowd out the civilian economy and lead to severe economic
weaknesses. Devotion to military Keynesianism is, in fact, a form of slow economic
On May 1, 2007, the Center for Economic and Policy Research of Washington,
D.C., released a study prepared by the global forecasting company Global Insight
on the long-term economic impact of increased military spending. Guided by economist
Dean Baker, this research showed that, after an initial demand stimulus, by
about the sixth year the effect of increased military spending turns negative.
Needless to say, the U.S. economy has had to cope with growing defense spending
for more than 60 years. He found that, after 10 years of higher defense spending,
there would be 464,000 fewer jobs than in a baseline scenario that involved
lower defense spending.
"It is often believed that wars and military spending increases are good
for the economy. In fact, 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."
These are only some of the many deleterious effects of military Keynesianism.
Hollowing Out the American Economy
It was believed that the U.S. could afford both a massive military establishment
and a high standard of living, and that it needed both to maintain full employment.
But it did not work out that way. By the 1960s, it was becoming apparent that
turning over the nation's largest manufacturing enterprises to the Department
of Defense and producing goods without any investment or consumption value was
starting to crowd out civilian economic activities. The historian Thomas E.
Woods Jr. observes
that, during the 1950s and 1960s, between one-third and two-thirds of all American
research talent was siphoned off into the military sector. It is, of course,
impossible to know what innovations never appeared as a result of this diversion
of resources and brainpower into the service of the military, but it was during
the 1960s that we first began to notice Japan was outpacing us in the design
and quality of a range of consumer goods, including household electronics and
Nuclear weapons furnish a striking illustration of these anomalies. Between
the 1940s and 1996, the United States spent at least $5.8 trillion on the development,
testing, and construction of nuclear bombs.
By 1967, the peak year of its nuclear stockpile, the United States possessed
some 32,500 deliverable atomic and hydrogen bombs, none of which, thankfully,
was ever used. They perfectly illustrate the Keynesian principle that the government
can provide make-work jobs to keep people employed. Nuclear weapons were not
just America's secret weapon, but also its secret economic weapon. As of 2006,
we still had 9,960 of them. There is today no sane use for them, while the trillions
spent on them could have been used to solve the problems of social security
and health care, quality education and access to higher education for all, not
to speak of the retention of highly skilled jobs within the American economy.
The pioneer in analyzing what has been lost as a result of military Keynesianism
was the late Seymour Melman (1917-2004), a professor of industrial engineering
and operations research at Columbia University. His 1970 book, Pentagon Capitalism:
The Political Economy of War, was a prescient analysis of the unintended
consequences of the American preoccupation with its armed forces and their weaponry
since the onset of the Cold War. Melman wrote (pp. 2-3):
"From 1946 to 1969, the United States government spent over $1,000 billion
on the military, more than half of this under the Kennedy and Johnson administrations
– the period during which the [Pentagon-dominated] state management was established
as a formal institution. This sum of staggering size (try to visualize a billion
of something) does not express the cost of the military establishment to the
nation as a whole. The true cost is measured by what has been forgone, by the
accumulated deterioration in many facets of life by the inability to alleviate
human wretchedness of long duration."
In an important exegesis on Melman's relevance to the current American economic
situation, Thomas Woods writes:
"According to the U.S. Department of Defense, during the four decades from
1947 through 1987 it used (in 1982 dollars) $7.62 trillion in capital resources.
In 1985, the Department of Commerce estimated the value of the nation's plant
and equipment, and infrastructure, at just over $7.29 trillion. In other words,
the amount spent over that period could have doubled the American capital stock
or modernized and replaced its existing stock."
The fact that we did not modernize or replace our capital assets is one of
the main reasons why, by the turn of the 21st century, our manufacturing base
had all but evaporated. Machine
tools – an industry on which Melman was an authority – are a particularly important
symptom. In November 1968, a five-year inventory disclosed (p. 186) "that 64
percent of the metalworking machine tools used in U.S. industry were ten years
old or older. The age of this industrial equipment (drills, lathes, etc.) marks
the United States' machine tool stock as the oldest among all major industrial
nations, and it marks the continuation of a deterioration process that began
with the end the Second World War. This deterioration at the base of the industrial
system certifies to the continuous debilitating and depleting effect that the
military use of capital and research and development talent has had on American
Nothing has been done in the period since 1968 to reverse these trends and
it shows today in our massive imports of equipment – from medical machines like
accelerators for radiological therapy (made primarily in Belgium, Germany,
and Japan) to cars and trucks.
Our short tenure as the world's "lone superpower" has come to an end. As Harvard
economics professor Benjamin Friedman has
"Again and again it has always been the world's leading lending country
that has been the premier country in terms of political influence, diplomatic
influence, and cultural influence. It's no accident that we took over the role
from the British at the same time that we took over … the job of being the world's
leading lending country. Today we are no longer the world's leading lending
country. In fact we are now the world's biggest debtor country, and we are continuing
to wield influence on the basis of military prowess alone."
Some of the damage done can never be rectified. There are, however, some steps
that this country urgently needs to take. These include reversing Bush's 2001
and 2003 tax cuts for the wealthy, beginning to liquidate our global empire
of over 800 military bases, cutting from the defense budget all projects that
bear no relationship to the national security of the United States, and ceasing
to use the defense budget as a Keynesian jobs program. If we do these things
we have a chance of squeaking by. If we don't, we face probable national insolvency
and a long depression.
Chalmers Johnson is the author of Nemesis:
The Last Days of the American Republic, just published in paperback.
It is the final volume of his Blowback Trilogy, which also includes Blowback
(2000) and The
Sorrows of Empire (2004).
[Note: For those interested, click
here to view a clip from a new film, "Chalmers Johnson on American
Hegemony," in Cinema Libre
Studios' Speaking Freely series in which he discusses "military Keynesianism"
and imperial bankruptcy. For sources on global military spending, please see:
(1) Global Security Organization, "World
Wide Military Expenditures" as well as Glenn Greenwald, "The
bipartisan consensus on U.S. military spending"; (2) Stockholm International
Peace Research Institute, "Report:
China biggest Asian military spender."]
Copyright 2008 Chalmers Johnson