Re-Working American Defense: Critical Prior to Any Ramp Up of Defense Spending

09/03/2023

By James Durso

Will the Pentagon soon have all the money it desires, but not enough troops to realize its ambitions?

After appropriating about $2.26 trillion for the Afghanistan misadventure that put the Taliban back in charge in Kabul, and another $2.21 trillion to destabilize Iraq and deliver it into the hands of Iran, defense hawks  in the U.S. Congress think the administration’s proposed Fiscal Year (FY) 2024 national defense budget of $886 billion is too low

In FY 2022, of the government’s discretionary spending (spending controlled through annual appropriation bills), national defense was $751 billion and “nondefense outlays,” that is, the rest of the government, was $910 billion. Mandatory spending, e.g., Medicare, Medicaid, Social Security, was $4.1 trillion. So, of the spending that legislators can influence, the Pentagon gets 45%.

H.R. McMaster, the former White House national security adviser, and other defense hawks, want  the defense budget  increased to 4.5% of GDP or $1.2 trillion. McMaster justifies the budget increase because American “restraint” is to blame for aggressive moves by Russia and China, which will be news to people in the Middle East and Afghanistan who were on the sharp end of U.S. restraint.

Sky-high recommendations like these are, unfortunately, not uncommon.

The report of the 2018 National Defense Strategy Commission, “Providing for the Common Defense,” commission claims “America is very near the point of strategic insolvency,” but overlooks the risk to America’s fiscal solvency caused, paradoxically, by the Pentagon.  The Commission recommended “Congress increase the base defense budget at an average rate of three to five percent above inflation through the Future Years Defense Program (FYDP) and perhaps beyond.”

The “national defense budget” funds the Department of Defense (DoD), selected activities of the Department of Energy, i.e., nuclear weapons, and activities at other federal agencies. The Chairman of the Joint Chiefs of Staff, General Mark Milley, advocates a 3%-5% real increase to the budget each year for “preparing the military to meet the threats of the future while fighting the battles of today.”

Where does the defense budget come from?

Well, Congress appropriates the money, but where does the money come from? Mostly, the money comes from individuals and businesses, as in payroll taxes and income taxes, or from domestic and overseas lenders via the Treasury securities (government bond) market.

The biggest foreign buyers of Treasuries are Japan and China, which lately have reduced their bond holdings, which will increase borrowing costs because reduced demand will require higher interest rates to attract buyers. And higher rates will crowd out other spending, probably in the private sector. And the introduction of a basket-based reserve currency by the BRICS countries (which includes Iran starting in January 2024) may weaken the dollar, potentially pushing up borrowing costs across the economy.

Overseas lenders have financed much of America’s national debt of almost $33 trillion  and now hold about $7.5 trillion in Treasury securities; American citizens and the American government hold the rest. (The U.S. GDP is almost $27 trillion dollars.) If foreign demand for Treasuries is weak, and income tax rates aren’t rising, the government must offer a higher interest rate to attract buyers, further contributing to the budget deficit and pressure on government spending.

The Kobeissi Letter reports: “Interest expense on U.S. Federal debt is now at a record 19.5% of US government revenue…At current rates, within 10 years interest expense will account for 25% of US revenue. If borrowing continued at its current pace, US debt would climb from $32 trillion to $140 trillion by 2050.” According to the Peter G. Peterson Foundation, interest on the debt is “on track to become the largest federal budget item, surpassing Social Security and Medicare by the middle of the century.”

Increased spending to support Ukraine in the war with Russia, on top of the post-9/11 increase in government spending on the post-9/11 wars in Afghanistan, Pakistan, Iraq and elsewhere (estimated at $8 trillion), may signal the U.S. will borrow even-greater sums of money when the usual buyers with loanable funds are busy with domestic concerns. So, interest rates will rise because the bond market always says “yes” to the U.S. Treasury Department.

There is little public support for higher defense spending and support for the NATO proxy war with Russia in Ukraine is slipping. An August 2023 CNN poll found a majority of Americans – 55% – oppose additional aid for Ukraine, with Republicans and Independents against, and Democrats for, additional aid to Kiev. GOP 2024 candidates have taken the hint and several are opposed to more aid to Ukraine, though some GOP activists are funding “Republicans for Ukraine” to pressure lawmakers and the administration to continue support for Kiev.

High inflation will make the prospect of more money for the Pentagon, which just lost two wars, a non-starter as many taxpayers coping with unprecedented energy and food prices. And the Pentagon’s inability to pass a recent financial audit – that was first suggested in 1990 – further weakens its case for more money. And the recent addition of Sweden and Finland to the North Atlantic Treaty Organization (NATO) will double NATO’s border with Russia, and add $8 billion in upfront costs and another $1.5 billion annually, all for the privilege of defending two wealthy countries whose neutrality has served them well.

The Ronald Reagan Institute’s Summer 2023 survey found: ” As per usual, support for increased military and foreign policy spending is substantial but lags domestic issues… Support for spending to promote freedom abroad [intervening in Ukraine and Syria, for example] and to provide foreign aid has dropped sharply in the past year.” Despite an aversion to foreign intervention, the Institute found the American people still want America to engage with the world, creating an opening for more trade and diplomacy and less reliance on the military to solve all problems.

But just when the military wants an unprecedented haul of cash, its reputation is sliding.

The Ronald Reagan Institute’s November 2022 survey found that only 48  percent of those polled report “a great deal of trust and confidence in the military” – down 22  points in three years. Comments the Institute: “No other public institution asked about—including the Supreme Court, Congress, the Presidency, the news media, or law enforcement—has seen as sharp a decline in public trust over this time.” and “Those reporting great confidence in the military’s ability to keep the country safe decreased from 57% in 2021 to 50%.”

The military isn’t the only public institution suffering a bad reputation, but it is used to basking in public esteem so it may not know how to recover.

A public defeat in Afghanistan, commanders prioritizing woke social programs over battle skills,  epidemics of sexual assault and suicide, substandard housing, exposure to dangerous chemicals and hazardous materials…no wonder the services are in danger of missing their  recruiting targets, which will further weaken support for big defense budgets as a family with someone in uniform is more likely to both support a big defense budget and encourage  their children to join the military.

Calls for a “limited military draft” when Congress has not declared war will be rejected by the public,  and a proposed “national security strategy for military recruiting” will occupy a panel of worthies for several months but will it come up ideas that escaped the military recruiters? Probably not.

There are fewer young Americans eligible to serve, due to physical fitness standards and prohibitions on drug use, and only 9% of 16-21 year old Americans have an interest in putting on the uniform.

And when the Pentagon asked young Americans, “What would be the main reason(s) why you would NOT consider joining the U.S. Military?” 70% replied “Possibility of physical injury/death” and 65% replied “Possibility of PTSD or other emotional/psychological issues.” Those distressing numbers are likely due to the well-known epidemics of suicide and sexual assault in the military, and the promotion of “wounded warrior” charities has probably made more prospective recruits aware of the severe injuries they may suffer. In short, is the GI Bill worth losing your legs?

And “the kids” may be on to something: a recent report published by the Journal of the American College of Surgeons says that in a war against a near peer adversary, i.e., Russia or China, U.S. troops will suffer injuries more severe than those in Iraq or Afghanistan, that is “multiple high-velocity penetrating injuries, barotrauma, and blunt injuries from being thrown during the explosion, and traumatic brain injuries.” In addition, U.S. forces won’t command air superiority so evacuation from the battlefield will be difficult if it is even possible.

The military has traditionally relied on military families to provide recruits for the services, but the Secretary of the Army isn’t helping matters by declaring she wants to avoid relying on a “warrior caste” of families with a military tradition. It is commendable that she wants to broaden interest in military service but not clever if it will discourage the ready pool of volunteers before she has alternates signed up.

The Army Secretary has her work cut out for her as even military veterans are less and less likely to recommend military service to their kids.

Then-Vietnam war protester John Kerry said, “How do you ask a man to be the last man to die for a mistake?” Well, we know the names of the last thirteen men and women who died for America’s mistakes in Afghanistan, and so do many young Americans who may look at their sacrifice as a foolish mistake, not an example of selfless service, especially as no one named Bush or Obama carried a rifle in Iraq or Afghanistan.

America’s national security leaders may be unreconciled by the ending of the Cold War with the Soviet Union, which wasn’t marked by an epic armored battle à la Kursk, but by Soviet citizens deciding it was over because the planned economy couldn’t deliver decent household appliances. The brass missed the Big Game and they and their confederates in the policy community and media may think that a splendid little proxy war with Russia in Ukraine will make the taxpayers forget about the defeat in Afghanistan and all those wasted lives and dollars.

Unique in the world’s militaries, the Pentagon doesn’t think it is responsible for defending its country’s borders. Instead of defending America, it defends American interests, which are mutable and can change with a new administration and are not viewed overseas as positively as they are in Washington, D.C. green rooms.

The military is an economic enterprise. It relies on a generous budget to not just pay itself, but also the defense contractors that build weapons and provide services – and hire former servicemembers. Besides the national defense budget ($886.3 billion) there is the Intelligence Community ($101.7 billion, of which $29.2 billion is for the Military Intelligence Program) (billion), and the Veterans Administration, which is just deferred defense spending ($325.1 billion).  It’s not “Military, Inc.”  like in Pakistan or Egypt but the military’s economic interests may not always align with  those  of the American people, calling to mind Eric Hoffer: “What starts out here [the U.S.] as a mass movement ends up as a racket, a cult, or a corporation.”

U.S. President Joe Biden and NATO Secretary General have been calling for sacrifice in order to defeat Russia and usher Ukraine into NATO and the European Union (EU).  Stoltenberg admits “it could take years…even if the costs are high, not only for military support, also because of rising energy and food prices.” However, a recent Rasmussen survey found that 60% of likely voters, mostly Republicans and Independents, “said getting control of the border crisis is more important than aiding Kiev.”

The U.S. Congress unquestioningly  appropriated over $70 billion in war aid and economic support to Kyiv, but much of the military equipment shipped to Ukraine is at risk of diversion, according to the Organized Crime Index which reports “Ukraine is believed to have one of the largest arms trafficking markets in Europe. While it has long been a key link in the global arms trade, its role has only intensified since the beginning of the conflict in eastern Ukraine.” In other words, those weapons may soon wind up in Libya, Syria, and other conflict zones, where they probably won’t be promoting American interests.

A rapid conclusion of the NATO-Russia war in Ukraine war will do the American taxpayers a favor, so the U.S. can hand NATO and Ukraine’s reconstruction to the Europeans and focus on Asia. The Russian army has proved less fearsome that NATO imagined (an analytic shortfall that should publicly be addressed by Congress), so Europe should be able to finally defend itself. NATO was never a real coalition, anyway; it was just about the U.S. defending Europe, while the generous Pentagon budget allowed Europe to spend its money on social welfare schemes and industrial protection.

The 2022 Reagan Institute survey reported Americans still want to engage with the world which may offer less leeway for military adventures, and a larger role for diplomacy. Worrying for military bosses, only 33% of those polled regard “Military leadership,  such as officers and generals” as the best, likely due to the disorganized retreat from Kabul, and the abandonment of billions of dollars of military equipment to the Taliban.

Engagement with the world can be improved if the Congress rebalances funding for diplomacy and the military and security services that was shaped by the wars in Iraq and Afghanistan, and the response to the 9-11 attacks.  Monica Duffy Toft argues, “since 9-11, U.S. military intervention abroad has come at an escalating cost to U.S. national, and national security interests.” More money, for the State Department, Commerce Department, and U.S. Trade Representative will help to de-securitize relations with the rest of the world by emphasizing free and fair trade, with explicit direction from the White House that they are the sales team, and that politics without economic considerations is a waste of time.

Another to-do item is to examine the effects America’s willy-nilly sanctions policy has on trade and finance, as seen in the distortion of world supply chains – and the attendant shortages and price jumps – caused by U.S. sanctions on Russia, China, and whoever else is the villain du jour. Washington’s eagerness to sanctions anyone and everyone is partly  responsible for the BRICS effort to encourage trade settlement in local currencies instead of the U.S. Dollar, and create a new reserve currency which, if successful, will permanently weaken the Dollar  and the United States.

Instead of parroting the Pentagon’s wish for budget increase of 3%-5% above inflation to fund another round of “great power competition,” the Congress should hold hearings on how the nation’s financial challenges will affect its strategic choices, and discuss the opportunity costs of the proposed unprecedented defense spending levels, taking the opportunity to remind the Pentagon (and themselves) of Bernard Brodie’s maxim, “Strategy wears a dollar sign.”

In future wars, the Pentagon will have to understand the potential impact on the global supply chain (and its own suppliers) before the commanders make their recommendations to the President, who will have to consider the supply chain effects on the U.S. and world economy. The need to minimize shocks to the global economy may require the military to take more battlefield risk, a consideration that will cause discomfort for the military establishment and its supporters.

And fewer enlistees may also shape Defense Department choices and recommendations to the President. An undermanned Pentagon may feel it must take more risk in the early stage of a conflict to make gains before casualties pile up, but a riskier strategy may cause the other side to escalate, making a negotiated resolution harder to achieve.

Congress might also consider multi-year defense budgets to would relieve contractors’ planning uncertainty and reduce the cost of weapons systems; giving DoD authority to spend Operations and Maintenance funds across several fiscal years to reduce budget turbulence and the “use it or lose it” mentality; another round of military base closings to drive infrastructure savings; and reviewing domestic content legislation (the “Buy America Act”).

Pentagon leaders should focus on rebuilding the military’s reputation with the taxpayers (and parents of future enlistees) by starting a conversation about how the military can help defend the country’s borders. In the U.S., this is regarded as a civilian, law enforcement function, but it’s time the taxpayers get something back for the money they grant the Pentagon every year, despite the aversion of the brass to this mission.

The military is quick to pin its minor contribution to the Southern border crisis on the Posse Comitatus Act and claim it is only following the law, but the reasons are more likely:

– It doesn’t want to take any actions that may hurt its reputation with the American public, over 60 million of whom have used illicit drugs, many from the other side of the Southern border, in the past year;

– The cartels have a lot of money to fund public corruption and some of that cash will wind up in military pockets. And if there are no talkers, the cartels can always rely on their old standby: Plata o plomo (Silver or lead.);

– The Taliban and the Islamic State couldn’t realistically retaliate for U.S. strikes, but the cartels have networks in Fayetteville and Oceanside, and may hit back in military towns if the military seriously disrupts business or foolishly carries operations over the border to Mexico.

Next, the military needs to end the military’s epidemics of suicide and sexual assault, instead of hyping the nuisance of those right-wing extremists in the ranks who never showed up despite Secretary of Defense Austin’s extremism “stand down” and General Milley’s fascination with “white rage.”

The military is the only employer that requires a Cabinet-level agency – the Veterans Administration – to repair and rehabilitate its former employees, a distinction, all right, and not always a good one.

There is a clear need to address this key question: How will America pay for its national security establishment?

America’s national debt is almost $33 trillion dollars, 125% of the GDP of $26.2 trillion, more  money as the next four countries with the highest debt including China, Japan, France, and Italy. But no one in the nation’s leadership has any idea of how it will be paid down. Growing our way out of it would be nice, but that will be difficult given the nation’s weary infrastructure and public education system that is failing its students. On the other hand, a hard default would surely end U.S, influence, so we may have to conder “the revenue side.”

Some ways to raise revenue are increasing taxes, closing tax loopholes, raising the retirement age, and cutting spending. Lawmakers may be reluctant to end loopholes that favor their constituents or financial supporters, and citizens have been dealing with a low minimum wage, stagnant real wage growth since the 1970s, and increasing disparities in wealth, so may favor spending less or taxing the wealthy.

The Pentagon budget may need to take a haircut followed by a freeze, or the nation’s leaders should do a “clean sheet” budget, which will require a sober reassessment of most likely threats, rejecting the comfortable reliance on  “threat inflation” spurred by the unexpected 9-11 attacks on New York City and the Pentagon. And Congress will also have to ease its mandates, i.e., Buy America legislation, and forcing the Pentagon to buy weapons it does not want.

America is a pretty safe place, resting behind the Atlantic and Pacific moats, and bordered by weak neighbors. The is shifting to a multi-polar system and the U.S. will have to adapt to a changing economic and political environment; hopefully America’s institutions are up to the task. This change is worrying to the national security establishment that will be frustrated as it learns deterrence works both ways. The Pentagon, the defense contractors, some members in the political class, and their pilot fish in the media and think tanks will fret, but guardrails on America’s expeditionary impulses may benefit American workers and taxpayers.

James Durso (@james_durso) is a regular commentator on foreign policy and national security matters. Mr. Durso served in the U.S. Navy for 20 years and has worked in Kuwait, Saudi Arabia, and Iraq.

Featured Graphic: Photo 252146470 | Defense Spending © Kontakt5956 | Dreamstime.com

MRF-D Working with Australian Army

09/01/2023

U.S. Marines with Marine Rotational Force – Darwin 23 and Australian Army Soldiers with 8th/12th Regiment, Royal Australian Artillery, conduct a close air support evolution at Mount Bundey Training Area, Northern Territory, Australia, June 15, 2023.

This allied training facilitates interoperability between joint fire observers, enabling target prosecution in close proximity to friendly forces.

MOUNT BUNDEY, NT, AUSTRALIA

06.15.2023

Video by Cpl. Adeola Adetimehin

Marine Rotational Force – Darwin

VMM-774 Operating off of USS New York

08/30/2023

U.S. Marines with Marine Medium Tiltrotor Squadron 774 (VMM-774) from Marine Corps Air Station New River, North Carolina, land Bell Boeing V-22 Ospreys on San-Antonio-class amphibious transportation dock, USS New York (LPD-21), on June 29, 2023.

This is the first-time squadron VMM-774 has conducted a flight deck landing.

MARINE CORPS AIR STATION NEW RIVER, NC

06.29.2023 Video by Lance Cpl. Alfonso Livrieri 2nd Marine Logistics Group

A Bridge for Intra-Theater Distributed Fleet Operations: The CMV-22B

08/27/2023

By Robbin Laird

As the joint force shapes a distributed force for enhanced survival and relevant presence, the ability to sustain and deliver relevant payloads to that force in combat is critical. Distributed force operations across the Pacific as a giant chessboard, requires an ability to cross link and cross support that force.

This requires continued progress of the relevant command and control (C2) systems to connect the combat clusters that make up a distributed force, but also requires an ability to resupply the relevant payloads used by forces within those combat clusters. The advantage of the sea base is that it is mobile and moves at speed. The disadvantage of the sea base is that it consumes assets to do so and in times of conflict, it needs to resupply the weapons of other payloads it is consuming in combat.

What the combat cluster needs will vary over time– fuel, weapons, USVs, UUVs, and other payloads in development – but some can be supplied by the combat force moving back to the supply system. But if it remains operating within a hot zone, the most likely delivery system will be airborne. If speed and range is not an issue, rotorcraft will do. But if speed and range are critical, say in the resupply of weapons, then the Navy will need to rely on the CMV-22B.

Bought to “replace” the C-2A Greyhound, the CMV-22B is no more a replacement for this aircraft than the MV-22 was for the CH-46. Much like the Osprey changed how the Marines would operate when they mastered Osprey operations and brought it to the Pacific, the Navy is discovering that the Osprey can now provide an intra-theater lift capability which is critical to a distributed force.

In my book, The Role of the Osprey in the Pivot to the Pacific published this year, I described how the Osprey came with the Marines in the original pivot to the Pacific and now is becoming a key part of how the Navy works its way forward in distributed maritime operations, or DMO.

And as the Marines work their Expeditionary Advanced Basing Operation, or EABO concept, the Ospreys for the Marines play a key role as well, which makes them the players in the “second” act for the Marines as they move beyond the pivot to becoming embedded in the Navy-Marine Corps team of 21st century integrated operations.

As I noted in my book: “The importance of the Osprey in the shift in con-ops was highlighted in an interview I did in April 2023 with a senior U.S. Navy commander. He emphasized that the Navy needs to be able to more effectively do intra-theater logistics and to do so with effective speed and survivability.

“As the Admiral underscored: ‘If we are going to have distributed maritime operations, we better have the ability to support, battle damage repair, sustainment, and medical services provided at way more rapid than 20 knots.’

With the Navy needed to augment significantly over time its intra-theater logistics support, they are starting with the replacement of the C-2A Greyhound with the CMV-22B tiltrotor aircraft. The Admiral described this as “a shift from a limited specialized support asset to having a distributed fleet support asset which provides for intra-theater logistics, a priority need.”

The Osprey provides an important stimulant for the shift in con-ops whereby the Navy‘s experimentation with distributed operations intersects with the U.S. Air Force’s approach to agile combat employment and the Marine Corps’ renewed interest in Expeditionary Advanced Base Operations.

In other words, the reshaping of joint and coalition maritime combat operations is underway which focuses upon distributed task forces capable of delivering enhanced lethality and survivability.

And the notion of support is augmented in such a situation.

The CMV-22B with its flexibility to land on a wide range of sea bases, and to move rapidly from a variety of land bases, means that it can lead to a significant “rethink” of how to perform logistical support across the fleet and to be able to work very differently across the joint force.

But to enhance in the short and mid-term the lethality and survivability of the fleet, the low hanging fruit is to increase the numbers of this core logistics asset to ensure the fleet can meet logistics requirements in a contested environment.

But I would argue even more broadly than this goal.

Buying a significant number of CMV-22Bs will allow the Navy to more rapidly and cost effectively meet the logistical shortfall for wider fleet support as well as shape new ways of working with the joint force, both to support them as well as finding new ways for the joint force to enhance the fleet’s operational reach, survivability, and lethality.

In other words, going beyond the current CMV-22B Program of Record provides a thread which can tie together the wider fleet and the joint force into a more lethal and effective distributed kill web force.

Featured Image: Aug. 17, 2023) A CMV-22B Osprey, assigned to the “Titans” of Fleet Logistics Multi-Mission Squadron (VRM) 30, flies over Nimitz-class aircraft carrier USS Carl Vinson (CVN 70). Vinson, Carrier Strike Group 1’s flagship, is underway conducting routine operations in the U.S. 3rd Fleet area of operations. (U.S. Navy photo by Mass Communication Specialist 3rd Class Isaiah B. Goessl).

 

HMLA 169 and MWSS 172 Daily Operations

08/25/2023

U.S. Marines with Marine Light Attack Helicopter Squadron (HMLA) 169 and Marine Wing Support Squadron 172 fly and refuel aircraft with HMLA-169 during Fuji Viper at Camp Fuji, Japan, June 17, 2023.

Fuji Viper provides 1st Marine Aircraft Wing with realistic training opportunities to exercise combined arms and maintain proficiency, lethality, and readiness. CAMP

FUJI, JAPAN

06.17.2023

Video by Cpl. Kyle Chan

1st Marine Aircraft Wing

Daunting Fiscal Risks: The Missing U.S. Government Strategy

08/24/2023

In a recent paper released by Malmgren-Glinsman Partners, the difficult situation in which the United States Government finds itself financially was underscored.

Their white paper argued: Over and above the concerns surrounding inflation and the economy, there are also daunting fiscal risks facing the U.S. government. And this situation will be aggravated by spending needed for new global commitments, the Ukraine War and spending for U.S, military operations.

They highlighted the factual situation as follows:

While financial market news is currently preoccupied with the inflation rate and possibility of recession, an entirely different policy challenge is emerging: How will mammoth U.S. Government debt be managed in the next 15 months before 2024 national elections?

The bipartisan Congressional Budget Office (CBO) estimates that the federal budget deficit for the first 10 months of the current fiscal year (which runs from October 2022 to September 2023) is $1.7 trillion. This is more than twice the deficit for the same period in the preceding fiscal year.

To put this escalating figure in perspective, government debt as a percent of GDP in the year 2000 stood below 50%, whereas U.S. government debt today stands at 118.6%, and is projected by the CBO to go even higher.

At the end of July, the U.S. Treasury announced that it expected to need to borrow $1,007 trillion from private markets in Q3 (July to September), and another $852 Billion in Q4 (October to December).

It was not made clear what assumptions had been made in these estimates.

It should be noted that the all-time high for quarterly borrowing of almost $3 trillion was hit in April-to-June 2020, thanks to the pandemic crisis.

In early August, several days after these numbers were announced, a Treasury spokesman said the Treasury was no longer assuming a recession in 2023. No recession is a growing financial market view. No recession would mean no large decline in tax receipts or rise in counter-cyclical spending such as unemployment compensation.

However, tax receipts have slowly been declining in recent weeks, suggesting sagging economic activity.

Falling measures of physical economic activity, such as declining volume of shipments of goods by sea, rail and trucks, are suggesting significant slowdown.

If, as we expect, recession begins to erode GDP growth, then the July 31 borrowing estimates would have to be revised to take into account rising unemployment benefit expenditures and falling tax receipts, resulting in larger numbers for the remainder of this year, and of course, higher numbers well into 2024.

They then reviewed the global situation and how the Administration is spending defense money, notably in Ukraine, and argued that the global situation will likely accelerate the debt problem.

They highlighted the various commitments the Biden Administration is making globally which require increased defense spending and then underscored that the Ukraine aid added to these commitments and increased spending necessary for operations short of the beginning of armed conflict with a peer competitor. These actions all argue for increased defense spending ON TOP of the current debt structure.

They noted:

Enhanced integration of U.S. military responses with Japan, Australia, South Korea, and possibly other like-minded nations is being actively pursued.

As part of U.S. military conflict contingency planning, the U.S. military is likely considering wider dispersion of its military presence in other locations in the neighborhood of the South China Sea, Sea of Japan and the Pacific Island rings.

If an armed conflict between the U.S and China were to happen, there is no doubt that management of the U.S. government budget would be dramatically affected. Wars are brutally expensive. Moreover, the costs of conducting an armed conflict are invariably underestimated when political decision makers decide to act without elaborate analysis by the military in advance.

How viable is such a situation?

And where is the strategy to deal with it?

If the U.S. did find itself entangled in an armed conflict, the U.S. Treasury would have to develop an emergency debt management program that would entail massive new borrowing.

This possibility has been given virtually no thought in Congress or mainstream journalism.

Even if no armed conflict took place, a process of preparing for conflict would inevitably entail dramatic escalation of the defense budget to cover widespread deployment of U.S. forces throughout the Indo-Pacific Command.

A new National Defense Activity Authorization would have to be enacted.

With that, new Treasury operations scenarios would have to be developed, and the Federal Reserve would have to reconsider the changed financial market parameters posed thereby.

The Economist Looks Back at the Obama Administration

08/23/2023

In this week’s The Economist, the lead article addresses what they call “Obama’s Biggest Mistake.”

The article focused on Obama’s red line in Syria that was not.

They then ask; “How much was his red line in Syria to blame for America’s lost credibility?”

Because we essentially are being governed by Obama III, the question needs to be extended to how realistic and effective is American leadership following the traditional liberal path?

The question of course is even broader: Given where the world is and has been evolving, what is a realistic view for America and its place in the world?

I would argue that neither Obama III or the Trump “Make American Great Again” perspectives are realistic in terms of the world in which America finds itself, nor it is capable of navigating.

The world has changed dramatically beyond what either liberals or neo-cons contemplate when considering American policy or anything remotely realist in terms of what America can “lead” in terms of the West.

I agree with The Economist that going back to the 8 years of the Obama Administration is a good place to see the disconnect between strategic policy and strategic reality.

And I have recently edited a book on the Administration which provides a year-by-year account of an Administration which could not come to grips with the rise of China or the imperialistic appetite of Putin.

As I put it in the introduction to the book:

The United States does not have the resources, or capability, to remake the countries into which it has inserted itself, and in trying to do so, it has undercut its own geopolitical interests. Or put another way, American diplomatic and military approaches have reshaped U.S. tools to do things like stability operations, rather than investing in relevant air and naval systems to defend the United States directly and to be able to compete with a rising China more effectively or a resurgent Russia.

As Mearsheimer put it: “Liberals tend to think of every area of the world as a potential battlefield, because they are committed to protecting human rights everywhere and spreading liberal democracy far and wide. They would naturally prefer to achieve these goals peacefully, but they are usually willing to countenance using military force if necessary. In short, while realists place strict limits on where they are willing to employ force, liberals have no such limits. For them, vital interests are everywhere.”

Even though this quote highlights liberals, the liberal hegemonic approach he is discussing has been at the heart of the past three Administrations’ policies, whether driven by neo-cons or liberals. With the Soviet Union gone, and the working assumption that the Chinese were being assimilated into the global order, the United States was free to work with its allies to reshape the troublesome Middle East and to deal with “Islamic terrorism” as the key strategic threat.

Donald Trump began to change course. His Pentagon released a new national security strategy, which focused on the return of Great Power rivalry and the need to reshape U.S. policies and capabilities to make such a strategic shift. It is an open question of whether the Administration was really reorganized to do this or whether the United States can easily shift course. In essence, Trump recognized the shift but provided tactical adjustments rather than a coherent strategy to deal with the strategic shift and transition to a new historical era.

What is not in question is that the rise of China and the resurgence of Russia have put in play 21st century authoritarian powers directly challenging the United States and the liberal democratic allies whose challenges need to be met. Put bluntly, the collapse of the Soviet Union and the end of the Warsaw Pact was seen to open up a new period of domination by the liberal democracies. New states would be added to the EU and to NATO, and the globalization of the economy was seen as inextricably intertwined with the ascendancy of liberal democracy. What was lost in this euphoric way forward was the rise of the 21st century authoritarian capitalist powers, Russia and China, and their ability to challenge the ascendancy of the liberal democratic European and American regimes, both at home and abroad.

In this book, we take the reader year by year from 2009 through 2016 to examining the global shifts and how the Obama Administration saw these shifts and dealt with them.