- 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, drones, communications
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
- You'll get the gist of this from a recent editorial in
the trade magazine Aviation 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.) Tom
- Going Bankrupt
- Why the debt crisis is now the greatest threat to the
- 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
- 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
- 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 are accurate.
- 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 as suspect.
- 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.
- Military Keynesianism
- 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.
- 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
- 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 Feb. 6, 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 amounted to $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
- 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.
- Baker concluded:
- "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
- These are only some of the many deleterious effects of
- 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
- 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 industry."
- 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 proton 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