"Outsiders" Economy Watch (7/3/2011): Navigating Thru the Minefields...
The Economy Watch will be a regular feature here going forward. As I wrote earlier KP's sister site, Outsider Views, the second half of 2011 promises to be a very challenging one especially in light of the fact that the United States will be in Election Season Mode and hardly anything will get done. This is as the prospect of a US Default looms ever more.
The Republicans have been on the record pushing for deep cuts in Federal Spending. They have been against any tax hikes, arguing that their effect on the Economy will be detrimental. This is, of course, as the Economy continues to grind to a halt. The analysis that John Mauldin did in his "View from the Frontlines" newsletter is scary enough. But there are rays of hope if the politicans have the courage to step up and make the tough choices.
A recent article in Time Magazine talked about how a Trillion dollars could be saved almost immediately if the scalp was applied to the US Defense Budget. The article began, oddly enough, about an event in Norfolk celebrating the virtual ribbon cutting of the new US Aircraft Carrier that is part of the new Gerald R Ford Class of Super-Carriers. It noted how the Chinese are working on a Missle called the DF-21. The DF 21 costs 10 Million Dollar each and will be able to sink the $ 20 Billion Ship with its' 5,000 crew in a hearbeat. The question was then, why spend that kind of money?
What is so sad is how the US spends more money on defense than the entire world combined--yet the US feels less secure. What is also ever more unfortunate is that the current crop of Republican Candidates want to even spend more. The myth of US Power is starting to fade ever more simply because maintaining 500 bases, a multitude of conflicts and an unsustainable out of date military will simply not suffice for the 21st Century. Mark Thomson's Article noted how the savings could be achieved:
1) Reduce the 11 Aircraft Carriers
Savings $ 15 Billion Per Carrier;
2) Use More Drone/unmanned Aircraft
Savings $ 500 Billion
3) Shrink Missile Defense
Savings 60 Billion
4) Reduce US Global Footprint
Savings 287 Billion
5) Trim Spy Spending
112 Billion
Of all the analysis Mark Thomson did, what I found striking was how the myriad of Spy Agenices the US has generates data that, at times, is absolutely useless. 9/11 supposedly woke up America. Yet, it seems, America seems to be struck in its' old ways.
Although some of the steps advocated seem simple enough, I was frankly shocked by a report by Aliya Sternstein in Government Executive Magazine. She reported on a practice commonly referred to as "Second Chances" whereby Federal Contractors were given another chance to meet the bonuses entitled to under their contracts. The amount reported by her was about $ 300 Billion from fiscal 2004 thru 2008. It seems to me that this is in and of itself is simple enough. If you don't make the grade, you don't get paid. This is another example that shows how simple common sense ways of looking at how Government Works can serve all in the long term.
The road to long-term economic development and viability begins with a true and honest assessment of the defense budget. What I have to wonder is whether the US Political leadership will have the guts to really reassess this and get through the minefields ahead.
The Republicans have been on the record pushing for deep cuts in Federal Spending. They have been against any tax hikes, arguing that their effect on the Economy will be detrimental. This is, of course, as the Economy continues to grind to a halt. The analysis that John Mauldin did in his "View from the Frontlines" newsletter is scary enough. But there are rays of hope if the politicans have the courage to step up and make the tough choices.
A recent article in Time Magazine talked about how a Trillion dollars could be saved almost immediately if the scalp was applied to the US Defense Budget. The article began, oddly enough, about an event in Norfolk celebrating the virtual ribbon cutting of the new US Aircraft Carrier that is part of the new Gerald R Ford Class of Super-Carriers. It noted how the Chinese are working on a Missle called the DF-21. The DF 21 costs 10 Million Dollar each and will be able to sink the $ 20 Billion Ship with its' 5,000 crew in a hearbeat. The question was then, why spend that kind of money?
What is so sad is how the US spends more money on defense than the entire world combined--yet the US feels less secure. What is also ever more unfortunate is that the current crop of Republican Candidates want to even spend more. The myth of US Power is starting to fade ever more simply because maintaining 500 bases, a multitude of conflicts and an unsustainable out of date military will simply not suffice for the 21st Century. Mark Thomson's Article noted how the savings could be achieved:
1) Reduce the 11 Aircraft Carriers
Savings $ 15 Billion Per Carrier;
2) Use More Drone/unmanned Aircraft
Savings $ 500 Billion
3) Shrink Missile Defense
Savings 60 Billion
4) Reduce US Global Footprint
Savings 287 Billion
5) Trim Spy Spending
112 Billion
Of all the analysis Mark Thomson did, what I found striking was how the myriad of Spy Agenices the US has generates data that, at times, is absolutely useless. 9/11 supposedly woke up America. Yet, it seems, America seems to be struck in its' old ways.
Although some of the steps advocated seem simple enough, I was frankly shocked by a report by Aliya Sternstein in Government Executive Magazine. She reported on a practice commonly referred to as "Second Chances" whereby Federal Contractors were given another chance to meet the bonuses entitled to under their contracts. The amount reported by her was about $ 300 Billion from fiscal 2004 thru 2008. It seems to me that this is in and of itself is simple enough. If you don't make the grade, you don't get paid. This is another example that shows how simple common sense ways of looking at how Government Works can serve all in the long term.
The road to long-term economic development and viability begins with a true and honest assessment of the defense budget. What I have to wonder is whether the US Political leadership will have the guts to really reassess this and get through the minefields ahead.
Mike Pouraryan
