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The Tax and Spend Spectator

Guns and Pensions

The consequences of military cuts and huge government pensions will become clear — many elections from now.

A nation’s choice between spending on military defense and spending on civilian goods has often been posed as “guns versus butter.” But understanding the choices of many nations’ political leaders might be helped by examining the contrast between their runaway spending on pensions while skimping on military defense.

Huge pensions for retired government workers can be found from small municipalities to national governments on both sides of the Atlantic. There is a reason. For elected officials, pensions are virtually the ideal thing to spend money on, politically speaking. Many kinds of spending of the taxpayers’ money win votes from the recipients. But raising taxes to pay for this spending loses votes from the taxpayers. Pensions offer a way out of this dilemma for politicians.

Creating pensions that offer generous retirement benefits wins votes in the present by promising spending in the future. Promises cost nothing in the short run — and elections are held in the short run, long before the pensions are due.

By contrast, private insurance companies that sell annuities are forced by law to set aside enough assets to cover the cost of the annuities they have promised to pay. But nobody can force the government to do that — and most governments do not.

This means that it is only a matter of time before pensions are due to be paid and there is not enough money set aside to pay for them. This applies to Social Security and other government pensions here, as well as to all sorts of pensions in other countries overseas.

Eventually, the truth will come out that there is just not enough money in the till to pay what retirees were promised. But eventually can be a long time.

A politician can win quite a few elections between now and eventually — and be living in comfortable retirement by the time it is somebody else’s problem to cope with the impossibility of paying retirees the pensions they were promised.

Inflating the currency and paying pensions in dollars that won’t buy as much is just one of the ways for the government to seem to be keeping its promises, while in fact welshing on the deal.

The politics of military spending are just the opposite of the politics of pensions. In the short run, politicians can always cut military spending without any immediate harm being visible, however catastrophic the consequences may turn out to be down the road.

Despite the huge increase in government spending on domestic programs during Franklin D. Roosevelt’s administration in the 1930s, FDR cut back on military spending. On the eve of the Second World War, the United States had the 16th largest army in the world, right behind Portugal.

Even this small military force was so inadequately supplied with equipment that its training was skimped. American soldiers went on maneuvers using trucks with “tank” painted on their sides, since there were not enough real tanks to go around.

American warplanes were not updated to match the latest warplanes of Nazi Germany or imperial Japan. After World War II broke out, American soldiers stationed in the Philippines were fighting for their lives using rifles left over from the Spanish-American war, decades earlier. The hand grenades they threw at the Japanese invaders were so old that they often failed to explode. At the battle of Midway, of 82 Americans who flew into combat in obsolete torpedo planes, only 12 returned alive. In Europe, our best tanks were never as good as the Germans’ best tanks, which destroyed several times as many American tanks as the Germans lost in tank battles.

Fortunately, the quality of American warplanes eventually caught up with and surpassed the best that the Germans and Japanese had. But a lot of American pilots lost their lives needlessly in outdated planes before that happened.

These were among the many prices paid for skimping on military spending in the years leading up to World War II. But, politically, the path of least resistance is to cut military spending in the short run and let the long run take care of itself.

In a nuclear age, we may not have time to recover from our short-sighted policies, as we did in World War II.

COPYRIGHT 2013 CREATORS.COM

About the Author

Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University, Stanford, CA 94305. His website is www.tsowell.com. To find out more about Thomas Sowell and read features by other Creators Syndicate columnists and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

Letter to the Editor View all comments (55) |

Arnie| 2.19.13 @ 7:00AM

The Pentagon has been failing audits for decades. It has been the largest black hole-money pit of the whole government. And most of that money goes to rigged, over charged bids for military hardware, that end up sitting in a desert, or sold at bargain prices to many heinous regimes across the Middle East, including Israel.

How about we have a basic military that's tasked with just defended the U.S. and not in a forward position all over the world, and helping fund conflicts in places we cannot possibly resolve, or helping arm regimes we cannot conscientiously support?

There's a thought.

And I'll add, Republican and Democrats have been guilty of this for decades.

markenoff| 2.19.13 @ 12:14PM

And the Departments of Education, Commerce, Health and Human Services etc always pass with flying colors. At least spending for defenses is something the federal government is REQUIRED to do by the Constitution.

C'mon Man!| 2.19.13 @ 3:07PM

We could solve both problems - require able bodied welfare recipients to serve in the military. Wow, can't wait to hear the screaming from the liberals on that one!

Harry the Horrible| 2.19.13 @ 4:24PM

Not to mention the screaming from the Drill Instructors...

markenoff| 2.19.13 @ 4:30PM

Most of them couldn't pass the ASVAB, or the physical fitness test, meet the body fat standards or pass the drug test.

Von Mises Jr| 2.19.13 @ 7:10AM

A few years ago when Gov. Christie took Office, the State Pension Fund had about $47B when the contributions needed were at $107B, or about $0.44 on the dollar. They also had about $65B in liabilities for health care benefits with zero put aside for paying retirees that could leave even before 55 years of age until they qualified for Medicare. So when you factor in the health care obligations, New Jersey had about $0.27 on the dollar. In a private corporation that had a defined benefit plan, contributing less than about $0.80 on the dollar could get the CFO in an orange jumpsuit.
The reason these pensions and above market wages for teachers and cops was a political winner is that each employee paid about $1,000 per year in union dues. Employees paid gladly since the top steps in pay are in the $100K ranges plus a $24K family health plan. This was a Democrat money laundering scheme where those dues financed liberal’s political campaigns.
I do not believe Christie contributed to the shortfall, but he was successful in reducing health care shortfall by raising the employee contribution from 3% to 30%. Before Christie raised the rate, a teacher or cop paid $60 per month for a $24K plan. Now it is $600 per month that created rage among public employees as they still pay below private sector rates for far superior health care.

SUBVET| 2.19.13 @ 11:32AM

VM Jr. ...........the defence and retirement budgets make up the lion share of the US budget close to 50%......why just cut the military ?

http://www.usgovernmentspendin.....012_3.html

markenoff| 2.19.13 @ 12:17PM

Not really.

CRS Report: Welfare Spending The Largest Item In The Federal Budget

http://budget.senate.gov/repub.....a5a62c3183

markenoff| 2.19.13 @ 12:18PM

Ranking Member Sessions and the minority staff of the Senate Budget Committee requested from the nonpartisan Congressional Research Service (CRS) an overview of cumulative means-tested federal welfare spending in the United States in the most recent year for which data is available (fiscal year 2011). The results are staggering. CRS identified 83 overlapping federal welfare programs that together represented the single largest budget item in 2011—more than the nation spends on Social Security, Medicare, or national defense. The total amount spent on these 80-plus federal welfare programs amounts to roughly $1.03 trillion. Importantly, these figures solely refer to means-tested welfare benefits. They exclude entitlement programs to which people contribute (e.g., Social Security and Medicare).

markenoff| 2.19.13 @ 12:35PM

The exclusively federal share of spending on these federal programs is up 32 percent since 2008, and now comprises 21 percent of federal outlays (this share too is more than Social Security, Medicare, or defense).

As a historical comparison, spending on the 10 largest of the 83 programs (which account for the bulk of federal welfare spending) has doubled as a share of the federal budget over just the last 30 years. In inflation-adjusted dollars, the amount expended on these 10 programs has increased by 378 percent over that time.

Von Mises Jr| 2.19.13 @ 1:15PM

Medicare/Medicaid is the largest program as a standalone with about $780B, I believe and 21% of the total spending. Social Security and DOD are both in the $720-730B range each and about 20%. So if you just add Medicare/Medicaid and Social Security you are over 40%. If you start adding other welfare and entitlement programs, you are surly over half the $3.6T Budget. These must be cut to balance the Budget.

mike 3/505| 2.19.13 @ 7:22AM

Although I agree we shouldn't be poking our nose into places where it don't belong, defense just at the border won't work. Basic strategic understanding requires a forward defense.

Arnie| 2.19.13 @ 8:07AM

You might be right Mike, but then don't complain about government debts without admitting the military empire of America has contributed immensely to the debt.

I mean, what is wrong with rebuilding the military at the time of need. The U.S. did it in a relatively short period during WW2.

c. j. acworth| 2.19.13 @ 8:23AM

There's plenty of fat in ther Pentagon's budget. Start by killing the insane bio-fuels program that has us paying, what, $250/gal of biodeisel?

Albert Constantine Jr.| 2.19.13 @ 9:09AM

What is wrong is that thousands of soldiers suffer or die due to the lack of preparedness, which is what is laid out in Dr. Sowell’s article, starting in the paragraph which begins ” Despite the huge increase in government spending on domestic programs during Franklin D. Roosevelt’s administration in the 1930s, FDR cut back on military spending…” and goes on to lay out examples of how this happened. It then concludes “ These were among the many prices paid for skimping on military spending in the years leading up to World War II. But, politically, the path of least resistance is to cut military spending in the short run and let the long run take care of itself.
In a nuclear age, we may not have time to recover from our short-sighted policies, as we did in World War II.

Of course, if you’re not paid to read the articles, and merely are paid to post here, you might miss that critical bit of information, and post something inane like “ I mean, what is wrong with rebuilding the military at the time of need. The U.S. did it in a relatively short period during WW2.

Arnie| 2.19.13 @ 10:01AM

Albert, I did read it. I just don't see his logic at all. The U.S. is armed to the teeth with nuclear missiles. The nucs just sit in silos, ready to be fired. We could nuc the Earth several times over (I know this Armageddon scenario get you Christians all hot and wild, but most people despise the idea)

If the world ever comes to that point, navies and an air force won't matter at all.

Arnie| 2.19.13 @ 10:03AM

And I'm not arguing getting rid of the whole military, but we could easily cut about 80% of the budget, and still have the strongest one in the world.

markenoff| 2.19.13 @ 12:21PM

Let's get out of the business of using our military to respond to natural disasters all over the world. Why should we be helping earthquake victims in Haiti, cyclone victims in Bangladesh or stranded mountain villagers in Macedonia?

Albert Constantine Jr.| 2.19.13 @ 10:13AM

His logic (or more accurately, his point) is that where cutting spending results in a lack of military preparedness, members of the military (and perhaps others) will suffer and die while we try to prepare for the crisis that we find ourself immersed in.

Woodrow| 2.19.13 @ 11:38AM

Arnie, you're probably a nice guy, but do you ever read what you write before you send it?

Jacob McCandles| 2.19.13 @ 11:40AM

Thats exactly why even the despicable Soviets did not use the nukes. It's called mutually assured destruction. And since it is a deterrent to nuclear war, we've used conventional weapons since Hiroshima. That's why we need top notch state of the art conventional weapons systems and great men willing to fight.

markenoff| 2.19.13 @ 12:19PM

Which sounds good unless your one of the guys who died on the Bataan Death March. But they're not around to complain, right?

Albert Constantine Jr.| 2.19.13 @ 12:37PM

That's exactly who came to my mind when I read what he wrote (though I chose the word suffer to include those who survived the march, and like General Wainwright, endured torturous conditions for the next three years as a result of their nation being unprepared the war it found itself in).

C'mon Man!| 2.19.13 @ 3:26PM

So, Arnie, when the nukes are flying at us, tTHEN is the time to build up the military? Ever wonder why the Iranians didn't respect Carter, who decimated our military? But had COMPLETE respect for Reacan, who built it back up?
Yeah, moron, let's not spend on the military but keep throwing it away on the welfare class, that seems to be working! Over 6 trillion, and what did we gain? That's right! More welfare recipients! I'd rather have the respect Reagan earned.

Ryan| 2.19.13 @ 8:53AM

I think this is a conversation that we could probably have, but there are far too many in government with military bases at home who are scared of reductions in growth (as the sequester is) and even some form of questioning expenses.

Heck, it may even be something that the Tea Party and the Dems could come to an agreement about, and hang the establishment guys.

Solo| 2.19.13 @ 9:20AM

Agreed Mike...as it should be self-evident to even the most casual observer that our national security is not defined by our geographical borders.

That having been said, however, we can and should draw down our presence...particularly in Europe. We have our own problems in stemming the march of socialism here at home-- we don't need to be underwriting its march across the EU by having U.S. citizens pay for their defense.

PolishKnight| 2.19.13 @ 10:43AM

Parden me for picking upon you, Solo, but I would say that one of the problems with the right is that they ignore the reality that our national security IS defined by our geographical borders. Millions of illegals pouring over the border and committing crimes along with Islamic prayer rugs found in the desert suggests that the right should be dealing with that issue. But hey, let the USA fall if it means a small business improving their profit margin by a buck.

The Iraq and Afghanistan adventures have not made us more secure. The original Iraq war and presence of US troops in Saudi Arabia sparked Bin Laden to go to war with us in the first place. And Israel... we can't even talk about that! But before anyone makes the obvious attacks against me for saying its name, is the world (and America) MORE secure because of America's involvement in the region?

markenoff| 2.19.13 @ 12:23PM

Drill here, drill now. Let them have their sand.

Mike W| 2.19.13 @ 8:55AM

Cut defense. Cut it big. Pull troops out of S. Korea, Afghanistan and Europe. We are going to do it one way or the other. We should do it in an organized way instead of the chaotic mess that will occur when real "sequestration" happens.

Regarding WW II- technical superiority didn't win the air war. Numbers won it. At 135 million/plane, we will not have many number of F-35s.

PolishKnight| 2.19.13 @ 9:55AM

Indeed. It's worth remembering that the Nazis invested heavily into military research and multiple versions of the same plane and "wonder weapons" such as the V1 and V2 which were annoying to civilians but had no significant military effect.

The most effective "weapons" were not weapons at all but rather detection and intelligence systems: The Ultra machine invented by the Poles and improved upon by the Brits and RADAR. These allowed the Brits and later the Americans to utilize their existing resources with pinpoint accuracy.

After the atom bomb was dropped, no atomic powers ever waged war directly against each other for obvious reasons. So conventional weapons are largely 3rd world terrorist busters and not much more than that. The problem is that all the expensive planes and fancy tanks in the world can't deal with the aftermath of a military victory: policing the propped up politically correct democracies that the west attempts to build.

So in other words, most modern military spending is worthless.

Arnie| 2.19.13 @ 10:05AM

Wow. I totally agree with you again Polish Knight.

PolishKnight| 2.19.13 @ 10:20AM

Somehow, getting your endorsement probably won't help me here. :-)

Arnie| 2.19.13 @ 10:27AM

That is definitely true :-) I'll keep my agreements to myself next time. How's that?

PolishKnight| 2.19.13 @ 10:37AM

No, I'm cool with it.

If what I say happens to bump into right wing dogma, that's a good thing because the right wing dogma and game plan isn't winning them elections or long term cultural and economic dominance. That's the bottom line.

And Obama is bluffing about cutting the military since much of the spending goes to his own cronies and he knows it. Northern Virginia is purple and full of leftists designing bombs in comfortable office buildings.

Here's some ideas: I think women CAN be useful in the military AND in a special forces role. They were highly useful for the Brits in WWII for gathering intelligence because they weren't as easily suspected. Imagine this possibility gents: Imagine if the shooter of Osama Bin Laden had been a woman.

markenoff| 2.19.13 @ 12:28PM

LOL.

WRTolkas| 2.19.13 @ 11:23AM

Force Multipliers, Arnie, I think is the term that PolishKnight describes. Unfortunately, only gifted commanders have utilized these devices to their full potential (Radar during the Battle of Britain and sonar and radar during the Battle of the North Atlantic). We had brilliant commanders then. Now?

PolishKnight| 2.19.13 @ 12:01PM

I think our battlefield commanders are as good as ever. They certainly win conventional wars quickly and decisively. But the problem is that they are merely 3rd world battles. The allies versus the Axis. That was a world war worthy of a massive fleet. The cold war and proxy battles in Korea and Vietnam.

But now? The problem is policing and post war politics (poor Patton, that's what killed him!)

markenoff| 2.19.13 @ 12:29PM

If we had today's media then D-Day would have been painted as a disaster.

PolishKnight| 2.19.13 @ 12:56PM

Well.... not necessarily Markenoff. This was a DEMOCRAT war, remember? The media back then that wouldn't print a photo of FDR in a wheelchair. That didn't mention the reason why he and his entourage of Soviet spies handed over Eastern Europe to the Soviets was because FDR could barely stay awake? That allowed FDR to put Japanese Americans into concentration camps? That didn't ask too many pesky questions about why it was such a coincidence that the aircraft carriers at Pearl Harbor were sent out while intelligence from allies warning of the attack was ignored?

As someone of Polish ancestry, I can appreciate the good side of all this in that the Soviets, as bad as they were towards the Poles, were still better than the Nazis. (Not by much, but still.)

markenoff| 2.19.13 @ 4:34PM

Unless you were a military officer.

Bob K| 2.19.13 @ 6:38PM

I wish it was that simple, PK; (I have Polish Ancestry too) but Russia already had millions of troops in Eastern Europe by the time of the Yalta talks. In reality there was nothing for Roosevelt to hand over to Stalin. Stalin already had Eastern Europe thanks to the help of the USA in supplying him with the armaments he needed to drive the Germans back out of Russia.

Stalin wasn't going to give up control of Eastern Europe and we were in no position to make him do it.

Britain was tired of the war. By the time Potsdam rolled around the Brits had voted Churchill out of office and Atlee replaced him there. The war was over in Europe for us; we were preparing for Japan and Stalin knew it. He was going to stay in Eastern Europe.

PolishKnight| 2.20.13 @ 10:10AM

With all due respect, BobK, Bullshit. Here's why:

1) The USA was close to finishing the atomic bomb and Stalin knew about it.
2) The USA's involvement in the war was only about three years and just getting ramped up. The USSR was as tired of war as Britain was.
3) The war wasn't yet over! Stalin would have to worry about watching his back. Keep in mind, he only got this far with help!
4) On VJ day, Stalin got to declare war against Japan days after atom bombs were dropped. He'd have to give that easy victory up if he went against FDR and Churchill.
5) Stalin had his ass handed to him in Finland by 5 million guys in the woods. He could be beaten and he knew it.
6) If the Soviets did "heavy lifting" as they say, imagine if the allies decided to go easy on the Germans and start going after the Soviets where they could. Maybe give Hitler some breathing room to reattack on the eastern front!

So no, even at Yalta, FDR didn't come to the negotiating table with nothing. It would have been risky to demand Stalin give up Poland, but possible. Not only did FDR give up Poland but also created the conditions for the cold war as well.

markenoff| 2.19.13 @ 12:27PM

Yes but the V1 and V2 as well as the ME 262 and the Type XXII U-boats would have gone into production much sooner and been more effective if Hitler had not interfered with their development. And ultimately it was the Soviet Army driving Chevy and Dodge trucks and eating Spam and the Soviet Air Force flying P39s and P40s that defeated the Nazis.
The Nazis investment in technology was not a mistake just misdirected.

PolishKnight| 2.19.13 @ 1:05PM

Yes, the V1 and V2 might have been more effective under your proposed scenario but even then, not very decisive. They were terror weapons and largely a waste of time during wartime. (Terror weapons work great on comfy non-wartime civilian populations such as the USA.)

I read about the type XXII U-boats. Don't see that they would have done much good.

Let's hypothesize and ask that without Normandy, the wasteful Italian campaign (that still held up some German troops), would the Soviets still have triumphed? Wars that appear obvious are usually a matter of one group's attrition tipping over just before the other one. The Soviets had limited manpower as well (look at the Finns who kicked them out!) I think the Soviets did a lot of lifting, but without the Americans and the Brits they would have lost. I think it would have turned out similar to the alternative timeline novel "Fatherland."

markenoff| 2.19.13 @ 4:42PM

I pointed out they drove Dodges and Chevys.

I believe that if Hitler had not declared war on us FDR would have had a very hard time diverting resources to Europe over Japan. And it would have taken very little to tip the U-boat war to the point where Britain was starved into submission. If the Germans had not learned the wrong lessons from WWI and been prepared for a U boat offensive as opposed to wasting resources on capital ships whose utility was minimal against the Royal Navy Britain might have been forced into an accomodation before the Pearl Harbor attack.

That said, the war on the eastern front quickly descended into a war of extermination. Even at their greatest extent the Germans penetrated less than half way across Russia. A German victory on the eastern front would have been difficult under any circumstances but not out of the question if the US had not been at war with Germany and concentrated on Japan. Certainly "Tunistan" the surrender of 250,000 Axis soldiers in north Africa deprived the Germans of much needed manpower.

markenoff| 2.19.13 @ 12:24PM

And out of Kosovo. Clinton sent our troops in their without an exit plan. But and arm more drones and just kill anyone that looks like a threat,. if you can get their wives and kids at the same time that's just a bonus.

markenoff| 2.19.13 @ 4:53PM

By the end of the war the best planes in both the Pacific and Europe, with the exception of the ME 262, were American.

cicero| 2.19.13 @ 11:38AM

These are two separate issues, although they crash into one another when we overspend to the extend that we are now doing. The problem with the outrageous government pensions is two fold. First they are richer by far than anything in the private sector. Second, they kick in way too early. These folks retire in their fortys and fiftys, and begin collecting the pensions on day one. In most instatnces, they go out and find another job, sometimes with another government agency, and begin vesting another pension. If the govermental agencies were to allow retirement at a givenage, but commence payment at age 67, just like Soc.Sec, the actuarrial problem would be taken care of.
As things stand, watch for one of our panderers in chief to recommend that all governmental pensions be guaranteed by the Feds.
The military spending can be cut without sacrificing readiness. We have a volunteer army, and it is well trained. The F-35, on the other hand, has not lived up to hype, and they cannot get it past the preliminary tests. At a trillion dollars a rattle, it should be scrapped. In addition, if we would stop giving our high tech aircraft and armor to countries that we will have to fight in the future, we don't need to continually upgrade to stay ahead of what we give to our enemies.

markenoff| 2.19.13 @ 12:30PM

Just cut the social security retirement age to 45. Think of how many jobs would open up immediately.

JD| 2.19.13 @ 4:22PM

Careful, Democrats will actually consider ideas like that!

Albert Constantine Jr.| 2.19.13 @ 5:13PM

Actually, there's another article here today about that; it's already happening, but they call it SSDI.

Who Knows?| 2.19.13 @ 1:12PM

As always, Dr. Sowell clearly tells the truth.

Two hoary saying seem relevant---

Those who forget the past are doomed to repeat it.

If you want peace, prepare for war.

Since old people, who remember the past die, and new ones, who never even knew of it, are born, DOOM is the appropriate word---because, one of the key lessons of the past, is the second saying.

And, here we go again---by refusing to adequately prepare for war, to wit failing to maintain a strong military, we are DOOMING future citizens to death.

Choices matter. Obama likes to misuse the word “investment”. Well, by not investing in strong armed forces, can you say “mal-investment”?

Obama and his team are essentially using the seed capital of America for their own deluded purposes. I wouldn’t be surprised if before long the “granaries” are discovered to be empty.

Maybe enough “real” Americans are awake enough to be squirreling away REAL goods, and readying themselves and theirs for the day when bankruptcy arrives, and all hell breaks loose.

Guns, food, and gold, and silver, and blankets, and shoes, and seeds, and water, and pray for rain.

atilla| 2.19.13 @ 3:26PM

In America we should try a new tack. Instead of electing enemies of the state to office, maybe we should try electing Americans

spike59| 2.20.13 @ 5:26AM

fat chance of THAT happening anytime soon; get ready for Shrillary 2016 and 2020..we're going to have to wait till all the counterculture Progturds who came into their own during the late 60's/early 70's take a collective dirt nap

hrgfue | 2.20.13 @ 2:34AM

Kickoff to you with the online store 2013

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