Barack Obama rolled out the ultimate weapon in his arsenal last week when he accused al Qaeda of racism. But Obama's apparent belief that an accusation of racism is the ultimate weapon at his disposal may soon be a commonplace among American leaders because Obama's spending spree will soon bring us to the point where words are all we can afford to shoot at our enemies.
Rich countries can lose wars, as Harry Truman taught us to do in Korea and Lyndon Johnson did in Vietnam. Concomitantly, poor nations -- and poorer-still insurgents -- can win them. Truman and Obama have a lot in common. The Missourian jokingly sought a "one-armed economist" because he was frustrated by economists' penchant for saying, "on the other hand…"
But from Adam Smith to Niall Ferguson, conservative economists have agreed with Smith's 1776 formulation in The Wealth of Nations that "The first duty of the sovereign, that of protecting the society from the violence and invasion of other independent societies, can be performed only by means of military force." Smith added that the expense of doing so grows as the society advances in civilization. And, he concluded, "defence is more important than opulence."
But what of a society that so burdens itself with debt that money is unavailable to provide for the defense of the nation?
British economic historian Niall Ferguson said in a recent speech to the Aspen Institute, Obama's spending spree may leave us with little more than rhetoric to protect our nation. It's worth a long quote:
Of course, power is not just about GDP. It's not just about the economy. Power is also about the ability to project hard power through military means. And some people in Washington like to comfort themselves by saying, "We can still do that way more than they can. Count their aircraft carriers, count ours.uot;
But one point that follows from the financial crisis which is terribly, terribly important is that by combating our crisis of private debt with an extraordinary expansion of public debt, we inevitably are going to reduce the resources available for national security in the years ahead. Because as the debt grows, so the interest payments you have to make on it grow, even if interest rates stay low. And on current projections, the federal debt is going to be absorbing around 20 percent, a fifth of all the taxes you pay, within just a few years. The item of discretionary federal expenditure most likely to be squeezed is, of course, defense. And there are lots of historic precedents for that. So, I fear that the financial crisis doesn't just impact on the economy. It actually impacts on American power in the hardest sense.
In his May address to the West Point graduating class, Obama said, "Simply put, American innovation must be the foundation of American power -- because at no time in human history has a nation of diminished economic vitality maintained its military and political primacy." That is entirely true, but Obama's actions have relentlessly pursued our economic diminution. He tells us that we're on an "unsustainable" economic course, but he keeps the helm hard over, keeping us on the path that makes our economy smaller and weaker.
Even the Democrats -- who passed a "budget enforcement" resolution in the House rather than vote on Obama's bloated budget -- are chary of Barry's spending spree in an election year. But they won't oppose it, either. The president's 2011 budget calls for $3.8 trillion in spending, $200 billion more than 2009. One chart included in the White House budget submission shows spending to reach $5.7 trillion in 2020, with the deficit reaching 77.2% of the GDP. That plan will consume credit, making it unavailable to aerospace and defense companies, greatly lessening their investments in research and development.
There are increasingly vocal calls for slashing defense. From the left-libertarian alliance of Barney Frank and Ron Paul comes the call for $1 trillion in defense cuts over ten years, and from the right (from those such as Sen. Tom Coburn of Oklahoma) come calls for cutting undefined waste from defense spending. The media are picking up their old Cold War narrative, pushing for defense spending cuts to benefit social welfare programs.
With very few exceptions such as Coburn's, the demands to cut defense spending come from those who seek another "defense dividend" which would increase spending on social welfare programs at the expense of defense.
Two points. First, Ferguson uses the term "discretionary spending" as federal budgeteers do. It's the part of the federal budget that isn't otherwise mandated spending, which is comprised of programs such as Social Security, Medicare, and now Obamacare. Those are fixed in law and unless Congress is suddenly repopulated with people whose DNA includes a fiscal responsibility gene, they will keep us on the path of an unsustainable growth in federal debt.
Second, in time of war just how much of defense spending really is "discretionary"?
The short answer to this is that "discretionary defense spending" is a three-word oxymoron, especially in time of war. But that begs the question: how much defense spending do we need?
That question we cannot answer for two reasons. First, as I have argued comprehensively, we have the wrong strategy for the war against the nations that sponsor Islamic terrorism. We can't know what the war will cost unless and until we make the proper analysis and change to a strategy that will end state sponsorship of terrorism. The Obama counterinsurgency strategy absorbs hundreds of billions that could otherwise be spent in pursuit of victory.
Second, Defense Secretary Gates deprived us of the analytical basis for a defense budget by imposing massive cuts on new weapon systems such as the Air Force's F-22 and combat search and rescue aircraft, the Navy's DDX and the Army's Future Combat Systems without any analytical basis for the cuts.
We don't know what we need, so we can't determine what amount of defense spending is, as Adam Smith might say, non-discretionary.
Back in the Good Old Days (which, for these purposes, we shall define as the years 1981-1988), we had a process called "Defense Guidance." In it, using the best intelligence on the intentions and capabilities of adversaries, Pentagon experts measured the threats we face from all sources. They compared it to what we have in the Pentagon's tool box, from fighter aircraft to soldier's rifles, and determined the difference between the threats and the means we had to meet them. From that, they recommended what needed to be renewed or replaced, what to build and what to retire. On that, our defense budget was established.
Niall Ferguson has sounded a warning that we cannot ignore. There may well be major savings in defense spending we can make and still increase our nation's security. Do we need as many ballistic missile submarines as we have now? How is our ability to defeat the terrorist nations and guard against the hell-for-leather Chinese military buildup affected by Obama's cuts?
The American economy has been the engine powering freedom at home and abroad for almost 150 years. Deprived of the strength of free market capitalism, that engine is stalling. Can we afford to defend our economy against the Obama spending spree? Yes we can. And we must.
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