Tag Archives: Government Spending

The Budget Control Act and the Defense Budget: Frequently Asked Questions

Young Voices Advocate, Michael Shindler, cited in new report by the Congressional Research Service.

The federal government already spends far more than it receives and legislators have a responsibility to spend only as much as they need to. The spending caps put in place by the BCA, and the punitive nature of the sequestering that follows if they are exceeded, are well-designed measures that encourage responsible spending. The incoming administration should not let rhetoric get in the way of duty.

Members of Congress and the executive branch have often expressed dissatisfaction with the spending limits and reductions required by the BCA/P.L. 112-25, and modifications to both the defense and nondefense limits have been enacted for the fiscal years FY2013-FY2017. Following the November 2016 presidential election, Members of Congress, senior military officials, and President Trump have either proposed increases to the defense spending limit or called for repeal of the BCA

Will policymakers ever stop underestimating the true cost of war? – REAL CLEAR DEFENSE

On April 6, the hundred year anniversary of the United States’ entrance into World War I, President Trump ordered 59 Tomahawk cruise missiles to be fired at Syria’s Al Shayrat airfield. The strike came after Syrian President Assad’s most recent use of chemical weapons against rebel units and citizens living in opposition-controlled areas. Although officials claim this strike is a “one-off,” as we look back at another war –– one that may seem distant –– many parallels emerge to our current War on Terror, and warn of the danger of sending additional forces into Syria. Americans would do well to remember that wars usually cost more than assumed and that they invariably erode the domestic freedoms that the fighting is supposed to protect.

As any good student of history or economics will tell you, wars are expensive and have long-lasting consequences for decades or even a century. Yet, the start of a conflict is often greeted with a bizarre degree of enthusiasm, only for voters and governments to later realize the terrible price. In 1914, crowds cheered in every European capital as politicians predicted glorious victory that would see the boys home “before the leaves fall.” The war would last until 1918 and cause 41 million military and civilian casualties, about 20 million killed and 21 million injured. Moreover, the financial burden was billions of dollars, leaving the major European powers weakened and in debt. The Great War also hit Americans with a bill that would amount to $334 billion in 2014 dollars. This pattern of underestimating the price of war has repeated itself in subsequent conflicts, including our present day ones.

When the U.S. invaded Iraq in 2003, officials said the war would be short and estimated the cost at no more than $200 billion. Yet mission creep, the phenomenon when military and political objectives of using force keep expanding, set in. With a vaguely-worded authorization for the use of military force passed by Congress, soon the goals and enemies multiplied as the conflict spread across the globe. Including U.S. military involvement in at least five wars: Iraq, Afghanistan, Yemen, Somalia, and Pakistan. The combined War on Terror has cost at least $3.6 trillion. That rises to $4.79 trillion when requested spending and projected costs are taken into account.

Spending an amount similar to World War II would be alarming enough on its own, but borrowing at such a level when combined with ongoing U.S. entitlement costs is unsustainable. One fact many hawks on the left and right keep ignoring is that the national debt is now greater than America’s GDP and is about to hit $20 trillion.

Continue reading at RealClearDefense 

Black Monday Pops the State’s Infrastructure Bubble

The global economy is in free fall. Markets worldwide are down dramatically, and officials around the globe are scrambling for answers. “What’s happening? How can we stop the bleeding?” The coming days and weeks will see millions of words written over the cause and cure for what has happened these past few days.

We don’t know much, but one thing is certain: it is clearly tied to the inefficient spending of Chinese companies and local governments, leading to overcapacity in specific economic sectors, one of those being physical infrastructure, as famed economist Tyler Cowen has noted.

While it may not be the root cause of the crisis, the “infrastructure issue” is certainly a major part of it. The fact is, not all new roads are worth building. Neither are all new ports, airports, power lines, water mains, telephone cables, or any of the other myriad pieces of physical infrastructure that people use in their everyday lives.

Each type of infrastructure is just like any other good. They are produced by producers, and consumed by consumers. Supply and demand, straight out of Economics 101. Sometimes, producers make too much of a product for the available demand, sometimes too little.

Read the rest on the PanAm Post here.