Heroin and Cornflakes

Spurred by September 11, 2001 attacks in New York and Washington, the Stockholm International Peace Research Institute (SIPRI) has  reported that military spending in the USA has increased by 59%.

The National Priorities Project (NPP), a research organization that analyzes and clarifies federal data so that people can understand and influence how their tax dollars are spent,  estimates the Afghan war has currently cost taxpayers over $172 billion.

When the projected costs of long-term military occupation, interest, and veterans’ benefits are included, the war will cost close to $1 trillion.

That’s an awful lot of dollars.

Where does it all go?

With all this money allocated, why is it still going on?

Perhaps one reason it’s still going on is, because as the U.S. Secretary of Defense, Robert Gates wrote in 2009;

‘ The United States cannot take its current dominance for granted and needs to invest in the programs, platforms, and personnel that will ensure that dominance’s persistence’.(1)

Dominance, that after nearly eight years, cannot control a Third World state that house a once defeated (2001) Taliban group that has been allowed to regroup since 2004, and become revived as a strong insurgency movement governing at the local level and fighting a guerrilla war.

Clearly something is not working.

Is it policy?

Rather than dominate these nations by military objectives, are there alternatives?

The administration’s director of national intelligence, Dennis C. Blair, estimated that as many as two-thirds of the Taliban groups are motivated by local concerns and might be defeated or pacified through addressing problems, such as inadequate water supplies or access to education.(2)

The National Priorities Project (NPP) suggest this maybe a good time to consider the advice of the last Soviet general to leave Afghanistan, when he spoke on the 20th anniversary of the Soviet withdrawal (2/14/09):

“Afghanistan taught us an invaluable lesson . . .
It has been and always will be impossible to solve political problems using force. We should have helped the people of Afghanistan in improving their life, but it was a gross mistake to send troops into the country.”

– Retired Red Army General Boris Gromov.

This view is enhanced when it is seen that despite the billions spent in Afghanistan since the invasion to oust the Taliban, the country is still comparable to the worst humanitarian crisis zones in Africa. 

Afghanistan has the world’s highest maternal mortality rate and the second-highest child mortality rate — and hunger is a major reason why, the United Nations says.(3)

Indicators tracked by U.N. and Afghan government agencies paint an alarming picture of chronic hunger: 70 percent of children lack iodine, which can cause mental disabilities.

A lack of vitamins and proper nutrients means much of the population has poor eyesight.  Stunted growth is widespread.  A quarter of Afghan children die before the age of five and nearly 2 percent of women die while giving birth.

So, if the Afghan people are not receiving much humanitarian assistance, who does gain most out of this continued war?

Of course, an obvious answer would be armament manufacturers.  A country that needs its dominance to prevail, has to be seen as armed and dangerous.

Sixty-three of the one hundred top weapons firms are based in the United States and Western Europe, accounting alone for 292.3 billion dollars in sales in 2006.

The main corporations in the U.S. include:

AAI Corporation
BAE Systems Inc.
Boeing
General Electric (primarily through GEAE)
General Dynamics
Honeywell
Lockheed-Martin
United Technologies (primarily through Pratt and Whitney, Sikorsky Aircraft Corporation)

These corporations are among the largest in the world, and they have tremendous political influence.  Arms industry executives sit on federal advisory commissions at the Commerce, Defense and State Departments.

In addition, the industry provides hundreds of thousands of dollars annually to Congressional campaigns, ensuring that their lobbyists have access to Members of the House and Senate.  They also pump cash into Presidential campaigns ensuring access at the very highest levels.

Of these companies, General Electric (GE) is one of the largest, most influential corporations in terms of revenue and scope of its media operations and ownership.  GE is the world’s 22nd largest company in terms of market capitalization.

Its media operations include the highly influential-

Television Holdings:

* NBC: includes 13 stations, 28% of US households.

* NBC Network News: The Today Show, Nightly News with Tom Brokaw, Meet the Press, Dateline NBC, NBC News at Sunrise.

* CNBC business television; MSNBC 24-hour cable and Internet news service (co-owned by NBC and Microsoft); Court TV (co-owned with Time Warner), Bravo (50%), A&E (25%), History Channel (25%).

In the 2005 /06 election cycle, GE spent $19,420,000 for lobbying in 2006.  It also gave $1,281,400 to federal candidates in the 05/06 election cycle.

Indeed, GE has endured a good relationship with the U.S. government in the recent past.  It has secured millions of dollars in defense and military contracts. It also paid zero taxes from 2001 to 2003 and received $9.5 million in tax breaks from the U.S. government. GE was awarded $2.2 billion worth of military contracts in 2005.

It also looks after its executives:

And its former executives.  This was seen when it was revealed in a divorce court filing by his wife, that GE’s retirement package to former CEO, Jack Welch, included use of the company jet, a 2003 Mercedes-Benz SLR and a $9 million a year pension.

The present CEO, Mr Geoffrey Immelt, was selected (2009) as one of President Obama’s financial advisers concerning the economic rescue plan. This, despite GE allegedly being the largest profit-maker of doing business with terror states including Iran.

Christopher Holton, national director, center for security policy’s divest terror initiative stated:

‘They are among the largest U.S. companies that do business in terror sponsorship. Iran Syria. GE CEO Jeffrey Immelt denies doing business with Iran, but we have confirmed that he does.’ (The O’Reilly Factor, January 23, 2008)

Another, less obvious answer to our original question, ‘who benefits most from war?’ would be the receiver of the interest on budget deficit, to which military spending overwhelmingly contributes.

Budgeted net interest on the public debt was approximately $239 billion in fiscal years 2007 and 2008.  This represented approximately 9.5% of government spending.  Interest was the fourth largest single budgeted disbursement category.

The United States has had public debt since its inception. Debts incurred during the American Revolutionary War and under the Articles of Confederation, led to the first yearly reported value of $75,463,476.52 on January 1, 1791.  Over the following 45 years, the debt continued growing.

The first dramatic growth spurt of the debt occurred due to the Civil War. The debt was just $65 million in 1860, but passed $1 billion in 1863, and had reached $2.7 billion following the war.  It grew steadily in the 1910’s and early 1920’s to roughly $22 billion, as the country paid for involvement in World War I.

The buildup and involvement in World War II, brought the debt up another order of magnitude from $51 billion in 1940 to $260 billion following the war.  By the end of 2005, the gross debt had reached $7.9 trillion, about 8.7 times its 1980 level.  Total debt of $10.6 trillion as of January 2009.   At the current rate, the national debt is increasing by nearly 4 billion dollars every day.

So who is it owed to?

A little more than half of the total national debt is owed to public and foreign countries, the rest to “Federal Reserve” and ‘Intergovernmental Holdings’.

‘Intergovernmental Holdings’ is the name given to a method that is used to keep track of money that the government has borrowed from several government agencies—the primary one of which is the Social Security Administration  (e.g. Social Security and Medicare payments from individuals and employers).

The Federal Bank is privately owned.  Its shareholders are private banks.

There are actually 12 different Federal Reserve Banks around the country, and they are owned by big private banks. But the banks don’t necessarily run the show.  Nationally, the Federal Reserve System is led by a Board of Governors whose seven members are appointed by the president and confirmed by the Senate.

Baumol and Blinder (Macroeconomics-Principles-and-Policy-Eleventh-Edition) state;

“Technically, each Federal Reserve bank is a corporation; its stockholders are its member banks.”  Each of the Federal Reserve banks is a quasi-public (part private, part government) institution owned by the private commercial banks in the district that are members of the Federal Reserve system.

At least someone’s making money out of war.

Anyone else?

According to a memo [PDF] released by Sen. Claire McCaskill’s staff, during a Contract Oversight subcommittee hearing on contracting in Afghanistan …

“From June 2009 to September 2009, there was a 40% increase in Defense Department contractors in Afghanistan.  During the same period, the number of armed private security contractors working for the Defense Department in Afghanistan doubled, increasing from approximately 5,000 to more than 10,000.”

At present, there are 104,000 Department of Defense contractors in Afghanistan. According to a report this week from the Congressional Research Service, as a result of the coming surge of 30,000 troops in Afghanistan, there may be up to 56,000 additional contractors deployed.(4)

The current total US force in Afghanistan is approximately 189,000 personnel (68,000 US troops and 121,000 contractors).

The US has spent more than $23 billion on contracts in Afghanistan since 2002.  By next year, the number of contractors will have doubled since 2008, when taxpayers funded over $8 billion in Afghanistan-related contracts.

However, no one is keeping an eye on the situation.

McCaskill’s subcommittee says that the Defense Contract Audit Agency identified more than $950 million in questioned and unsupported costs submitted by Defense Department contracts for work in Afghanistan.

There may be a few more candidates.  If one wanted to be cynical, one could say that continued war is certainly beneficial to a few citizens.  Political forces could easily call a halt to this war effort.  However, corporate (financial) pressures sway their judgment.

Who can blame corporate executives for wanting to continue receiving huge pay outs?

Why shouldn’t they use the services of lobbyists to influence politicians and powerful media outlets to influence the public, by subtly conveying the pro-war message to overcome evil forces, a handful of terrorists?

Sure, there are going to be losers – like those paying social security payments to the government, in what is reminiscent of a pyramid scheme – who then uses the money to pay off interest on national debt it has created, and subsidize companies who produce hi-tech weapons, who in turn give the politicians substantial funds to help get elected.

And don’t forget the biggest losers of all – the brave soldiers out there risking their lives to fill a few folks pockets with a fistful of dollars.

But hey, this is war – someones got to be a loser.

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Thank you

Ann Margrain

Founder, ‘Heroin and Cornflakes’ blog.

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http://perotcharts.com/us-national-debt-clock/

This entry was posted Wednesday, December 23rd, 2009 at 2:28 am and is filed under general. You can leave a response, or trackback from your own site.