America’s Top Military Chief: Debt is Main Threat to U.S. National Security – Pentagon Must Cut Spending[lang_de]America’s Top Military Chief: Debt is Main Threat to U.S. National Security – Pentagon Must Cut Spending[/lang_de][lang_zh]America’s Top Military Chief: Debt is Main Threat to U.S. National Security – Pentagon Must Cut Spending[/lang_zh]

Sep 16

black budget tech, conspiracy, economic manipulation

In February 2009, the head of U.S. intelligence – Dennis Blair – said that the global financial crisis was the largest threat to America’s national security. All of America’s intelligence agencies apparently agreed.

The same month, the chairman of the Joint Chiefs of Staff – Admiral Mullen – also agreed.

Now, Mullen is focusing on a specific economic threat. Specifically, Mullen is focusing on the debt:

The national debt is the single biggest threat to national security, according to Adm. Mike Mullen, chairman of the Joint Chiefs of Staff. Tax payers will be paying around $600 billion in interest on the national debt by 2012, the chairman told students and local leaders in Detroit.

“That’s one year’s worth of defense budget,” he said, adding that the Pentagon needs to cut back on spending.

But at least war is good for the economy, right? At least spending on defense will help the economy recover and climb out of this pit of debt, no?

Actually, no.

Nobel-prize winning economist Joseph Stiglitz has said that war can be very bad for the economy. For example, in 2003, Stiglitz wrote:

War is widely thought to be linked to economic good times. The second world war is often said to have brought the world out of depression, and war has since enhanced its reputation as a spur to economic growth. Some even suggest that capitalism needs wars, that without them, recession would always lurk on the horizon.

Today, we know that this is nonsense. The 1990s boom showed that peace is economically far better than war. The Gulf war of 1991 demonstrated that wars can actually be bad for an economy.

Stiglitz has said that this decade’s Iraq war has been very bad for the economy. See this, this and this.

And as the New Republic noted last year:

Conservative Harvard economist Robert Barro has argued that increased military spending during WWII actually depressed other parts of the economy.

Also from the right, Robert Higgs has done good work showing that military spending wasn’t the primary source of the recovery and that GDP growth during WWII has been “greatly exaggerated.”

And from the left, Larry Summers and Brad Delong argued back in 1988 that “five-sixths of the decline in output relative to the trend that occurred during the Depression had been made up before 1942.”
All of the spending on unnecessary wars adds up.

The U.S. is adding trillions to its debt burden to finance its multiple wars in Iraq, Afghanistan, Yemen, etc.

Two top American economists – Carmen Reinhart and Kenneth Rogoff – show that the more indebted a country is, with a government debt/GDP ratio of 0.9, and external debt/GDP of 0.6 being critical thresholds, the more GDP growth drops materially.

Specifically, Reinhart and Rogoff write:

The relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one percent, and average growth falls considerably more. We find that the threshold for public debt is similar in advanced and emerging economies…

Indeed, it should be obvious to anyone who looks at the issue that deficits do matter.

A PhD economist told me:

War always causes recession. Well, if it is a very short war, then it may stimulate the economy in the short-run. But if there is not a quick victory and it drags on, then wars always put the nation waging war into a recession and hurt its economy.

You know about America’s unemployment problem. You may have even heard that the U.S. may very well have suffered a permanent destruction of jobs.

But did you know that the defense employment sector is booming?