The most decorated Marine in the history of the Corps Major General Smedley Butler once wrote that "War is a racket." That was in 1935. If only he could see it now. The cash flow enabling the global war on terror which was launched in 2001 is astonishing, numbers that are too large to even imagine. Columbia University economist Joseph Stiglitz has estimated that the total cost of Iraq alone will exceed $5 trillion when all the borrowed money and legacy expenses for 30,000 wounded soldiers are finally paid off. And Iraq is only one part of the enormous shift in national resources that has taken place over the past twelve years.
The direct costs of the Bush-Obama war are reflected in the Defense and intelligence budgets, both of which are more than twice as big as they were pre-9/11, but factor in the additional domestic costs for the Transportation Security Administration, the Department of Homeland Security (DHS), and growth of the federal bureaucracy in general and the numbers become mind boggling. And then there is the replication of the federal spending at the state and local levels reflected in the increases in numbers of police and the establishment of homeland security offices in nearly every state as well as in some counties and cities. New York City alone has more than 34,000 policemen, to include a large intelligence division and counter-terrorism group that has been accused of spying on local Muslims all along the East Coast. It was trained by the CIA and is headed by a former CIA analyst. Many large companies have also either been either compelled or convinced to spend increasing sums on security, nearly all of which is unnecessary.
So if war on terror is a racket, the question becomes how long will it take before the productive part of the economy collapses under the strain of paying for a huge package of goods and services that do not actually produce anything. It may be happening already as the US economy continues to struggle after its reversals five years ago, but the media and public figures can only rarely be seen calling for some retrenchment because they themselves benefit greatly from the status quo and have been largely immune to the consequences of their bad decision-making.
This lack of any sustained public outcry over the expensive new national security state just might be because many people are in fact making quite a lot of money out of it. They fall into several broad categories. First is the military itself, which has a proposed budget for $487 billion in 2014. Some of that spending is strategic, which means paying for the missiles, submarines, and aircraft carriers that may be highly questionable but are nevertheless intended to deter potential adversaries like China and Russia. The large increases in the budget since 2001 have, however, been dedicated to counter-terrorism. Both the size and cost of the federal bureaucracy, to include the military, has doubled over the past twelve years under both Republican and Democratic administrations. Then there is the intelligence community, which costs something like $80 billion (its budget is secret), and Homeland Security, which comes in at $59 billion. There are 2,700,000 federal employees and 1,400,000 active duty military personnel currently supplemented by nearly 500,000 national guardsmen.
When all the increases are added up and compared to the baseline of 2001, the war on terror currently costs the American taxpayer more than $500 billion per year. As there may be only 100 or so terrorists seriously interested in attacking the United States directly, that works out to something like $5 billion per year per terrorist.
The first level beneficiaries of the largesse are the employees themselves. An Army captain with six years in grade makes $64,339 plus bonuses, additional allowances, special pay, complete health care and housing. If he stays in the service for twenty years he can retire at a 50% pension and also retains his health care benefits. An average US federal government civilian employee costs $125,000 per year when one factors in all legacy costs. These numbers are far beyond what an average working American makes and it should also be noted that federal employees have complete job security, which no one else has any more. Many also "retire" and exploit their security clearances to step into civilian jobs in national security that double or treble their income.
The next level of beneficiaries is the defense contractor crowd. Defense related plants employing 3,500,000 are strategically located in every state and very nearly in every congressional district, providing jobs that congressmen cannot ignore. And there are also numerous contractors within the government itself coming from beltway bandit companies like Booz-Hamilton and SAIC. It has been reported that one third or more of the intelligence community and the Department of Defense civilian staff now consists of contractors. They earn considerably more than staff employees and wind up sometimes costing as much as $500,000 each when all the expenses are factored in. The Pentagon and CIA do not even know how many contract employees they have and you know defense contractors are doing very well when you open up any Washington DC newspaper and read their full page ads praising our soldiers and America’s "arsenal of freedom."
The third level of beneficiaries is the law enforcement community, going down to the local level, which has benefited greatly from the 9/11 flood of money. There are nearly 800,000 cops in the United States. A New York City police officer earns $91,000 after five and a half years of service, plus overtime, has an excellent health care plan that he can take with him when he leaves, and can retire on a half pension after 22 years. Outside New York policemen do not make as much but they have similar retirement and health benefits. As in the case with the military, a high school graduate can retire when he is less than forty years old with health care and a generous pension for the rest of his life. He normally then takes a second job, also involving security.
Finally, there is the private security industry. This has grown up around the Department of Homeland Security. It includes many former government officials including Michael Chertoff, who headed DHS and has been promoting his goods and services ever since. His Rapiscan full body scanners have been described as "useless" and many are now sitting in a government warehouse.
It all adds up to a huge pile of money and a lot of interested parties who want to keep the gravy train going. If you add up the soldiers, bureaucrats, policemen, and private contractors you come up with 8,900,000 Americans who are directly dependent on the spending on the government’s war on terror for their livelihood. They are present in every county and town in the United States. They all have a powerful incentive to promote the national security state and government officials, who also benefit from the largesse, listen to them in ways that they do not listen to the rest of us.
The current total federal budget is $3.77 trillion, much of which is dedicated to "keeping us safe." It is just under 25% of the national GNP and growing, but it is only part of the story as it does not include state and local expenditures for police and homeland security. No one knows exactly how much fiat currency the Federal Reserve banks print and distribute while the Department of the Treasury routinely borrows money to meet the considerable budget shortfalls that have been the norm since 2001. This coming year the unfunded part of the federal budget is estimated to be $744 billion. The federal debt now stands at $17 trillion and it is not getting any smaller. It is 107% of the total Gross National Product (GNP), a level that is considered to be unsustainable by most economists.
And it is all done to fight a few hundred terrorists, mostly being pursued by the authorities in their home countries, moving every night to avoid surveillance and hiding in caves. Economic collapse due to military overextension is not unthinkable, witness the fall of the Soviet Union twenty years ago. A joke making the rounds shortly thereafter described the Soviets as having a state of the art ballistic missile fleet together with the economy of Upper Volta. Going back a bit farther, King Frederick the Great’s Prussia was once described as an army with a country attached, perhaps a model for current neocon ambitions and, I might add, not unlike contemporary Israel which they so admire. Prior to the fall of the Western Roman Empire in the fifth century the state taxed the healthy parts of the economy to death to support its military and it inevitably collapsed. If America is indeed the New Rome, as many neoconservatives might assert, it must change course if it is to avoid becoming like Russia or old Prussia or, even worse, to share the fate of the Old Rome.