The past week has brought still more evidence that America is fiscally doomed owing to the twin burdens of the Welfare State and Warfare State. The latter, of course, is demographically and politically immovable owing to the coming tsunami of Baby Boom retirements and the absolute cowardice of the GOP when it comes to curtailing the social security and medical entitlements and performing its job as the tribune of fiscal rectitude in American democracy.
But the Warfare State’s grip on the nation’s finances is no less forbidding, as we learned from two new outbreaks of Empire First in Washington. That is, the Donald’s embrace of gung-ho interventionism in Venezuela and the 100% vote of the newly elected liberal firebrands in the U.S. House for preservation of NATO.
So the fiscal math is straightforward and prohibitive. A decade or so down the road the Welfare State will cost 18.5% of GDP under current law, the Warfare State will be pushing 5% of GDP when you count Veterans and interest on past wars, and the rest of government – including even minimal pork barrel and normalized interest expense – will a cost at least 4% of GDP.
That brings the future outlays side of the Federal budget to 27% of GDP at a minimum (compared to 21% this year) relative to a revenue baseline which will not even reach 17% of GDP this year; and which is ferociously guarded by the junk yard dogs of the anti-tax GOP, who have sabotaged any and all efforts to find more benign sources of revenue (such as a consumption tax) – even as they remain AWOL on cutting entitlements, the domestic pork barrel or anything else.
Needless to say, you don’t borrow the difference – more than 10% of GDP each and every year – in an economy with a 3-4% long-term nominal GDP growth trend at best and live to tell about it.
And you don’t keep buying the dip in the stock market, either, unless you truly believe that our bettors in the Imperial City have invented the proverbial economic free lunch or that the Fed and other central banks can print their way to prosperity indefinitely, world without end.
So consider further the iron grip of the Warfare State on America’s fiscal accounts. This past week again demonstrated that interventionist group think runs so deep in Imperial Washington that apparently no one can escape its baleful grip – not even the wanna be America Firster, Donald Trump.
After all, it is absolutely impossible to square his recent plunge into the internal affairs of Venezuela with the sentiments he delivered at the UN just four months ago:
“I honor the right of every nation in this room to pursue its own customs, beliefs, and traditions. The United States will not tell you how to live or work or worship. We only ask that you honor our sovereignty in return.”
Even if you put some weight in the last bolded sentence, exactly when did the socialist lunatic, Nicholas Maduro, who for better or worse was elected president of Venezuela, threaten to send gunboats into Miami harbor?
Likewise, who is Vice-President Pence to unilaterally declare Venezuela’s recent election invalid, and to then install under the threat of force his own choice for president of that country, national assembly head Jose Guaido, instead?
And make no mistake, the threat of force in the form of devastating economic sanctions against the Venezuela national oil company is the equivalent of sending in the marines. Whatever spark of life is left in the country’s ransacked economy depends on the oil exports and earnings of PDVSA.
As the great Ron Paul properly observed,
It’s ironic that a president who has spent the first two years in office fighting charges that a foreign country meddled in the US elections would turn around and not only meddle in foreign elections but actually demand the right to name a foreign country’s president! How would we react if the Chinese and Russians decided that President Trump was not upholding the US Constitution and recognized Speaker Nancy Pelosi as US president instead?
What is especially irksome is that the Donald is not only being led around by the nose by his lightweight neocon vice-president, but he has actually brought in the war criminal elements from the neocon bench to execute this blatant negation of America First.
We are referring to his appointment of convicted criminal Elliot Abrams as his point person to “restore democracy” in Venezuela. That is truly some kind of sick joke.
Abrams is among the most rabid neocon interventionists to ever ply his trade in Washington and was one of the chief architects of the disastrous US invasion of Iraq in 2003. In a national capital that was not obsessed with the business of Empire, Abrams would not be given the time of day.
But Empire First still reigns – the Donald’s best intentions notwithstanding – because as Tom Luongo recently so astutely explained the Donald has his own version of it, which can be described as US Energy Dominance:
Trump has been very clear about this policy for years. We take over these places, kill the bad people and pay for it all by stealing their natural resources, in this case oil.
It is Trump’s 17th century view on trade writ large. Since this is a 17th century colonial mindset.
An independent Venezuela, even if it is run by an incompetent bus driver, is something that cannot be allowed to stand. Anyone that refuses to trade that oil on US controlled exchanges, exchanges controlled by Goldman-Sachs, or in US dollars is to be taken over and a puppet government installed, c.f. Iraq, Libya.
But only after your production is removed from the market. So that we can sell ours.
This is geopolitics 101 folks. Nothing new under the sun. Does everyone not remember Trump’s cutting Venezuela from the global monetary system through sanctions last year?
The worst of the country’s hyper-inflation occurred after this. Sadly, it was cheered on by libertarians and conservatives more interested in proving Socialism is bad than seeing the bigger picture of how it was fomented by immoral US policy under Trump’s guidance.
Maduro’s attempts to rebuild Venezuela’s monetary system outside of the control of the US’s dominance of financial markets are a blueprint for resisting Energy Dominance.
Whether Maduro’s Petro cryptocurrency and Sovereign Bolivar succeed are irrelevant. What’s important is that he has gained the backing of both China and Russia in support of the scheme.
They are all, along with Iran, committed to an alternate path to Trump’s Energy Dominance. They have to be, because the US will not stop locking down the world financial system around oil until stopped practically.
And Trump has to continue on the path he’s on, if he believes in America’s Inherent Greatness (which he does), and quash them with everything in his power.
So, now he is taking on the weakest link, Venezuela. A country softened up by Chavez’s idiocy and Maduro’s incompetence. But it took the US leaning on them through ruinous sanctions to destroy what was left and ensure the collapse of its oil industry so ours can thrive.
Then we blame the Venezuelan people for resisting our edicts and electing the wrong man.
This is the John Bolton blueprint for regime change. Demonize the leader of a country that opposes our imperial rule, cut them off from the rest of the world through sanctions and political/military pressure and wait for the society to collapse. Then back a regime change by a US groomed puppet, in this case the nobody who is Juan Guaidó.
Sell it all the entire time as a failure of the other guy in charge. For Chavez and Maduro the spectre of Socialism is all it takes, especially now with the Democrats and the media championing our own female Che, Alexandria Ocasio-Cortez, as the bogeyfem.
And that gets us to the second event of the past week that underscores why Empire First is so deeply lodged in national policy. To wit, the US House took a vote last week on banning the nation’s commander-in-chief from even taking steps to withdraw from NATO, and not a single Democrat – including America’s new female Che from the Bronx and Queens – voted against it.
Once upon a time, of course, the so-called progressive Left at least distinguished itself by principled and often politically courageous opposition to Washington’s projects of Empire like the Vietnam War and decades of military, political and covert intervention in Latin America.
No more. No only did not a single Democrat vote "nay" in what was a lopsided 357-22 vote in favor of the measure, but one of their freshman firebrands made clear exactly why.
To wit, it had nothing to do with the ragged case for an obsolete institution which should have been disbanded when the old Soviet Union slithered off the pages of history 28 years ago; it was actually just a cathartic excrescence of the Trump Derangement Syndrome.
Thus, one of the bill’s co-sponsors, freshman Rep. Tom Malinowski, D-N.J., called Congress
“the only check we have” after the departure of former generals Jim Mattis as defense secretary, H.R. McMaster as national security adviser and John Kelly as chief of staff – and Nikki Haley as United Nations ambassador.
"They’re all gone now, we’re all that’s left, and its urgent and essential, therefore, that Congress play its constitutional role and take this action,” said Malinowski, a former U.S. diplomat and now a freshman congressman on the House Foreign Affairs Committee."
So there you have it. The progressive Left is now defining the nitwit warmongering neocon, Nikki Haley, as a hero!
What that means, of course, is that the Donald’s original impulse to declare NATO obsolete and withdraw US participation is now dead in the water.
Indeed, had not the Donald been stopped cold by the hail of hysteria which emanated from the bipartisan War Party, which prevailed again last week on the NATO resolution, the next step would have been to take up where George H.W. Bush faltered in 1991.
That is, on the dismantlement and interment of NATO and the reopening of Europe to peaceful commerce among all the nation’s that had been artificially separated by the now long departed Iron Curtain.
The fact is, Washington doesn’t need its budget-busting $720 billion defense budget to defend Europe from Russia, nor should it be endlessly haranguing those nations to waste more of their own money on defense than they already are.
That’s because there is absolutely no reason to believe that Russia wants to attack Germany or any other country in Europe. Indeed, the very idea is just plain madness.
As shown by the table below, the NATO-28 (excluding the US) are now actually spending $250 billion per year on defense (2017). That’s 4X Russia’s entire military budget of $61 billion.
Likewise, the GDP of Russia is but $1.5 trillion compared to $18 trillion for the NATO-28. So is Cool Hand Vlad so completely foolish and reckless as to think that he could invade and occupy territories that have an economy 13X bigger than that of Russia?
Actually, it’s far more ludicrous than that. As we mentioned above, Russia is a giant hydrocarbon province attached to some wheat fields, timber lands and mineral deposits – all dependent upon an aging work force afflicted with an undue fondness for Vodka etc.
What that means is that Russia must export its commodities big time or die. In fact, during 2017 Russian exports totaled $357 billion or 26% of its GDP. And 55% of that went to Europe!
Moreover, when you breakdown Russian exports it is plain to see that the industrial maw of Europe is the port of first call for its vast tonnages of exported commodities. These included $173 billion of oil and gas and $60 billion of iron, steel, aluminum, precious metals, forest products, fertilizers, grains and copper, among others.
Finally, the table on defense spending by country below speaks for itself as to the purported Russian threat. If the German government really feared that Russian tanks would be soon rolling through the Brandenburg Gates, it would have more than 20 operational tanks, and it would spend far more than $40.6 billion or 1.2% of GDP to defend itself.
And the same is even more true of the former Warsaw pact countries that are located cheek-by-jowl on Russia’s border. Yet Romania spends the tiny sum of $2.8 billion or 1.2% of GDP on its military.
Likewise, the figure for Hungary, which learned all about Soviet-style invasions in 1956, spends only $1.2 billion or barely 1.0% of GDP. And besides that, its intrepid leader, Viktor Orban, doesn’t even support NATO’s ridiculous sanctions on Putin’s cronies and allies.
And as for the allegedly threatened Baltic states, their combined defense budgets are less than $1.5 billion, representing a minuscule 1.7% of combined GDP; and Bulgaria, fast upon the Russian Lake called the Black Sea, spends only $660 million or 1.4% of its GDP.
In short, European policy action on the defense spending front trumps all the hot air that wafts from NATO’s spanking new Brussels headquarters. Their governments and parliaments positively do not think they are threatened by the Russian Bear because they aren’t.
So let us again observe that even in its current state of alleged disrepair and under-spending that the NATO-29 (including the US) have a combined GDP of $36 trillion and military budget of $1 trillion.
Those figures are 24X Russia’s GDP of $1.5 trillion and 16X its military budget of $61 billion. Accordingly, there is not a snow balls’ chance in the hot place that the perfectly rational leader of what is actually a pint-seized nation (economically speaking), who stood alongside the Donald at the Helsinki press conference, has any illusions (or intentions) whatsoever about military aggression.
What would help a lot, therefore, is for the Great Disrupter to forget about his unfortunate infatuation with the idea that bigger is always better, and do what no other American politician in thrall to the Warfare State has been unable to do since 1991 when the Soviet Union vanished.
That is, declare "mission accomplished" with respect to NATO and disband it forthwith.
You could call it a Mercy Killing, but it’s one that’s not to be.
The Donald has been sidetracked into his own version of Empire First and the liberal Dems have become vociferous handmaids of the Warfare State.
David Stockman was a two-term Congressman from Michigan. He was also the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street. He’s the author of three books, The Triumph of Politics: Why the Reagan Revolution Failed, The Great Deformation: The Corruption of Capitalism in America and TRUMPED! A Nation on the Brink of Ruin… And How to Bring It Back. He also is founder of David Stockman’s Contra Corner and David Stockman’s Bubble Finance Trader.