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The Latest (Semi) Austerity Casualty - The Pentagon
Technically, we misspoke. The US is most certainly not in austerity... Yet. Which is why one can imagine the fallout that will occur once the country does cross the Rubicon into prudent spending, especially after recent disclosure that certain Pentagon accounts are about to run dry as soon as August as is. Reuters reports that the Pentagon said on Wednesday it may be forced to take extreme measures -- like not paying salaries -- if the Democratic-led Congress fails to pass a $37 billion defense spending bill before lawmakers begin an August recess. In retrospect this looks like the best straw man to be used by various splinter groups terrified of what austerity would mean for their salaries - just throw out that America would be defenseless and all talk of non-excess spending would cease immediately. Furthermore, what is the big deal - the US issues between 2 and 3 times that amount in various auctions each week. Surely Chine would be very happy to know a third of a week's tally is going to support the unparalleled (and broke) US military machine.
Tensions are growing in the Pentagon about the fate of the bill, which has languished in Congress despite repeated pleas for action by Defense Secretary Robert Gates, who needs to fund a 30,000-troop surge for the Afghan war.
The White House has added to the drama, threatening to veto the bill over $800 million in education spending cuts that were added by the House of Representatives.
"While we hope and expect the Congress will get this done, we also are obligated now to begin seriously planning for the possibility that they don't," Pentagon Press Secretary Geoff Morrell told reporters.
He noted that "absent more drastic action" certain Army and Marine Corps spending accounts would run dry in August.
The Defense Department would do everything in its power, Morrell said, to continue to protect the United States and support troops "deployed in harm's way."
"It may involve asking a lot of hard-working people in this department to report to duty without an ability to pay them or other extreme measures we would rather avoid," he said. "But we will get the job done, including in Iraq and Afghanistan and where else we operate around the world."
What is very surprising is that Europe, which now that the bonds of the monetary union are collapsing, is exposing far more of the ethnic, racial and religious tensions that kept it the hotbed of warfare for 10 centuries, did not use precisely the same excuse to have austerity blocked. Surely, if various parliaments had decided to tie in overall pension cuts to Mig 29 jet fuel inventory and 7.62 shells, austerity would be dead as the dodo, the ECB would be printing hand over fist, Krugman would be happy as a pig in heat and the recent G-20 strongarm campaign for record deficit spending would have been a tremendous success.
h/t Mark
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*Cough up* War with Iran *Cough up*
Furthermore, what is the big deal - the US issues between 2 and 3 times that amount in various auctions each week. Surely Chine would be very happy to know a third of a week's tally is going to support the unparalleled (and broke) US military machine.
Why not? They've already financed the entire Defense Department budget for the year so far (current revenues only cover SS, and Medicare/aid) - what's another couple of weeks?
There's always money for bombing people and bailing out multinational banks. There's just no money for helping little people.
or even medium-sized ones
Over 700 bases and /or installations in over 100 countries, for what? Seventy thousand guys sitting in Germany, for what? We are past stupid.
Those guys in Germany are there to make sure that if the Germans ask for their gold back the US can tell them it's already gone without fear of reprisal.
I recall a discussion about base closings and someone defended the German bases as "do you have any idea what would happen to the local economies of the cities that host those US bases? They would fold!"
So from that, I deduced that our military is more about trickle down economics than about strategic defense. I would also not be shocked to find out that the real reason McChrystal was fired was because he cut off the fast food restaurants operating on US bases in Afghanistan. Now that Petraeus is in charge, the "burger bun" flights have probably resumed.
Hehe, see: 'Reaganomics' is still working!
But apparently more for foreign local economies than domestic ones.
I find very interested how, when everybody else has read that JPM numbers were TERRIBLE since hours ago, bloomberg is still puzzled as how after such a good beat of expectations the stock is down.
Writing this at 13:07 ET, they are still analyzing when JPM will increase dividends !!
Are they incompetent (they cannot analyze anything by themselves or find the right expertise), delinquents, a mix of all that or what ?
Well it is not like I was expecting anything of Giggy or Maggie other than a flash of her panties.
PS. got the duct tape for the iphone ?
Lets see how long does it takes them ... ?
By the time this is over US military personnel are going to have to hitch hike back home from their overseas locations.
Obama would not DARE..............
Go ahead, make your HISTORICAL early EXIT.
I would love it if he did veto it................talk about FKD...........he would be.................He would have to move to Saudi..........
"threatening to veto the bill over $800 million in education spending cuts that were added by the House of Representatives".
Gotta take care of that voting block bitch.
Austerity, is not in his vernacular.
There are two kinds of spending: value-generating and value-usurping. Deficit spending should only used to fund the former, and the value generated should exceed the interest associated with the incurred debt. For example, borrowing at 0.5% to buy bonds with yields of 4-8% would be good while borrowing at 17% to purchase a new iPhone 4 to replace your perfectly-good iPhone 3GS would be bad. This is basic investing 101.
Most modern social programs fall into the value-usurping category. We'd like to think that they are the product of moral or ethical standards to be afforded by an advanced and productive society. Even if that were true, we should never borrow money for value-usurping expenditures. However, in reality they are more often than not the product of politically strong lobbies from selfish special interests. Social security arguably started out as a program which generated surplus value (remember the retirement age at inception was two years longer than the average lifespan of those eligible to collect it), but it has long since become parasitic.
Oddly enough, most people lump education spending with value-usurping social programs, but I have never understood why. A well-educated populace has much more value-generating potential than an uneducated one does.
I wonder if there are reports of similar discussions in the roman senate by Cicero or others, once it became clear that the conquests were not sufficient to finance the military anymore.
Read Le Goff; Cicero's times was before the insufficiency of military conquest. That started to occur shortly after Marcus Aurelius defeated the Barbarian Tribes at Danube and became apparent in 276 with first major Barbarian offensive against Rome on it own territory. Some would argue that the Limes became insufficient of a defense strategy due to reluctance of soldiers stationed there to fight *solely* for Romes glory while not being paid in months. Eventually by the end of the 3rd Century many provinces became self-governed [while still formally a part of the Empire] and that led to inability of constructing a viable military strategy in the 4th and 5th Century when unity was needed most. But not to drag this post any further; read Le Goff; he is brilliant when it comes to Middle/Late Antiquity. The best; it could be said.
CB, which Le Goff tome do you recommend? Thank you. :)
He is more of a Historian of Disciplines than a macro Historian, but the best book to start with would be "The Birth of Europe". That is the most recent one and in which he attacked many of the prevalent dogmas which circulate around concerning Middle Ages [or as modern day historians call it "Antiquity"]. Skip the books in which he discusses disciplinary methodology [unless you are a historian]. Then read all the others in whatever order you wish so. But "The Birth of Europe" is the best one to start with if you are new to Le Goff.
Thank you for posting all of that. It's a topic which I find of interest and will definitely check out "The Birth of Europe".
Of course; no problem. One thing though; Le Goff is specialized in the transition period [4th,5th and 6th Century] not on Rome per se. So you will read more about transition from Rome to Europe. Le Goff is a brilliant historian of Antiquity but if your interest is Rome and solely Rome [maybe with the extension into Byzantine Era] I would recommend you other authors [yes Gibbon for sure, but his work is by todays standards somewhat flawed in its conclusions]. If you want I can browse trough my library and compile a list for you; it will be not be a problem.
Again, my thanks. Actually, I'm more interested in the transition period. I'm of the opinion that we're on the brink of a transition period ourselves, what with the current financial crisis, coupled with the end of cheap energy. Especially if/when we stop paying our soldiers.
Hmmm ES, I'm not sure if this is a real title or not, but "The AfterBirth of Europe" has a nice ring to it, and sounds like it would cover your area of interest.
<junks self for being so crass>
Bluff. Washington monument syndrome. You're going to pay your other bills to military industrial complex members, but you'll cut off paychecks to a gaggle of 20 year olds hopped up on monster drinks with guns? Bullshit. Bluff
LOL. I was thinking the same thing. You got to pay the guy with the 50 caliber rifle. Don't want to piss him off.
Maybe, maybe not. How many lower-ranked enlisted are not authorized to live off base? They're in barracks and have mess privileges. And they're not allowed to have firearms or weapons of any kind on base.
Deployed troops already have the option of putting up to $10,000 of their pay in to the SDP.
http://www.dfas.mil/army2/investmentoptions/savingsdepositprogramsdp.html
Is it a far cry to mandate this option for those deployed to combat zones (at least those deployed without dependents)? And to increase it to 100% of unallotted pay?
One thing anyone in the military knows is how creatively you can be screwed by DC.
Sdp is to prevent your wife or girlfriend from spending all your money while you're deployed. If uncle sugar takes it for awhile, you'll be ok. The govt can and will take your tsp before anything else.
But if the paychecks for e-4 and below stop, you're screwed. Yeah they have barracks and mess halls in the states, but they're getting paid less than walmart cashiers. They can't take even the slightest disturbance in pay. And I doubt care how scary the gunny can be, he probably won't want anything to do with that horseshit. Once that level of insubordination sets in, you're screwed. You might as well just send everyone home the next day.
"And they're not allowed to have firearms or weapons of any kind on base."
not quite true...POW's are stored in the unit armory and may be checked out to go to one of the open ranges for onpost personnel and families (usually only on weekends though)...unless that has changed recently (which is possible in light of the Ft. Hood traitor).
Don't pay the generals, they got plenty coming from mic bribes.
While I agree that this is a bluff, the military owns soldiers like they are indentured servants. The military can decided to extend a soldier's contract without his/her consent, so I'm sure they could get away with delayed payments. I think revolutionary soldiers dealt with this problem and Washington had to have some of them put down...
More theatrics.
It would be very accurate if you weren't being so sarcastic. What else do you think props the USD up better than perpetual war? Would you seek the protection of a school yard bully if he/she wasn't such a bully? Think about it.
I sincerely hope ZH doesn't become a propaganda mouth piece for China by proxy because it certainly behaves that way through it's glorification and justification of the oppressive state. China has picked it's bed partner for it's own prosperity. If it catches a nasty disease in the meantime is entirely it's own fault.
Did you not see the article last night about the 65 (or 55?) million vacant homes in China and the prediction/comments around a coming property crash? How about the articles taking apart the 'float' of the Yuan?
ZH is no shill for the China machine.
They are articles based on events and ZH is simple reporting them. I don't credit ZH for the investigative journalism uncovering all of these stories. What I do notice is the ZH inserted comments that mostly favour/praise China especially in regards to US dollar, gold and UST purchases.
All I'm saying is that the China-US relationship is more complicated than any one here could ever understand (including myself). That includes their decisions, motives and strategies especially when it comes to where they place their Yuans and US dollars. To make a sarcastic joke about China being happy spending their money on invasions by the US is simply naive IMO and may be more accurate not being so sarcastic.
The US has been invading longer than China has been buying UST's so why the surprise all of a sudden?
When the U.S. invades countries, China gets a cut of the oil we find there.
Plus, China doesn't want it's best customer to get a pay cut.
Both nations are aligned.... for now.
Cut Pentagon budget by 70% and the US will still have the larger military spending in the World.
Clearly you don't use any imported oil. None. Ever.
Nor do you use any technology pioneered by the U.S. Military.
Clearly you feel completely safe from foriegn interests.
Clearly this 70% spending cut will have no negative side effects and U.S. taxpayers will see every cent of that 70% reduction. In real terms.
US military IPO soon? Privatize the keepers of the nukes. Turn the navy into a for profit protection racket with the carrier groups. Leave 172 billion in unmarked bills in a brown paper bag under the London bridge or kiss Ottawa good-bye. Tell no one.
oh now you are talking....I would get back into equities then.
An Ohio-class nuclear submarine ETF, perhaps?
"Starship Troopers" -- Only the military are full-fledged citizens allowed to vote.
Your treasuries and stocks aren't worth shit without the might of the U.S. Military.
Our entire economic system is built on growth. Growth predicated on the expansion of technology and resources, overwhemling spearheaded by the U.S. Military.
A few quick tangential comments:
1. The GAO routinely remarks that the Pentagon cannot square its books in any remotely acceptable accounting fashion. I have to think there are billions stored in various accounts, which makes this even more preposterous that they will run out (not that they would want to tap secret accounts of course).
2. CNBC seems to be amping up the hopium today - very little/no mention of any of the bad news today, and a real focus on positive guests and optimism. Not to be overly sensitive, but the spin is much faster today.
3. Illinois has $5 billion in unpaid bills. Is there a liquidity event coming soon? Somewhere in the system? There seems to be a great deal of tension, with no immediate positive resolution offered.
Noticed the same thing. The old guy on SontheS looked ready to either have a heart attack or pound the living beejesus out of the goofy limey. Great entertainment.
"3. Illinois has $5 billion in unpaid bills. Is there a liquidity event coming soon? Somewhere in the system? There seems to be a great deal of tension, with no immediate positive resolution offered."
Maybe the Daley boy, can tap those secret accounts............. Daddy left behind.(what a corrupt POS shit political machine).
And they thought Capone, and the Mob were the criminals.......LOL
Are you sure this is not a war debt US has?
Education spending cut instead of military, that is fucking sickening
Indeud, as if that will make a big difference to the deficit. Education is pretty desperate as it is. It gets, what, 53B or so? Compared to a trillion plus for the military. Nice priorities there, Amerika.
Yes it is..........
Imagine only spending $8k per year ,per student, to not be able to write,spell, or do multiplication tables............and graduate them that way.
Despicable..........
You forget states tax for education also.( A WAD).
Wherever this money is going is certainly not to the troops or their families, most barely make it, and are on Fkin food stamps!!!!!.
Wanna talk sick?, that is some sick shit.
Recall a few months ago Secretary of Offense Gates' preposterous claim that he would somehow find $10 - $15 billion "savings" in a nearly $600 billion (ex wars and a lot of other stuff adding another $300 - $400 billion to our total "defense" spending); a baseline budget that has doubled since 2001. The military industrial complex and its cadre of drunken Praetorian generals is going to have its way with us one way or another.
Yup, I belive the Pentagon "misplace" two trillion. The only reason we keep handing them money is because Congress is getting kickbacks from friends and family in the defense industry. Congress can always find money for war but not for its own citizens.
because war begets money.
When I was in "the War" back in the '80s (when the few actual wars we had were mostly fought in secret, the way they ought to be), we went through a few episodes where the government "shut down" and our salaries were cut off ... for a few days, that is.
The differences between then and now?
1) In Reagan we had a President that we knew honored and respected the military?
2) In Reagan we had a President we knew loved our country.
3) In Reagan we had a President who didn't bow down before our vassals and didn't kiss up to our enemies.
Those first three points go to the concept of motive. The next goes to means ...
4) Most of our military was in garrison and disarmed on a day-to-day basis.
5) Today the armed armed forces are nearly all on the other side of the world.
Crossing the Rubicon is an interesting choice of phrases, as it goes to the old Roman law that prohibited a Roman General from crossing it with a Legion, as to do so would most certainly be an assault on the Capital, as Julius Caesar aptly demonstrated.
Nowadays it would take a lot of motivation for this to happen, but given all the other Black Swan events we've had in the past few years, can one really rule this out?
Maybe this is why the Regime doesn't waste time getting rid of disgruntled generals.
One way to read this is that budget delay - if intentional - keeps DoD on a short leash (can't plan, can't spend and right now a lot of procurements are stalled).
The corollary to that is that the DoD works for the president. May we interpret this as Congress taking the C-in-C's Iran options off the table?
Congress toying with C-in-C's Afghan surge?
The salaries business is not dire - there will always be pay day catch up - it's the more general DoD budget crimp that seems to have political fingerprints on it.
Meanwhile, the domestic front has an echo in the stand-down of police departments. Shedlock has been blogging on it, e.g.
http://globaleconomicanalysis.blogspot.com/2010/07/oakland-lays-off-80-police-officers-in.html
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