Militarism And The US Debt: A Retrospective View
By Dr. Peter Custers
11 August, 2011
Countercurrents.org
Leiden, the Netherlands: As the crisis on the financial markets deepened, the need for introspection to analyze the causes of the US’s plight was all too obvious. On Sunday July the 31st, Congressmen belonging to the Democratic and the Republican Party reached an agreement aimed at averting a so called ‘default’, meaning the failure of the government in Washington to pay its bills. The informal agreement was reached after months of terse negotiations. During the following two days it was passed by the House of Representatives and the Senate, and on the very day when the ceiling on the US public debt was being reached, i.e. on Tuesday August the 2nd, President Obama signed the bill lifting the ceiling. There were sighs of relief in Washington. Yet the deal was immediately questioned on a variety of grounds, not least on grounds that it put the main burden of public debt relief on the US’s working population. Thus, whereas the ceiling was raised by 2.1 Trillion US Dollars, President Obama once again gave in to the Republicans’ demand that there would be no increases in taxation on the country’s super-rich and corporations. Congressional negotiators did mutually agree on budgetary cuts aimed at partially rebalancing the government budget. Yet those cuts were heavily biased against the country’s poor: at least three-quarters of cuts agreed on will affect social programs such as health care.
Meanwhile, few analysts took care to analyze the actual causes of the dazzling level of the US public debt, now standing at plus 14 Trillion US Dollars. Hence, the need for introspection and for a brief retrospective on the history of these debt. A proper starting point I believe is the period of the eighties, when the US was ruled by the Republican President Ronald Reagan. His period was inaugurated in 1981 by a so called ‘tax revolution’ which had an income effect that was squarely notorious: the superrich benefited from tax reductions, even as social welfare programs were slashed. Thus the bias of Reagan’s budgetary measures was all too obvious. Yet it did not result in balanced budgets. In fact, throughout his governing period the budget deficit kept increasing dramatically, much faster it appears than had been the case during preceding decades. As official data of the US Department of the Treasury confirm: the US’s public debt skyrocketed, from roughly 1 Trillion US Dollars in 1982, to two and half times this amount, some 2.5 Trillion, at the end of the Reagan era, in 1989. And these skyrocketing debts were almost uniformly blamed on the fact that the military budget was raised each and every year. Ironically, during recent Congressional negotiations Obama’s lieutenant at the Treasury Geithner, in an attempt to convince Republicans, conveniently referred to appeals to lift the debt ceiling made by Ronald Reagan a quarter century back. Yet it is Reagan who set the pattern that has resulted in the US’s present plight!
There is a second irony in the story over Congressional negotiations. Whereas Obama since taking office has countered the US recession via double digit deficit spending – both military and civilian -, it is Congressmen belonging to the oppositional Republican Party who have insisted most strenuously on the need to balance the US’s annual budget. Yet a comparison of different US presidential periods over the last thirty years brings out that there has been no case where a Republican President was parsimonious. Quite the contrary. The only period when a serious attempt was made to re-balance the US government budget was during the 1990s, when the Democratic President Bill Clinton ruled. Whereas the late 1990s were characterized by balanced budgets, - from the moment the Republican President George W. Bush assumed power, in 2001, the US’s public debt started rising rapidly once more! To quote from official figures: the US’s outstanding public debt was nearly 6 Trillion in 2001, but had risen to 11 Trillion when Bush left office, in 2009. And again the main cause of escalating public debts was rather obvious. For once again the key ingredients of Republican policymaking were: tax reductions for top income categories, - combined with steep increases in allocations for the US army and for US’s wars. Once again, increased debt problems were largely induced by the government’s proclivity towards militarism.
Clearly, the Republican agenda aimed at rebalancing the US government budget does not sound very self-critical, once the history of the public debt be re-discussed. Yet before new confusion be created, I should add this: my above story is not meant to argue that the use of military allocations for economic stimulation is exclusively a Republican legacy. Far from it in fact. Thus, under the Democratic President Obama the US public debt has steeply risen too. His government too has failed to carry out any meaningful cuts in the military expenditures so far, although it uses civilian spending towards stimulation of the economy much more actively than has been the case in the past. Again, even when the Democratic President Clinton ruled in the nineties, the US’s level of military spending was half the world’s total! Yet debt spending for military purposes seems a special Republican legacy. During each Republican governing period, a distinct a pattern of two parallel upward movements can be discerned, - of annual increases in military allocations and of annual increases in the US’s public debt. These parallel movements stand for a specific form of policymaking aimed at drawing the US economy from the slump. Both under Reagan and under Bush wasteful spending - in the form of construction programs for military aircraft, for missiles, etc. - has been so large that it became the single most important stimulus.
As to the follow-up to the present Congressional deal: a part of the 2.2. Trillion budgetary cuts to be implemented in the future are yet to be worked out by a bipartisan Congressional Committee. Thus, US analysts will argue that patience is required, and that Congressmen have perhaps started seeing the light. For according to latest reports, the possibility of cuts in the military budget is now on the table of negotiations at last. An apparently high average figure of 30 to 50 Billion Dollars in annual reductions over 10 years has even been suggested. Yet these amounts absolutely pale in comparison with the contribution military expenditures have made to the escalation in the US’s debt problems over the last thirty years. Again, the urgency of drastic measures is all too obvious. Given adverse reactions on the world’s financial markets to the last-minute US decision on the debt ceiling, it would be foolhardy to wait. Share prices on the world’s stock markets have tumbled, as doubts increase over the US’s long-term capacity to repay its domestic and foreign creditors. Surely, the US’s debt problems do not stand alone, and are to be read in combination with debt problems faced by Europe’s weak states. Surely, the deregulation of financial markets, the start of which too can be dated from the beginning of the 1980s, and the 2008 financial crisis are other major causes behind escalating state debts. Nevertheless it is fair to conclude that the US’s longstanding reliance on military keynesianism is one of the key elements feeding into the debt crisis that has engulfed the Western world.
Dr. Peter Custers is a specialist on military keynesianism and author of Questioning Globalized Militarism (Tulika/Merlin Press, 2007)
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