The Obama administration’s $78 billion cut to US defense spending is a mere “pin-prick” to a behemoth military-industrial complex that must drastically shrink for the good of the republic, a former Reagan administration budget director recently told Raw Story.
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The ‘Ponzi scheme’ of ‘artificial prosperity’
Stockman, who described himself as a libertarian during a recent interview with Reason.tv, told Raw Story that the economy got into this mess because of the public and private sectors’ addiction to “guns and butter Keynesianism,” an economic policy that amounts to a Ponzi scheme that has ballooned since 1990.
“If we see what’s going on carefully, we’ve reached the final unmasking of the Keynesian illusion, that Keynesianism is really nothing but borrowing, stealing from the future to induce consumption today,” he said. “There are no multipliers. Every one of these programs we’ve had from ‘cash for clunkers’ to housing purchase credits have disappeared as soon as they expired and simple shifted activities in time by a few months.”
Stockman explained that before 1980, it took about $1.50 of new borrowing — public or private — to generate $1 of GDP growth. By the mid-1990s, it was $2.50 or $3 of borrowing for a $1 of GDP growth. By 2007, before the big collapse and meltdown finally came, $7 of public and private debt was added to the national balance sheet in order to get $1 of GDP growth.
“When you get to the point of $7 of borrowing to get $1 of income, you’re obviously on an unsustainable path and pretty close to hitting the wall, which more or less we have,” he said.
Phi Beta Iota: Drawing down the military-industrial complex will immediately produce two highly undesireable masses of unrest: pissed off unemployed veterans who own a gun and know how to use it; and pissed off pasty-faced short fat bald white guys with no marketable skills who either own a gun or know where to buy one. We agree that the military budget needs to be cut by $200 billion or more–however, it must be done strategically, with clear-cut plan for both assuring every veteran of a job, with priority to amputees, and for redirecting our energies into homeland development before we spent another dollar on foreign development. We’ve blown it for nearly three-quarters of a century. This is now about strategic design–do it, or lose what’s left of the Republic.