MATTHEWGOODONLINE

As Congress votes on the proposed bailout plan, the Dow Jones has fallen 600 points today, with oil dropping below $100 dollars a barrel. But rather than opine on the domestic causes for the crisis, I want to direct some attention to an article recently written by Chalmers Johnson entitled We Have the Money - If Only We Didn’t Waste It on the Defense Budget that delves into a little discussed aspect of the current crisis…

“There has been much moaning, air-sucking, and outrage about the $700 billion that the U.S. government is thinking of throwing away on rich New York bankers who have been ripping us off for the past few years and then letting greed drive their businesses into a variety of ditches. In fact, we dole out similar amounts of money every year in the form of payoffs to the armed services, the military-industrial complex, and powerful senators and representatives allied with the Pentagon.

On Wednesday, September 24th, right in the middle of the fight over billions of taxpayer dollars slated to bail out Wall Street, the House of Representatives passed a $612 billion defense authorization bill for 2009 without a murmur of public protest or any meaningful press comment at all. (The New York Times gave the matter only three short paragraphs buried in a story about another appropriations measure.)

The defense bill includes $68.6 billion to pursue the wars in Iraq and Afghanistan, which is only a down-payment on the full yearly cost of these wars. (The rest will be raised through future supplementary bills.) It also included a 3.9% pay raise for military personnel, and $5 billion in pork-barrel projects not even requested by the administration or the secretary of defense. It also fully funds the Pentagon’s request for a radar site in the Czech Republic, a hare-brained scheme sure to infuriate the Russians just as much as a Russian missile base in Cuba once infuriated us. The whole bill passed by a vote of 392-39 and will fly through the Senate, where a similar bill has already been approved. And no one will even think to mention it in the same breath with the discussion of bailout funds for dying investment banks and the like.”

This is an aspect of the financial crisis that I am astonished has not been given any attention – that and the foreign debt of the United States. In the recent Presidential debate, John McCain claimed that the United States owes China half a trillion dollars. In truth, the United States owes China a trillion dollars. The US foreign debt is so incredibly severe that one third of it is equal to the entire debt of the Third World. Everyone’s got a credit card though, and everyone’s encouraged to spend rather than save. After 9/11 the best advice that the White House could give the country was to go shopping.

And then the nation went to war, and every year that it has been at war the annual defense budget has increased - and yet defense spending has had almost no impact on the domestic economic mindset. Despite the fact that the nation was spending hundreds of billions of dollars a year, the promotion of the good life remained a steadfast domestic reality.

Despite what is occurring on Wall Street, the military expenditures of the United States remain phenomenally enormous. The US defense budget is, if you can believe it, some $200 billion dollars more than that of the entire European Union, and almost $6 billion dollars more than China’s and Russia’s. By comparison, the Canadian defense budget couldn’t buy toilet paper for troops in Iraq.

From Tom Engelhardt…

“Estimates of the true long-term costs of the President’s war of choice, including payments of health care and veterans benefits into the distant future, soar into the budgetary stratosphere. They range from the Congressional Budget Office’s $1-2 trillion to an estimate by economists Joseph Stiglitz and Linda J. Bilmes of up to $4-5 trillion. So we’re talking somewhere between one-and-a-half and seven bailouts-worth of taxpayer dollars flowing into the morass of disaster, corruption, and carnage in Iraq.”

Of course, none of this excuses the behaviour of those untouchable picaroons that played their role in engineering this current crisis. As the New York Times points out this morning, they’re already looking for ways to capitalize on the disastrous product of their own greed…

“Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it.

Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages.

At the same time, investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees.

Nobody wants to be left out of Treasury’s proposal to buy up bad assets of financial institutions.”

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