The End of Pax Americana: Courtesy of the Military Industrial Complex

By my count, there are at least three variants of  conservative thought here in the US when it comes to foreign policy:

  • The moral majority type of conservative.  These people appear to be more concerned with moral issues and tend to support a war-like foreign policy.  The religious right would be a good example here.
  • The neo-conservative or neo-con.  These guys tend to support foreign policies closely aligned with the interests of the state of Israel and tend to support interventionist foreign policies, particularly in the middle east.  Someone like Richard Pearle fits here.
  • The libertarian.  These people believe that our foreign policies is not only wrong headed but costly in a time when we can’t afford it.  They believe that a radical re-orientation is long overdue and that our policies have gotten us entangled in areas we should not be in and have resulted in more threats to our nation rather than less.  Their position is that we need to extricate ourselves from Iraq, Afghanistan and from the role of the world’s policeman.  Basically, they think we need to retrench, dramatically cut military spending, close the far flung bases we have all over the world and bring the troops home.  Ron Paul fits here.

By way of disclosure, I should say that my own views align very closely with the libertarian view.

I ran across a very interesting article today in The American Conservative entitled Graceful Decline-The end of Pax Americana by Christopher Lane.   I highly recommend that you read it in its entirety, but here’s a excerpted portion below that I wanted to comment on:

But it will be almost impossible to make meaningful cuts in federal spending without deep reductions in defense expenditures.  Discretionary non-defense domestic spending accounts for only about 20 percent of annual federal outlays. So the United States will face obvious “guns or butter” choices.  As Kirshner puts it, the absolute size of U.S. defense expenditures are “more likely to be decisive in the future when the U.S. is under pressure to make real choices about taxes and spending………….As a first step, the U.S. will need to pull back from its current security commitments to NATO, Japan, and South Korea. This is not isolationism….Because that U.S. enjoyed such vast superiority for such a long time, it had the luxury of acting on its delusions without paying too high a price. (That is, if you discount the 58,000 names on the Vietnam Memorial or the tens of thousands of U.S. military personnel who have suffered disfiguring wounds or been killed in Iraq and Afghanistan.) But as my graduate school mentor, Kenneth Waltz, one of the towering figures in the study of international politics, used to tell us about American foreign policy, “When you are big, strong, and powerful, you can afford to make the same dumb mistakes over and over again. But when your power declines, you begin to pay a price for repeating your mistakes.”

The beginning of Pax Americana really began with the US emerging from World War II largely unscathed by the ravages of war while the rest of the industrialized world lay in ruins.  At that time, our nation began an expansionist foreign policy characterized by interventions in various places in the third world via assassinations and sponsoring of coups.  In the post WWII period, there has not been a time where the US has enjoyed a long protracted period of peace.  There have either been interventions, low intensity conflicts or full out wars.   Due to this situation, our nation has been consistently on a war footing for the last 65 years  and the obvious implication of this fact is that both our foreign policy and major portions of our economy are based on war and the pursuit of empire.

This brings me to the fiscal conundrum the nation faces.  When people talk about it, most of the focus is upon the huge unfunded liabilities for the social security and Medicare entitlement programs.  No one raises the question why these are so underfunded to begin  with.   With respect to social security, there are two reasons:

  1. The unfunded liability for these two entitlements is an actuarial determination based on mortality or expected lifespan.  Basically, people are living a lot longer.   When social security was first created under FDR, the average American was dying at age 62.  Folks today are living well into their 80’s which means that one could drawn social security for nearly 20 years or more after retirement.
  2. The money collected for social security wasn’t set aside, but was in fact used for general governmental expenditures.  This basically began as an accounting gimmick with Lyndon Johnson’s administration.  Johnson was pursuing both a guns and butter approach with his policy of expansion of the Vietnam war while expanding social programs at home.  To to mask how much was being spent on the Vietnam war, his administration begin including social security tax collections and payouts in the budget. This had the effect of hiding the real percentage of spending being diverted to the war effort as well as creating larger surpluses.    

Social Security and Medicare taxes are trust taxes, which means the funds were to be held “in trust” for the purpose these taxes are for.  This is why they’re separately earmarked when they’re taken from your paycheck.

Because social security tax collections were greater than payouts, the excess amount either added to surpluses or decreased deficits.   Every administration, both democrat and republican, took full advantage of the budgetary accounting gimmickry precedent set by Johnson, so this means that the reported deficits were much greater and reported surpluses were non existent in some instances.  In effect, the social security surpluses were used to fund other government expenditures and since military spending accounts for anywhere between 30% to 50% of the federal budget, exclusive of entitlement programs, this means that a goodly portion of our retirement money is sitting in the coffers of the military industrial complex.  This is like taking your 401(k) savings and using it now versus leaving it be so the money is available when you retire. 

If social security tax collections had been placed in a lockbox and not spent for general expenditures either tax rates would have been much higher or the government would have been forced to live within its means and cut spending, including military spending.  As it is, the red herring of “too much entitlement spending” is raised as an issue when it really should be “too much military spending”. Again, taxes were specifically earmarked for funding the entitlements, but the funds were raided.

Even with a lockbox in place on social security, we would have still had to address the issue of underfunding due to people living much longer, but because the money was raided, we have to deal with that issue as well as trying to retrieve the money that was diverted. 

I think the fact that this money was taken is borderline criminal and most folks have no clue as to this issue.  By design, the gatekeepers divert folks into getting upset with the money spent on welfare or the new healthcare reform, both of which are small beans in comparison to the money diverted over the years from social security to fund military spending.

Vast portions of our economy are based on war and this has been the driver behind the situation.   The price of allowing the military industrial complex to drive this nation’s foreign policy is going to be immense.  After all, if your business model is based on war, peace is a threat to your economic viability.   Unfortunately, a permanent war footing is not sustainable and we’ve really reached the end of the road here.  The problem is that most don’t realize how we got here, so their protests and anger are totally misdirected and that’s really by design. 



3 Responses to “The End of Pax Americana: Courtesy of the Military Industrial Complex”
  1. “As it is, the red herring of “too much entitlement spending” is raised as an issue when it really should be “too much military spending”. Again, taxes were specifically earmarked for funding the entitlements, but the funds were raided.”

    Excellent article. How many times have we seen pundits play one (entitlements) off against the other (military expenditures).

    Rarely do we see a call to cut military expenditures. What we do see is criticism of the dreadful amount of money going to entitlements, to fill the hole of high public expectations of supposed governmental give-away programs.

    As you know, Dwight Eisenhower sounded the alarm regarding the military industrial complex, but his cry went largely unheeded.

    Ours is a fearful nation. And that fear is justified. We’ve done so much crap around the world in the name of “keeping America safe” that we have to keep our military posture strong, lest we be attacked.

    Teabaggers say that they want to rein in government spending, but they don’t want their Social Security and Medicare touched, or a weakening of our military presence in Afghanistan, and possibly the world.

    These two areas account for most of our federal expenditures, and the size of the U.S. budget.

    For Fiscal Year 2009, 39% of the budget went to Medicare and Social Security. Defense accounted for 23%. That’s a whopping 62% of the budget.

    When you throw in the untouchables (other mandatory expenditures) and “interest” on money we’ve borrowed, that’s another 22%.

    That’s 84% of the budget, leaving discretionary expenditures around 12%, about half of the Defense budget, and a little over a third of “entitlements.”

    So we have Tea Party folks jumping up and down over a mere 4% of the budget that went to Tarp.

    The stimulus wasn’t a trillion dollars, and a large part of it went to tax cuts ($288 billion), and more is slated. Now how could the Tea Partiers oppose tax cuts?

    One of the problems for Social Security and Medicare is this:

    “Mandatory programs are affected by demographic trends. The number of workers continues declining relative to those receiving benefits. For example, the number of workers per retiree was 5.1 in 1960; this declined to 3.3 in 2007 and is projected to decline to 2.1 by 2040.”

  2. Greg L says:


    As I read your comments, the more I think the tea baggers are little more than a funded diversion. To be sure, there are some who may have some legitimate concerns, but mostly they’re a diversion. They really don’t want us talking or thinking about the real problems. They really want us diverted by the latest reality TV show and the tea baggers and these guys running around with the guns are just the latest installment.

    Anyone with a grasp of the basic facts realizes the problem even if we differ on approaches to the solution. There’s just a huge effort being put forward to obscure the facts from the people.

    The thing that is striking to me as I reflect on this is how neatly this integrates even with the nation’s monetary policy. One of the reasons the Fed has had so loose of a monetary policy is related to this very issue IMO. What better way to shrink the massive debt we’ve accumulated other than to pay it off in inflated dollars? But even that game is now up as the rest of the world is clamoring for a new reserve currency as they don’t want our increasingly worthless paper. As long as the dollar could hold onto being the world’s reserve currency, this game could continue with the rest of the world basically financing our hegemony.

    We’ve created a great many enemies as you’ve pointed out and most of us don’t even know who they are. The lie was that we had to do what we did to maintain our freedom, but the truth is that we operated as economic hit men with military backup and many of these interventions advanced narrow economic interests and not that of the people. But the people are the ones who pay.

    IMO, these truths, at least how I see them, are integral to the our fiscal and monetary situation being as it and I believe all stops are being pulled to prevent it from being seen.

  3. Greg L says:


    “For Fiscal Year 2009, 39% of the budget went to Medicare and Social Security. Defense accounted for 23%. That’s a whopping 62% of the budget.”

    I’ve seen studies on this that re-adjust these percentages to reflect how the budget was put together pre-Johnson or before including entitlements in the budget. They used to be treated as “off budget” due to fact that taxes were being specifically collected to fund these.

    If we were to measure military spending on the basis used before Johnson got into his gimmicks, the true expenditure for the military would be something like 50% and perhaps even higher and as you say, cutting it is never discussed.

    The thing I find interesting is the arguments about small government that come from some circles. That’s usually accompanied by the idea that government doesn’t know how to run anything, hence they “shouldn’t be in that business”, yet the same government that can’t run something like health care is suddenly the paragon of efficiency and effectiveness when it comes to the military.

    To be fair, that argument is made to push privatization and with Iraq and Afghanistan, we see that fully flowered. The problem is that when one’s business model is based on war, peace is a threat, so there’s a tendency to push for and create conflicts even when other approaches would be more effective.

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