With Budget Deal, the G.O.P. Tosses Out the Economics Textbooks

the Pentagon, which has spent years complaining about spending restraints that were introduced in 2011, will get an eighty-billion-dollar increase in its budget for this year, and an extra eighty-five billion dollars for next year.

.. All told, the deal authorizes about three hundred billion dollars in new spending over the next two years.

.. Gross domestic product .. is currently about twenty trillion dollars

.. the G.O.P. tax bill will reduce tax payments by about a hundred and thirty-five billion dollars in the 2018 fiscal year, and by two hundred and eighty billion dollars in the 2019 fiscal year.

.. If you add it to the additional spending in the budget deal, you’ve got a pretty big “Trump stimulus.”

.. the over-all effect of the tax bill and the spending deal would be about 1.25 per cent of G.D.P. for this calendar year, and two per cent for the next.

.. the Obama stimulus of 2009 through 2011 .. totalled about two per cent of G.D.P. each year

.. Many economics textbooks say this is the sort of environment in which the government should be balancing its books, and perhaps even paying down deb

.. in 2011 prompted members of the Party to refuse to raise the debt ceiling, is purely cynical.

.. The Reagan Administration and the George W. Bush Administration both raided the public purse to finance big tax cuts, and left the deficit much higher than they found it. The Trump Administration is merely following suit.

.. “As long as there is still slack in corners of the labor market, then this kind of fiscal stimulus of the economy near full employment is a kind of test I support.”

Exclusive: Massive Pentagon agency lost track of hundreds of millions of dollars

A damning outside review finds that the Defense Logistics Agency has lost track of where it spent the money.

Ernst & Young found that the Defense Logistics Agency failed to properly document more than $800 million in construction projects, just one of a series of examples where it lacks a paper trail for millions of dollars in property and equipment. Across the board, its financial management is so weak that its leaders and oversight bodies have no reliable way to track the huge sums it’s responsible for, the firm warned in its initial audit of the massive Pentagon purchasing agent.

.. The department has never undergone a full audit despite a congressional mandate — and to some lawmakers, the messy state of the Defense Logistics Agency’s books indicates one may never even be possible.

.. The $40 billion-a-year logistics agency is a test case in how unachievable that task may be.

.. The DLA serves as the Walmart of the military, with 25,000 employees who process roughly 100,000 orders a day on behalf of the Army, Navy, Air Force, Marine Corps and a host of other federal agencies — for everything from poultry to pharmaceuticals, precious metals and aircraft parts.

.. In one part of the audit, completed in mid-December, Ernst & Young found that misstatements in the agency’s books totaled at least $465 million for construction projects it financed for the Army Corps of Engineers and other agencies. For construction projects designated as still “in progress,” meanwhile, it didn’t have sufficient documentation — or any documentation at all — for another $384 million worth of spending.

.. It also warned that the agency cannot reconcile balances from its general ledger with the Treasury Department.

.. the agency also maintained it was not surprised by the conclusions.

.. the Trump administration insists it can accomplish what previous ones could not.

.. That Pentagon-wide effort, which will require an army of about 1,200 auditors across the department, will also be expensive — to the tune of nearly $1 billion.

.. an additional $551 million to go back and fix broken accounting systems that are crucial to better financial management.

.. The accounting firm itself went further, asserting that the gaping holes uncovered in bookkeeping procedures and oversight strongly suggest there are more.

.. has repeatedly charged that “keeping track of the people’s money may not be in the Pentagon’s DNA.”

.. “I think the odds of a successful DoD audit down the road are zero,” Grassley said in an interview. “The feeder systems can’t provide data. They are doomed to failure before they ever get started.”

Making China Great Again

As Donald Trump surrenders America’s global commitments, Xi Jinping is learning to pick up the pieces.

The hero, Leng Feng, played by the action star Wu Jing (who also directed the film), is a veteran of the “wolf warriors,” special forces of the People’s Liberation Army. In retirement, he works as a guard in a fictional African country, on the frontier of China’s ventures abroad. A rebel army, backed by Western mercenaries, attempts to seize power, and the country is engulfed in civil war. Leng shepherds civilians to the gates of the Chinese Embassy, where the Ambassador wades into the battle and declares, “Stand down! We are Chinese! China and Africa are friends.” The rebels hold their fire, and survivors are spirited to safety aboard a Chinese battleship.

.. For decades, Chinese nationalism revolved around victimhood: the bitter legacy of invasion and imperialism, and the memory of a China so weak that, at the end of the nineteenth century, the philosopher Liang Qichao called his country “the sick man of Asia.” “Wolf Warrior II” captures a new, muscular iteration of China’s self-narrative, much as Rambo’s heroics expressed the swagger of the Reagan era.

.. “In the past, all of our movies were about, say, the Opium Wars—how other countries waged war against China,” he said. “But Chinese people have always wanted to see that our country could, one day, have the power to protect its own people and contribute to peace in the world.”

.. For years, China’s leaders predicted that a time would come—perhaps midway through this century—when it could project its own values abroad. In the age of “America First,” that time has come far sooner than expected.

.. Trump often portrays America’s urgent task as one of survival. As he put it during the campaign, “At what point do you say, ‘Hey, we have to take care of ourselves’? So, you know, I know the outer world exists and I’ll be very cognizant of that, but, at the same time, our country is disintegrating.”
.. China’s approach is more ambitious. In recent years, it has taken steps to accrue national power on a scale that no country has attempted since the Cold War, by increasing its investments in the types of assets that established American authority in the previous century: foreign aid, overseas security, foreign influence, and the most advanced new technologies, such as artificial intelligence.
.. It has become one of the leading contributors to the U.N.’s budget and to its peacekeeping force, and it has joined talks to address global problems such as terrorism, piracy, and nuclear proliferation.
.. This was an ironic performance—for decades, China has relied on protectionism—but Trump provided an irresistible opening. China is negotiating with at least sixteen countries to form the Regional Comprehensive Economic Partnership, a free-trade zone that excludes the United States, which it proposed in 2012 as a response to the T.P.P. If the deal is signed next year, as projected, it will create the world’s largest trade bloc, by population.
.. By setting more of the world’s rules, China hopes to “break the Western moral advantage,” which identifies “good and bad” political systems
.. Meng Hongwei, a Chinese vice-minister of public security, became the first Chinese president of Interpol, the international police organization; the move alarmed human-rights groups, because Interpol has been criticized for helping authoritarian governments target and harass dissidents and pro-democracy activists abroad.

.. Moreover, China’s economic path is complicated by heavy debts, bloated state-owned enterprises, rising inequality, and slowing growth. The workers who once powered China’s boom are graying.

.. In 2000, the U.S. accounted for thirty-one per cent of the global economy, and China accounted for four per cent. Today, the U.S.’s share is twenty-four per cent and China’s fifteen per cent.

.. in the past we were used to going to the White House to get our work done,” Shivshankar Menon, India’s former foreign secretary and national-security adviser to the Prime Minister, told me. “Now we go to the corporations, to Congress, to the Pentagon, wherever.”

.. everybody else in the world will look around and say, I want to be friends with both the U.S. and the Chinese—and the Chinese are ready, and I’ll start with them.”

.. He presented China as “a new option for other countries,” calling this alternative to Western democracy the zhongguo fang’an, the “Chinese solution.”

.. The state press ran a profile of Xi that was effusive even by the standards of the form, depicting him as an “unrivalled helmsman,” whose “extensive knowledge of literature and the arts makes him a consummate communicator in the international arena.”

.. Xi has inscribed on his country a rigid vision of modernity. A campaign to clean up “low-end population” has evicted migrant workers from Beijing, and a campaign against dissent has evicted the most outspoken intellectuals from online debate.

.. Foreign universities with programs in China, such as Duke, have been advised that they must elevate a Communist Party secretary to a decision-making role on their local boards of trustees.

.. The Party is encouraging dark imaginings about the outside world: posters warn the public to “protect national secrets” and to watch out for “spies.”

.. Last June, Yao Chen, one of China’s most popular actresses, received a barrage of criticism online after she tried to raise awareness of the global refugee crisis. (She was forced to clarify that she was not calling for China to accept refugees.)

.. In Rao’s view, Trump’s “America First” slogan is an honest declaration, a realist vision stripped of false altruism and piety.

.. “In this world, power speaks,” he said, making a fist, a gesture that Trump adopted in his Inauguration speech and Xi displayed in a photo taken at the start of his new term.

.. “I think Trump is America’s Gorbachev.” In China, Mikhail Gorbachev is known as the leader who led an empire to collapse. “The United States will suffer,” he warned.

.. In 1991, when Bush, Sr., launched the war against Iraq, it got thirty-four countries to join the war effort. This time, if Trump launched a war against anyone, I doubt he would get support from even five countries.

.. For Chinese leaders, Yan said, “Trump is the biggest strategic opportunity.” I asked Yan how long he thought the opportunity would last. “As long as Trump stays in power,” he replied.

.. When Trump won, the Party “was in a kind of shock,”

.. “They feared that he was their mortal enemy.” The leadership drafted potential strategies for retaliation, including threatening American companies in China and withholding investment from the districts of influential members of Congress.

.. Before he entered the White House, China started assembling a playbook for dealing with him.

.. “China knows Trump can be unpredictable, so we have weapons to make him predictable, to contain him. He would trade Taiwan for jobs.”

.. there were two competing strategies on China. One, promoted by Stephen Bannon, then the chief strategist, wanted the President to take a hard line, even at the risk of a trade war. Bannon often described China as a “civilizational challenge.” The other view was associated with Jared Kushner, Trump’s son-in-law and adviser, who had received guidance from Henry Kissinger and met repeatedly with the Chinese Ambassador, Cui Tiankai. Kushner argued for a close, collegial bond between Xi and Trump, and he prevailed.

.. While Xi was at the resort, the Chinese government approved three trademark applications from Ivanka’s company, clearing the way for her to sell jewelry, handbags, and spa services in China.

.. During the transition, Kushner dined with Chinese business executives while the Kushner Companies was seeking their investment in a Manhattan property.

.. In May, Kushner’s sister, Nicole Kushner Meyer, was found to have mentioned his White House position while she courted investors during a trip to China.

.. During the Mar-a-Lago meetings, Chinese officials noticed that, on some of China’s most sensitive issues, Trump did not know enough to push back.

.. “Trump is taking what Xi Jinping says at face value—on Tibet, Taiwan, North Korea,”

.. “The Chinese felt like they had Trump’s number,” he said. “Yes, there is this random, unpredictable Ouija-board quality to him that worries them, and they have to brace for some problems, but, fundamentally, what they said was ‘He’s a paper tiger.’ Because he hasn’t delivered on any of his threats. There’s no wall on Mexico. There’s no repeal of health care. He can’t get the Congress to back him up. He’s under investigation.”

.. a Beijing think tank, published an analysis of the Trump Administration, describing it as a den of warring “cliques,” the most influential of which was the “Trump family clan.”

.. The Trump clan appears to “directly influence final decisions” on business and diplomacy in a way that “has rarely been seen in the political history of the United States,” the analyst wrote. He summed it up using an obscure phrase from feudal China: jiatianxia—“to treat the state as your possession.”

Nearly Half the Pentagon Budget Goes To Contractors

In fiscal year 2016, the Pentagon issued $304 billion in contract awards to corporations—nearly half of the department’s $600 billion-plus budget for that year.

the biggest beneficiaries by a country mile were

  1. Lockheed Martin ($36.2 billion),
  2. Boeing ($24.3 billion),
  3. Raytheon ($12.8 billion),
  4. General Dynamics ($12.7 billion), and
  5. Northrop Grumman ($10.7 billion).

Together, these five firms gobbled up nearly $100 billion of your tax dollars, about one-third of all the Pentagon’s contract awards in 2016.

Health care companies like

  1. Humana ($3.6 billion),
  2. UnitedHealth Group ($2.9 billion), and
  3. Health Net ($2.6 billion) cash in as well,

and they’re joined by, among others, pharmaceutical companies like

  • McKesson ($2.7 billion) and

universities deeply involved in military-industrial complex research like

  • MIT ($1 billion) and
  • Johns Hopkins ($902 million).

.. The heads of the top five Pentagon contractors—Lockheed Martin, Boeing, Raytheon, General Dynamics, and Northrop Grumman—made a cumulative $96 million last year.

These are companies that are significantly or, in the cases of Lockheed Martin and Northrop Grumman, almost entirely dependent on government dollars.

.. Donald Trump initially spent a fair amount of tweeting energy bragging about how he was going to bring such contractors to heel on their pricing practices for weapons systems. In fact, he’s already turned out to be good news indeed for major contractors, most of whom have seen sharp upturns in revenues and profits

.. Trump has proven eager to lift restrictions on U.S. weapons sales abroad (and enlist State Department and Pentagon officials to spend more of their time shilling such weaponry).

.. The arms industry’s investment in lobbying is even more impressive. The defense sector has spent a total of more than $1 billion on that productive activity since 2009, employing anywhere from 700 to 1,000 lobbyists in any given year.

.. you’re talking about significantly more than one lobbyist per member of Congress, the majority of whom zipped through Washington’s famed “revolving door”; they moved, that is, from positions in Congress or the Pentagon to posts at weapons companies from which they could proselytize their former colleagues.

.. Two analysts from U.S. war colleges have estimated that about 300 deliverable nuclear warheads would be enough to dissuade any nation from attacking the United States with a nuclear weapon.

.. And note that the current trillion-dollar “modernization” program for the nuclear arsenal was initiated under President Barack Obama, a man who won the Nobel Prize for his urge to abolish all such weaponry.

.. In 2011, a study by economists from the University of Massachusetts made this blindingly clear.  What they showed was that military spending is the worst way to create jobs. Putting the same money into any other area—from infrastructure to transportation to alternative energy to healthcare or education—creates up to twice as many jobs as military spending does.

.. Contractors aid and abet the process of investing in the Pentagon by routinely exaggerating the number of jobs their programs create.

.. the best jobs generated by Pentagon spending are the ones for well-heeled lobbyists and overpaid corporate executives.

.. So the next time someone suggests that the Pentagon needs yet more money for the troops, just remember that what they’re actually talking about are troops of overpaid defense contractors, not members of the armed forces.

Pentagon buries evidence of $125 billion in bureaucratic waste

Pentagon leaders had requested the study to help make their enormous back-office bureaucracy more efficient and reinvest any savings in combat power. But after the project documented far more wasteful spending than expected, senior defense officials moved swiftly to kill it by discrediting and suppressing the results.

The report, issued in January 2015, identified “a clear path” for the Defense Department to save $125 billion over five years. The plan would not have required layoffs of civil servants or reductions in military personnel. Instead, it would have streamlined the bureaucracy through attrition and early retirements, curtailed high-priced contractors and made better use of information technology.

.. their report revealed for the first time that the Pentagon was spending almost a quarter of its $580 billion budget on overhead and core business operations such as accounting, human resources, logistics and property management.

.. The data showed that the Defense Department was paying a staggering number of people — 1,014,000 contractors, civilians and uniformed personnel — to fill back-office jobs far from the front lines. That workforce supports 1.3 million troops on active duty

.. The cost-cutting study could find a receptive audience with President-elect Donald Trump. He has promised a major military buildup and said he would pay for it by “eliminating government waste and budget gimmicks.”

.. Among other options, the savings could have paid a large portion of the bill to rebuild the nation’s aging nuclear arsenal, or the operating expenses for 50 Army brigades.

.. But some Pentagon leaders said they fretted that by spotlighting so much waste, the study would undermine their repeated public assertions that years of budget austerity had left the armed forces starved of funds. Instead of providing more money, they said, they worried Congress and the White House might decide to cut deeper.

.. After the board finished its analysis, however, Work changed his position. In an interview with The Post, he did not dispute the board’s findings about the size or scope of the bureaucracy. But he dismissed the $125 billion savings proposal as “unrealistic”

.. Work said the board fundamentally misunderstood how difficult it is to eliminate federal civil service jobs — members of Congress, he added, love having them in their districts — or to renegotiate defense contracts.

.. Some Defense Business Board members warned that exposing the extent of the problem could have unforeseen consequences.

“You are about to turn on the light in a very dark room,” Kenneth Klepper, the former chief executive of Medco Health Solutions, told Work in the summer of 2014, according to two people familiar with the exchange. “All the crap is going to float to the surface and stink the place up.”

.. “Elements of the culture are masterful at ‘waiting out studies and sponsors,’ with a ‘this too shall pass’ mindset.”

.. he revealed that early findings had determined the average administrative job at the Pentagon was costing taxpayers more than $200,000, including salary and benefits.

..

Former defense secretaries William S. Cohen, Robert M. Gates and Chuck Hagel had launched similar efficiency drives in 1997, 2010 and 2013, respectively. But each of the leaders left the Pentagon before their revisions could take root.

.. “Because we turn over our secretaries and deputy secretaries so often, the bureaucracy just waits things out,” said Dov Zakheim, who served as Pentagon comptroller under President George W. Bush. “You can’t do it at the tail end of an administration. It’s not going to work. Either you leave the starting block with a very clear program, or you’re not going to get it done.”

.. It then broke down how the Defense Department was spending $134 billion a year on business operations — about 50 percent more than McKinsey had guessed at the outset.

.. Almost half of the Pentagon’s back-office personnel — 457,000 full-time employees — were assigned to logistics or supply-chain jobs. That alone exceeded the size of United Parcel Service’s global workforce.

.. Work explained he was worried Congress might see it as an invitation to strip $125 billion from the defense budget and spend it somewhere else.

.. uniformed military leaders were receptive at first. They had long groused that the Pentagon wasted money on a layer of defense bureaucracies — known as the Fourth Estate — that were outside the control of the Army, Air Force and Navy. Military officials often felt those agencies performed duplicative services and oversight.

.. McKinsey consultants had also collected data that exposed how the military services themselves were spending princely sums to hire hordes of defense contractors.

.. The average cost to the Army for each contractor that year: $189,188, including salary, benefits and other expenses

.. On Feb. 6, 2015, board members briefed Frank Kendall III, the Pentagon’s chief weapons-buyer. Kendall’s operations were a major target of the study

.. he went to Work and warned that the findings could “be used as a weapon” against the Pentagon.

.. Worse, the board was unable to secure an audience with Carter, the new defense secretary.

.. Work and other senior officials had already “concluded that the report, while well-intentioned, had limited value.”

.. called the board’s recommendations too ambitious and aggressive. “They, perhaps, underestimated the degree of difficulty we have in doing something that in the commercial sector would seem to be very easy to do.”

.. “If we had a longer timeline, yes, it would be a reasonable approach,” he said. “You might get there eventually.”

.. On June 2, 2015, Navy Secretary Ray Mabus delivered a speech at the American Enterprise Institute, a conservative think tank. He complained that 20 percent of the defense budget went to the Fourth Estate

.. He singled out the Defense Finance and Accounting Service and the Defense Logistics Agency, which together employ about 40,000 people, as egregious examples.

Pentagon rips Benghazi Committee over ‘speculation’

A Defense Department official says the House panel’s repeated demands for information is straining resources.

“[W]hile I understand your stated intent is to conduct the most comprehensive review of the attack and response, Congress has as much of an obligation as the executive branch to use federal resources and taxpayer dollars effectively and efficiently,” the letter reads. “The Department has spent millions of dollars on Benghazi-specific Congressional compliance, including reviews by four other committees, which have diligently reviewed the military’s response in particular.”

Hedger also complained that Defense Department interviewees “have been asked repeatedly to speculate or engage in discussing on the record hypotheticals.”

“This type of questioning poses the risk that your final report may be based on speculation rather than a fact-based analysis of what a military officer did do or could have done given his or her knowledge at the time of the attacks,” he wrote.

Panel Republicans waved off the letter, saying it is “further proof the Benghazi Committee is conducting a thorough, fact-centered investigation.”

Where did ISIS come from? The story starts here.

Although Bremer was a former ambassador, he spoke no Arabic, had no experience with postwar reconstruction or with running a large organization, had never served in the military or the Arab world, and had never even visited Iraq. Those shortcomings did not hinder his candidacy. Perversely, as I would learn from Bremer, they enhanced it.

.. It’s been more than five years since US combat troops left Iraq. It took about that long after Vietnam for the nation to begin wrestling honestly with the forces that had led us into that mistaken war. It’s time we start doing the same with Iraq. And the case of L. Paul Bremer — at once well intentioned, infuriating, and tragic — is the ideal place to anchor this kind of reexamination.

.. Why had Bremer’s lack of expertise in the Middle East made him more attractive to the neoconservatives in the Bush administration?

Wolfowitz, a former academic dean, believed too many of the “Arabist” regional specialists in the State Department had concluded that democracy wasn’t possible in the Middle East. Bremer says Wolfowitz had wanted to make sure he hadn’t been “infected” by that kind of defeatist thinking.

.. Cheney owed his remarkable rise almost entirely to one man, Donald Rumsfeld. He had tapped Cheney to be his replacement when Rumsfeld departed the position to become Ford’s secretary of defense.

.. The shock was over a superpower’s impotence to stop the ransacking of a nation by desperate civilians and brazen thugs.

.. it’s clear the war could also serve as a demonstration project for their own animating philosophies.

For Cheney, it was the importance of untrammeled executive authority.

.. For Rumsfeld, Iraq would give him the chance to make the Pentagon’s generals, whom he saw as trapped in outdated Cold War thinking, see the wisdom of his plan to modernize the military with a smaller, faster, more technologically advanced fighting force.

.. For Wolfowitz, it was the belief that only a bold, military-initiated experiment in democracy could free the Middle East from its decades-long paralysis of despotism and anti-Semitism. Toppling Saddam, the brutal dictator who had gassed his own people, would allow a new democratic Iraq to emerge, one that would be gratefully pro-American, would dutifully make peace with Israel, and would promptly unleash the spread of democracy across the Middle East.

.. During World War II, planning for postwar Germany had begun more than two years before the end of fighting. For the Iraq War, the administration launched General Garner’s postwar planning operation slightly more than two months before the end of combat. For Bremer, the time between his appointment to replace Garner and his arrival in Baghdad had been just two weeks.

“The Soviet occupation of Afghanistan gave us the Taliban. The American occupation of Saudi Arabia gave us bin Laden and Al Qaeda. The Israeli occupation of Lebanon gave us Hezbollah. Let us see what the American occupation of Iraq is going to give us.”

The suspense is over. We now know that the American occupation of Iraq gave us ISIS.

.. AbuKhalil, a professor of political science at California State University, Stanislaus, argues all occupations are fated to fail in the modern era. But he suggests the tipping point for this one came with the selection of Bremer. “They chose the best man to do the worst job,” he says. “They chose a very arrogant person with a very colonial attitude.”

.. After a couple of days of the too-small contingent of US troops in Baghdad idly watching as Iraqi marauders ransacked every ministry building and museum, destroying priceless Mesopotamian artifacts up to 7,000 years old, Donald Rumsfeld held a news conference. He jokily dismissed criticisms about the Pentagon’s planning failures as “henny penny” overreactions and concluded, “Stuff happens.” To proud Iraqis looking for clues about whether the American leaders respected their cradle-of-civilization past and were invested in their future, Rumsfeld’s snickering spoke volumes.

.. While most critics fault Bremer for his orders de-Baathifying the government and disbanding the army, the Pentagon’s war architects blame him for handing over sovereignty near the end of his tenure rather than closer to the start.

.. Bremer says that the darling of the neocons, the brilliant but slippery businessman and Iraqi exile Ahmed Chalabi, was clearly not the right man for the job. This wasn’t just because he had provided intelligence on Saddam’s alleged WMD program that turned out to be dead wrong. Chalabi hadn’t lived in Iraq for decades and had no domestic base of support.

.. Although Bremer has come to be regarded as the sole author of this decree to root out Saddam loyalists from the Iraqi government, that is simply not true. Drafts of the order had been circulating around the Pentagon long before Bremer’s appointment.

.. saying Bremer issued that order practically “before he’d met his first Kurd.”

.. In the end, the deBaathification order is believed to have hoovered up 85,000 to 100,000 Iraqis, including thousands of teachers and mid-level technocrats who were summarily shut out of Iraq’s public sector future.

.. This was a dramatic departure from Jay Garner’s plans to keep the bulk of the Iraqi military intact, putting it to work on reconstruction efforts around the country.

.. At one point, he recalls, White House chief of staff Andy Card took him aside and warned him about maneuvering at the Pentagon: “They’re gaming you. They’re trying to blame you for this whole thing.”

.. “We screwed up,” he says. “The biggest screw-up was Bush took too long to fire Rumsfeld and change the strategy.” Only after the post-Rumsfeld surge in troop strength did things begin to improve. But when I ask him if the war was a mistake, he vigorously shakes his head no.