Tag Archives: spending

Expanding our Defense Budget

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President Donald Trump (R) says he’ll propose a $1.5 trillion defense budget for 2027, a 50% increase over this year’s proposed (because it’s only passed the House, with no guarantee that an obstructionist Progressive-Democratic Party will allow it to be passed in the Senate) $1 trillion budget. Of course, there’s no guarantee that the larger budget proposal will ever be passed, either, which adds to the premium on Republicans and Conservatives winning the 2026 mid-terms for the reasons below.

The subheadline set the framework.

A $1.5 trillion military will cost much less than a war with China.

This is a war that, presently, we would lose and lose in the most humiliating fashion.

But, but—

[H]asn’t the US military shown, in Iran and Venezuela, that it is unmatched? Yes, and brilliantly so, against small powers when we can dominate space and the skies, and use our experience in combined arms operations. Going up against China, or a multiple front conflict, is far less certain.

Actually, in a fight with the PRC or a multi-front war, the outcome is pretty certain, just not favorably so. The Ukrainian military’s last attempted offensive against our near-peer Russia was an abject failure. That offensive was conducted in accordance with NATO—which is to say American—combined arms doctrine (which worked so brilliantly in Venezuela), but without a Critical Item component of that doctrine: air power and support. Absent that, even with the technologically superior ground weapons Ukraine employed against the Russian forces, Ukraine’s offensive was stopped in its tracks with very heavy loss of those superior armored vehicles.

When the People’s Republic of China invades the Republic of China, American air power will be stripped away from any putative support we might have in mind for the RoC as our Pacific aircraft carriers are sunk and our surviving naval forces are driven all the way back to Hawaii.

Nor would the PRC would have no incentive to stop there, because

new technologies are proliferating in ways that threaten the US homeland. These include hypersonic missiles, space and cyber weapons, drones, and as ever nuclear weapons. All of this is before AI is weaponized in multiple ways.

Unlike 1940s Japan, the PRC has both the stated goal of dominating us in every important way and the wherewithal to follow up its naval victory in the Western Pacific.

The US remains helpless against cyber attacks as demonstrated by the repeated hacks against a variety of data storage sites and infrastructure distribution nodes. The PRC has a first strike capability with its hypersonic, nuclear-capable missiles, which have intercontinental reach. As part of its invasion of the RoC, the PRC has strong incentive to isolate us from the island and wage its cyberwar against us and then to exercise its first strike capability. With the latter, there will be no possibility of a nuclear threat, much less response, from the United States.

We would be left with the PRC dominating our foreign policy and, especially with its control of the Pacific sea lanes of communication and of commerce, dominating our domestic economy. With those controls, the PRC will control us.

That budget must be passed without delay, and DoD’s reform of contract-letting, of weapons development, and of procurement and production must proceed ruthlessly and with similar pace.

Right Idea, Wrong Plan

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Alexandra de Hoop Scheffer, German Marshall Fund of the US President, says three things must occur in order to redress Europe’s defense situation, a situation which I believe currently threatens its ability to survive a war as a collection of sovereign, independent nations. Some of these steps apply to us, and we are also, I believe, in the same war-losing peril of our own sovereignty and independence.

First, Europe must rearm, and fast.

Indeed. But even today, I see little stomach for that in too many of the continent’s nations critical to the continent’s survival against a Russian attack. Both France and Germany are in financial crisis and are showing no political will to correct that. The UK is even worse off; its political management doesn’t even seem aware of the depth of its failure. Until they do gain the awareness and the will to act—and then act—they’ll be unable to be serious about rearming, much less hardening their digital and material (water, fuel, and heating distribution) infrastructure against cyber attacks. Only those nations still fresh from the Russian boots on their necks—Poland, the Baltics, Slovakia, Hungary, Romania, and Moldova—remember what that life was like. Poland and the Baltics are serious about rearming, but they’re smaller even than Ukraine compared to the barbarian’s hordes and equipage. And they have a knife poised at their back in the form of Hungary, which is busily toadying up to Russia in its own effort to mitigate the consequences of being conquered again. Rearming is necessary, but it doesn’t seem promising, much less occurring any time soon.

Second, defense innovation must become a shared transatlantic mission. Neither side of the Atlantic can out-innovate geopolitical rivals alone.

De Hoop Scheffer fleshed this one out a bit; however, she’s mistaken in her proposed execution.

The US leads in emerging technologies, but Europe brings industrial capacity and advanced manufacturing. Joint work on protecting critical infrastructure, countering hybrid threats, and developing secure telecommunications and next-generation defense technologies must continue regardless of political noise.

Yes, and no. The US certainly can out-innovate our enemies alone. That’s how we ran the Union of Soviet Socialist Republics out of existence. We can—and we must—do so again, for all that we’re facing an aggressive Russia and an innovative People’s Republic of China. Our economic players’ freedom to innovate as they see fit gives them, and us as a nation, much more flexibility, and the ability to profit from their innovations, gives them much more incentive to innovate and to run the risks necessary for innovation than can any centrally planned process.

We need, though, to do our own manufacturing. Europe can never be an arsenal of democracy, especially with respect to modern weapons and cyber and space threats. Additionally, the industrial powerhouse of Europe, Germany, is not that anymore. Their industrial capacity is shrinking, and it’s becoming ever more expensive and unreliable as the German government insists on unreliable and expensive “renewable” energy sources while disdaining cheap, reliable oil, natural gas, coal, and nuclear energy sources.

Aside from that, we’re too likely to have to fight two or three wars simultaneously; we need our own manufacturing capacity to meet those equipment expenditure needs.

That doesn’t mean we should not share innovations with our friends and allies; of course, we should and they should with us. Accumulating best practices speeds innovation. We just need to guard against becoming dependent on others. Our dependence on the PRC for far too many items critical to our economy, our health, and our defense capability demonstrates the destructive folly of that. Friends and allies may be less likely to cut us off at critical moments, but that’s a non-zero proposition. See, for instance, an earlier France kicking our military out of that nation. See the German bureaucracy getting in the way of serious training exercises, including joint exercises.

Nor does that mean we shouldn’t buy European manufactures, also. We just can’t be dependent on them. Aside from the continent’s incapacity, two world wars showed vulnerability of US weapons flowing to Europe. That threat applies to the flow of manufactures from Europe to us in the event of another shooting war.

Third, Washington and European capitals must accept that their alignment is no longer automatic.

This is especially true given that fully a third of the European NATO members continue to welch on their financial and equipment obligations to NATO (and in so doing betray the other members of NATO) and continue to freeload off American money and our promise of American blood in defense of NATO Europe, legitimate members and scofflaws alike.

They need to build flexible coalitions outside the usual trans-Atlantic circle based on shared benefits, not only historical ties.

This is especially true for us. We need to stand up a new mutual defense arrangement that incudes the nations of the Three Seas Initiative, us, and the UK; although the latter’s inclusion should depend on its getting its fiscal house in order and then plussing up its defense establishment to something firmer than a secondary school football team. Absent both of those, the UK would be a net drain and so should not be considered.

Right Idea, Bad Plan

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Progressive-Democrat New York City Mayor-elect Zohran Mamdani wants to send $6 billion of city taxpayer money to a fancy, glittering new infrastructure of child care centers that he wants to build so mothers of small children—6 weeks old to 5 years old—can get back to work. (As if mothering children isn’t work in its own right, but that’s beyond the scope of this article). Erica Komisar, a psychoanalyst, wants that money sent, instead, directly to the parents for their use in raising their children their way.

That’s the right idea, but it’s a decidedly suboptimal plan.

Instead, reduce the city’s taxpayer bill by those $6 billion. Let all of the city’s taxpayers hang onto their money, instead of giving it up to the city’s government for spending on the favorite programs of whomever happens to be sitting in Gracie Mansion. Those parents of toddlers will benefit at least as much, from the increased city economic activity that tax reduction would generate, activity that would include increasing job availability; increasing wages; increasing availability of child care and babysitters at prices those parents actually could afford; increasing availability of employer-provided child care, not from government mandate but from it being a good business practice.

That economic flow-through won’t quickly develop; there’s a lot of economic destruction from prior city administrations’ Big Government impositions that needs to be corrected. That, though, simply puts a premium on getting a $6 billion reduction in city taxes enacted.

I Have a Question

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President Donald Trump (R) wants to set up financial accounts for children, initially funded with $1,000 of government money—taxpayer money redistributed. Wall Street wants in on the action. This bit is what raises my question:

Participating financial firms likely would earn lower management fees than their typical rates, but the program would be a potential gateway to acquire millions of new customers the companies hope will stay with them into adulthood and grow their accounts over time.

And this:

One priority for the government is to offer low-fee investment options.

Who will pay those fees? Would they be one-time set up fees, or would they be ongoing account maintenance fees? If the latter, and if they’re paid by the account holder, which is the usual case, even low fees would sap the accounts over time just as thoroughly as even low management fees on mutual funds do.

On the other hand, there’s this:

The Treasury Department is considering choosing an exchange-traded fund or working with firms to potentially create a market-tracking fund with no fees, one of the people familiar with the matter said.

That’s the firms betting on the account holders becoming future broader account holders/investors with those firms, and that would be a good bet.

No-fee (as most brokerages do for DIY investors) or (very) low fee, these accounts would seem like a good idea—give children a leg up on investing and thereby give them a long-term level of game skin for their betterment and their better judgment and interest in our economy.

Except.

How strong would that skin be if handed to the children (even if managed with the assistance of, or by, their parents)? Possibly, the benefits would outweigh that risks, given the size of the proposed seed money.

The far greater danger, though, is the Progressive-Democratic Party, with its penchant for Know Better Government intrusions, returning to power. At that point, the accounts will become permanently and annually government funded in ever increasing amounts—so long as the accounts invest in Party-approved vehicles. See, for instance, Party’s demand for continued (and increasing) subsidies for their unaffordable Affordable Care Act policies.

Some Thoughts on Tariffs

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The Wall Street Journal‘s editors have twisted their panties on tariffs, again, this time showing their lack of understanding of tariff rebates to us low- and middle-income American citizens (in addition to their lack of understanding of tariffs as foreign policy tools. That President Donald Trump (R) has muddled that use is not an excuse for the editors’ failure).

Begin with a couple of things the editors have elided.

President Donald Trump (R) early on said tariffs would let him reduce income taxes—something the editors completed ignored in their present missive. Trump wants to give a $2,000 tariff rebate to us American citizens. While this isn’t a direct reduction of our income taxes, it certainly offsets that much of each of our income tax bills. As a first step in reducing income taxes, it’s not bad.

Then there’s this:

In arguing [before the Supreme Court] that tariffs aren’t really taxes and are mainly a tool of foreign policy, Mr Sauer said “these tariffs, these policies, it is clear that these policies are most effective if nobody ever pays the tariff. If it never raises a dime of revenue, these are the most effective use of these—of this particular policy.”

Sauer went on to say that these foreign policy tariffs do, in fact, generate revenue, but that’s deeply secondary to their purpose, which is to persuade the tariffed nation to change its ways. The editors acknowledged that in an earlier editorial, though only by deeply burying it near the end of that piece. This time, the editors completed elided it.

Then there’s this bit of illogic, even as the editors deride the Trump administration’s logic.

If tariffs are most effective if no one ever pays them [as Sauer also argued], then how are they going to raise the revenue Mr Trump needs to pay those rebates?

Here the editors are exposing the fantasy of their world. “No one” ever pays tariffs because they work perfectly, nations are persuaded, and Hallelujah. No. The world isn’t an ideal place, no foreign policy measure ever works perfectly, friction occurs, and nations adapt according to their own imperatives. Foreign policy tariffs will still raise revenue, even as they do move nations to change, if not completely so, in desired directions.

Finally, this bit of editorial foolishness.

This is a teaching moment for a high school logic class. Start with the contradiction that Mr Trump can both pay a tariff rebate and pay down the national debt. The annual federal budget deficit is roughly $1.8 trillion even with tariff revenue, so paying a rebate would add to the national debt, not reduce it.

Start with the derision of Trump both paying a tariff rebate and paying down the national debt. Of course, both can be done. The rebate won’t, of necessity, absorb all of the current tariff revenue raised, and there’s no reason to expect it to do so in the future. Tariff revenue easily can be committed to, and split between, both goals.

And this: paying a rebate would add to the debt? The editors announce this as received wisdom, declining to provide any facts or logic to support their announcement. That’s because they cannot. The debt arises from spending more of individual and business taxpayer money than the government receives in individual and business taxpayer money. Tariff money is outside of that path. Even if foreign policy tariff revenue were taxes, their expenditure is outside the citizen and business tax revenues the government receives, and spending that revenue adds nothing to our national debt, even if all of the foreign policy tariff revenue were committed to rebates.

And this, straight from the horse’s mouth (which postdates the editors’ missive):

All money left over from the $2000 payments made to low and middle income USA Citizens, from the massive Tariff Income pouring into our Country from foreign countries, which will be substantial, will be used to SUBSTANTIALLY PAY DOWN NATIONAL DEBT. Thank you for your attention to this matter! President DJT