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Mattea Kramer: Spinning Ourselves Into a Deficit Panic

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You couldn't make this stuff up: thanks to Harold Rogers, chairman of the House Appropriations Committee, and the power of "earmarks," the Army has bought $6.5 million worth of "leakproof" drip pans "to catch transmission fluid on Black Hawk helicopters," reports the New York Times.  Those pans were purchased from a company called Phoenix Products, whose owners, coincidentally, are contributors to the congressman's political committee (and other Republican causes).  Oh, and according to the Times, "the company has paid at least $600,000 since 2005 to a Washington lobbying firm, Martin Fisher Thompson & Associates, to represent its interests on federal contracting issues." Anyway, do the math and you end up with a $17,000 Army drip pan -- and there's one tiny catch: another company sells a comparable drip pan for about $2,500.

Is anybody shocked?  This, after all, is the world of the U.S. military, which has been right up there with the 1% this last decade when it comes to garnering and squandering riches. It's been ever more flush, while the taxpayers whose dollars it's been raking in have done ever less well.  And symbolic as those drip pans may be, they aren't even a drip in the bucket of Pentagon expenses when you start looking at the big-ticket items.

Take the already notorious F-35 Joint Strike Fighter.  Once billed as a low-cost solution to maintaining control of the global skies, it's now in competition for first place in any most-expensive-jet-fighter-in-history contest.  (The present title-holder is the F-22, a $400 million plane whose pilots fear an oxygen malfunction every time they take off, and which "sat out" all Washington's recent wars.)

The F-35's price tag went up yet again recently, though only by a piddling $289 million, even as its production schedule continues to fall ever further behind.  As of now, the total cost for 2,457 of the aircraft is officially pegged at $395.7 billion, a jump of 75% over the original 2001 estimated price tag of $226.5 billion (for 2,866 planes).  That's one heck of a lot of drip-pan equivalents -- and no one believes that's the final price, either.  Of the total cost of the plane to produce and operate, expert Winslow Wheeler writes, "The current appraisal for operations and support is $1.1 trillion -- making for a grand total of $1.5 trillion, or more than the annual GDP of Spain. And that estimate is wildly optimistic."

This is the sort of boondoggle that can't be cut in Washington lest our safety be endangered, even as the country's infrastructure decays, the jobs of police and teachers are cut, and the urge to savage the funds that go to the poor rises precipitously.  Consider that just a little background for the world of spending misinformation that TomDispatch regular Mattea Kramer, senior research analyst at the National Priorities Project and lead author of the new book , A People's Guide to the Federal Budget, reminds us has wall-papered our world these last years. Tom

Four Spending Myths That Could Wreck Our World:
How Not to Solve an American Crisis

By Mattea Kramer

We're at the edge of the cliff of deficit disaster!  National security spending is being, or will soon be, slashed to the bone!  Obamacare will sink the ship of state! 

Each of these claims has grabbed national attention in a big way, sucking up years' worth of precious airtime. That's a serious bummer, since each of them is a spending myth of the first order. Let's pop them, one by one, and move on to the truly urgent business of a nation that is indeed on the edge.

Spending Myth 1:  Today's deficits have taken us to a historically unprecedented, economically catastrophic place.

This myth has had the effect of binding the hands of elected officials and policymakers at every level of government.  It has also emboldened those who claim that we must cut government spending as quickly, as radically, as deeply as possible.

In fact, we've been here before.  In 2009, the federal budget deficit was a whopping 10.1% of the American economy and back in 1943, in the midst of World War II, it was three times that -- 30.3%. This fiscal year the deficit will total around 7.6%. Yes, that is big. But in the Congressional Budget Office's grimmest projections, that figure will fall to 6.3% next year, and 5.8% in fiscal 2014. In 1983, under President Reagan, the deficit hit 6% of the economy, and by 1998, that had turned into a surplus. So, while projected deficits remain large, they're neither historically unprecedented, nor insurmountable.

More important still, the size of the deficit is no sign that lawmakers should make immediate deep cuts in spending. In fact, history tells us that such reductions are guaranteed to harm, if not cripple, an economy still teetering at the edge of recession.

A number of leading economists are now busy explaining why the deficit this year actually ought to be a lot larger, not smaller; why there should be more government spending, including aid to state and local governments, which would create new jobs and prevent layoffs in areas like education and law enforcement. Such efforts, working in tandem with slow but positive job growth in the private sector, might indeed mean genuine recovery. Government budget cuts, on the other hand, offset private-sector gains with the huge and depressing effect of public-sector layoffs, and have damaging ripple effects on the rest of the economy as well.

When the economy is healthier, a host of promising options are at hand for lawmakers who want to narrow the gap between spending and tax revenue. For example, loopholes and deductions in the tax code that hand enormous subsidies to wealthy Americans and corporations will cost the Treasury around $1.3 trillion in lost revenue this year alone -- more, that is, than the entire budget deficit. Closing some of them would make great strides toward significant deficit reductions.

Alarmingly, the deficit-reduction fever that's resulted from this first spending myth has led many Americans to throw their support behind de-investment in domestic priorities like education, research, and infrastructure -- cuts that threaten to undo generations of progress. This is in part the result of myth number two.

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Tom Engelhardt, who runs the Nation Institute's Tomdispatch.com ("a regular antidote to the mainstream media"), is the co-founder of the American Empire Project and, most recently, the author of Mission Unaccomplished: Tomdispatch Interviews (more...)
 

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