By David Stockman<\/p>\n
October 13, 2017 “Information Clearing House<\/a>” – Yesterday we identified a permanent fiscal crisis as one of the quadruple witching forces arising in October 2017\u00a0which will shatter the global financial bubble. Today the Donald is on the cusp of\u00a0making the crisis dramatically worse by decertifying the Iranian nuke deal, thereby reinforcing another\u00a0false narrative\u00a0that enables the $1 trillion Warfare State to continue bleeding the nation’s fiscal solvency.<\/p>\n In a word, the whole notion that Iran is a national security threat and state sponsor of terrorism is just as bogus as the Russian meddling story or the claim that the chain of events resulting from the\u00a0coup d’ etat fostered by Washington on the streets of Kiev in February 2014 is evidence of Russian expansionism and aggression.<\/p>\n Likewise, it’s part of the same tissue of lies which led to Washington’s massive, destructive and counterproductive interventions in Syria and Libya — when neither regime posed an iota of threat to the safety and security of the American homeland.<\/p>\n To the contrary, all of these false narratives are the\u00a0cover stories which\u00a0justify the Warfare\u00a0State’s massive draw on the nation’s broken finances.\u00a0We will get to the Big Lie about Iran momentarily, but first it is useful to demonstrate just how enormously excessive the nation’s defense budget actually is, and why the denizens of the Imperial City—especially the neocon ideologues—-find it necessary to peddle such threadbare untruths.<\/p>\n Spoiler alert: Iran has actually never attacked a single foreign\u00a0nation in modern history whereas Washington has chosen to unilaterally intervene in or arm virtually every\u00a0surrounding country\u00a0in the region.<\/p>\n Here’s some historical\u00a0context that dramatizes\u00a0our\u00a0point about Washington’s hideously excessive spending on defense. Back in 1962 on the eve of the Cuban Missile Crisis, the US defense budget was $52 billion, which would amount to\u00a0$340 billion\u00a0in today’s (2017$) purchasing\u00a0power.<\/p>\n Needless to say, the world came to the brink of nuclear\u00a0Armageddon at a time when the Soviet\u00a0Union was at the peak of its power and was armed to the teeth. In addition to thousands of nuclear warheads deliverable by missiles and bombers, it\u00a0had 50,000 tanks facing\u00a0NATO and nearly 4 million men under arms.<\/p>\n The now open Soviet archives, of course, show that the Soviets had far more bark than bite and never conceived of attacking the US or even western Europe; they didn’t remotely have the wherewithal or the strategic nerve.<\/p>\n Nevertheless,\u00a0by\u00a01962 false moves and provocations\u00a0by both sides had\u00a0created a state of “cold war” that was real. Yet even then,\u00a0the\u00a0$340 billion\u00a0military budget was more than adequate to deter the Soviet threat. Nor is that our view as an\u00a0armchair historian.<\/p>\n The 1962 defense budget was essentially President Dwight D. Eisenhower’s budget, and it is one that he had drastically slashed from the\u00a0$500 billion\u00a0(in today’s dollars) he had inherited from Truman at the end of the Korean War.<\/p>\n That is to say, the greatest general who ever led American forces had concluded that\u00a0$340 billion was enough. And that came\u00a0as he left office warning about just the opposite—-the danger that the military\/industrial complex would gain inordinate political power and pursue foreign policies which required ever larger military spending.<\/p>\n Unlike standard cold warriors, Ike believed that the ultimate national security resource of America was a healthy capitalist economy and that excessive government debt was deeply\u00a0inimical to that outcome.<\/p>\n That’s why he balanced the Federal budget three times during his tenure and presided over a fiscal consolidation—thanks to sharply reduced defense spending—that generated an average deficit of hardly\u00a01 percent\u00a0of GDP. That’s an\u00a0outcome scarcely imaginable at all in the present world.<\/p>\n Even then, the Soviet empire with all the captive republics that have become independent nations since 1991 (e.g. Ukraine, Belarus, Kazakhstan etc.) had a GDP in 1960 that was estimated to be\u00a050 percent\u00a0the size of the US. So Ike’s bet was that capitalist growth over time was the ultimate source of national strength; that a healthy domestic economy would\u00a0eventually leave the centralized command-and-control Soviet economy in the dust; and that ultimately the Kremlin’s brand of statist socialism and militarism would fail.<\/p>\n He was right. Russia today is a shadow of what Ronald Reagan called the Evil Empire. Its GDP of\u00a0$1.3 trillion\u00a0is smaller than that of the New York metro area ($1.6 trillion) and only\u00a07\u00a0percent\u00a0of total US GDP.<\/p>\n Moreover, unlike the militarized Soviet economy which devoted upwards of\u00a040\u00a0percent\u00a0of output to defense, the current\u00a0Russian defense budget of\u00a0$60 billion\u00a0is just\u00a04.5\u00a0percent\u00a0of its vastly shrunken GDP.<\/p>\n So how in the world did the national security apparatus convince the Donald that we need the\u00a0$700 billion\u00a0defense program for FY 2018—-12X\u00a0bigger than Russia’s—-\u00a0that he just signed into law?<\/p>\n What we mean, of course,\u00a0is how do you explain that—-\u00a0beyond the fact that\u00a0the\u00a0Donald\u00a0knows virtually nothing about national security policy and history; and, to boot,\u00a0is surrounded by generals who have spent a lifetime scouring the earth for enemies and threats to repel\u00a0and reasons for more weapons and bigger forces.<\/p>\n The real\u00a0answer, however,\u00a0is both simple and consequential. To wit, the entire prosperity and modus operandi of the Imperial City is based on\u00a0a panoply of “threats” that are vastly exaggerated or even purely invented; they\u00a0retain their currency by virtue of\u00a0endless repetition\u00a0in\u00a0the groupthink that passes for analysis. We’d actually put it in the category of cocktail party chatter.<\/p>\n For crying out loud. Why is Russia considered a threat to the American homeland when it doesn’t even have a blue water navy or any other basis to project offensive power to the North American continent?<\/p>\n Indeed, its “attack” fleet consists of a\u00a0 single, 40-year old smoke-belching aircraft carrier that could never get out of the Mediterranean bathtub\u00a0ringed by overwhelming US forces.<\/p>\n Beyond conventional\u00a0offensive\u00a0power there is the non-power of its 1500 or so deployable\u00a0nuclear warheads.\u00a0Whatever you may think of Vlad Putin’s kleptomania and hard-edged suppression of internal dissent, he is surely the “Cool Hand Luke” of the modern world. Do you think he would be rash or suicidal enough to threaten the US with nuclear weapons?<\/p>\n Or for that matter that Russia with its pipsqueak\u00a0$1.3 trillion\u00a0GDP and limited military capacity actually intends to invade and occupy Europe, which has a GDP of\u00a0$17 trillion\u00a0and sufficient military force—even without the US—-to make such a project unthinkable.<\/p>\n Likewise, so what if the Chinese want to waste money building sand castles (i.e. man-made islands with military uses)in the South China Sea. It’s their backyard—just as the Gulf of Mexico is ours.<\/p>\n Besides, the great Red Ponzi is utterly dependent upon exporting\u00a0$2 trillion\u00a0per years of goods to the US, Western Europe, Japan, South Korea etc. Without those markets its massively leveraged,\u00a0speculation-ridden, malinvested\u00a0bubble economy would collapse in 6 months or less. So does anyone really think that the PLA (People Liberation Army) will be bombing 4,000 Wal-Marts in America any time soon?<\/p>\n The truth is, the US defense budget is hideously oversized for a reason so obvious that it constitutes\u00a0the ultimate elephant in the room.\u00a0No matter how you slice it, \u00a0there just are\u00a0no real big industrialized, high tech countries in the world which can threaten the American homeland or even have the slightest intention of doing so.<\/p>\n Indeed,\u00a0to\u00a0continue with our historical benchmarks,\u00a0the American homeland has not been so immune to foreign military threat since WW\u00a0II. Yet\u00a0during all those years of\u00a0true peril, it\u00a0never spent close too the Donald’s\u00a0$700 billion\u00a0boondoggle.<\/p>\n For instance, during the height of LBJs Vietnam folly (1968) defense spending in today’s dollars was about\u00a0$400 billion.\u00a0And\u00a0even at the top of Reagan’s utterly unnecessary military building up (by the 1980s the Soviet Union was collapsing\u00a0under the weight of its own socialist dystopia), total US defense spending was\u00a0just\u00a0$550 billion.<\/p>\n That gets us to the bogus Iranian threat. It originated in the early 1990s when the neocon’s in the George HW Bush Administration realized that with the cold war’s end, the Warfare State was in grave danger of massive demobilization like the US had done after every war until 1945.<\/p>\n So among many other invented two-bit\u00a0threats,\u00a0the Iranian regime was demonized in order to keep the Imperial City in thrall to its\u00a0purported national\u00a0security\u00a0threat and in support of\u00a0the vast global armada of military forces, bases and occupations needed to\u00a0contain it (including the Fifth Fleet in the Persian Gulf and US bases throughout the region).<\/p>\n The truth, however, is that\u00a0according to the 2008 NIE (\u00a0National Intelligence Estimates) of the nation’s 17 intelligence agency, the Iranian’s never had a serious nuclear weapons program, and the small research effort that they did have was disbanded by orders of the Ayatollah Khamenei in 2003.<\/p>\n Likewise, what the Imperial City claims to be state sponsored terror is actually nothing more than Iran’s foreign policy—something that every sovereign state on the planet is permitted to have.<\/p>\n Thus, as\u00a0the leader of the minority Shiite schism of the Islamic world, Iran\u00a0has made political and confessional allliances with\u00a0various Shiite regimes in\u00a0the region. These include the one\u00a0that\u00a0Washington\u00a0actually installed in Bagdad;\u00a0the\u00a0Alawite\/Shitte regime in Syria; the largest political party and representative of 40 percent\u00a0of the population in Lebanon(Hezbollah); and the Houthi\/Shitte of Yemen,\u00a0who historically occupied the northern parts of the country\u00a0and are now under savage attack by American weapons supplied to Saud Arabia.<\/p>\n In the case of both\u00a0Syria and Iraq, their respective governments invited Iranian help, which is also their prerogative as sovereign nations. Ironically, it was the Shiite Crescent alliance of Iran\/Assad\/Hezbollah that bears much of the credit for defeating ISIS on the ground in Mosul, Aleppo, Raqqa,\u00a0Deir ez-Zor and elsewhere in the now largely defunct Islamic State.<\/p>\n In tomorrow’s installment we will address the details of the Iran nuke agreement and why the Donald is making a horrible mistake in proposing to decertify it. But there should be no doubt about the consequence: It will reinforce the neocon dominance of the Republican party and insure that the nation’s\u00a0$1 trillion Warfare State\u00a0remains fully entrenched.<\/p>\n Needless to say, that will also insure that the America’s gathering fiscal crisis will turn into an outright Fiscal Calamity in the years just ahead.<\/p>\n Reprinted with permission from\u00a0David Stockman’s Contra Corner<\/a>.<\/em><\/p>\n