Obsidian Wings

Shifting Resources

by hilzoy

From the NYT:

"When President-elect Barack Obama introduces his national security team on Monday, it will include two veteran cold warriors and a political rival whose records are all more hawkish than that of the new president who will face them in the White House Situation Room.

Yet all three of his choices -- Senator Hillary Rodham Clinton as the rival turned secretary of state; Gen. James L. Jones, the former NATO commander, as national security adviser, and Robert M. Gates, the current and future defense secretary -- were selected in large part because they have embraced a sweeping shift of resources in the national security arena.

The shift, which would come partly out of the military's huge budget, would create a greatly expanded corps of diplomats and aid workers that, in the vision of the incoming Obama administration, would be engaged in projects around the world aimed at preventing conflicts and rebuilding failed states. (...)

"This is not an experiment, but a pragmatic solution to a long-acknowledged problem," Denis McDonough, a senior Obama foreign policy adviser, said in an interview on Sunday.

"During the campaign the then-senator invested a lot of time reaching out to retired military and also younger officers who have served in Iraq and Afghanistan to draw on lessons learned," Mr. McDonough said. "There wasn't a meeting that didn't include a discussion of the need to strengthen and integrate the other tools of national power to succeed against unconventional threats. It is critical to a long-term successful and sustainable national security strategy in the 21st century.""

This would be wonderful. There are a lot of problems that can be addressed either sooner, by preventing them from getting out of hand, or later, once they have turned into crises. We prepare for the crises, and in particular for the possibility of military intervention. But we don't do nearly enough to try to prevent them from becoming crises in the first place. Nor do we have any decent way of trying to help failed states get back on their feet -- which matters, since failed states are the natural homes of terrorists.

We have needed for a long time to have more tools at our disposal for addressing problems abroad. If Obama plans to build up alternatives to military force, that's really, really good news. And if, moreover, Jones and Gates are on board with cutting some defense programs, then I imagine that the odds that they will actually be cut go up considerably. That would also be very good news.

Auto Industry Bleg

by hilzoy

I've been trying to understand the problems of the auto industry, and on a couple of points I can't quite seem to figure out what's going on. So I thought: why not ask?

(1) A quote from Business Week:

"Everyone knows that GM is over-branded. (...) At the core of GM’s problems is that it does not have, and has not had, enough resources to feed eight brands with unique products, and then the resources to feed each brand with unique and competitive brand campaigns."

I assume that having too many brands implies not just a pointless attempt to distinguish them from one another, but separate management and marketing, and to some extent separate manufacturing, that might usefully be consolidated. I imagine that having too many brands would also make it harder to establish any particular brand: when you're trying to make eight separate brands stand out, all of them probably have a harder time.

Question: are there other drawbacks to having too many brands, or is this it?

(2) Business Week again:

"The problem has long been that the company does not want to have to pay dealers to fold the brands it does not need as it did with Oldsmobile in 2001. State franchise laws prevent a car company from simply ending a brand. Closing down Oldsmobile cost the company around $2 billion."

Question: Is there any obvious reason why state laws should be able to prevent a car company from closing down a brand?

(3) The WSJ:

"GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000. These fewer and larger dealers are better able to advertise, stock and service the cars they sell. GM knows it needs fewer brands and dealers, but the dealers are protected from termination by state laws. This makes eliminating them and the brands they sell very expensive. It would cost GM billions of dollars and many years to reduce the number of dealers it has to a number near Toyota's."

What, exactly, does it mean to say that GM "needs fewer dealers"? Dealerships are privately owned. If there are too many of them, does GM incur financial costs, over and above dealers' ability to block things like brand consolidation?

(4) In trying to answer some of these questions, I ended up reading a fair amount about state laws governing auto dealerships. (E.g., here, here, and here.) Short version: selling cars is a very, very heavily regulated activity.

Is there some reason why this makes sense? For instance, is it obvious that automobiles have to be sold in franchises, as opposed to stores in which the storeowner can stock whichever cars seem most likely to sell, the way bookstores do? Does it make any sense for Texas to prohibit this?

"Ford, an automobile manufacturer, operates the Showroom web site. At this site, Ford advertises for sale various used vehicles at set no haggle prices. At the time such advertisements are posted to the Internet, Ford holds title to the advertised vehicles. If a Texas consumer is interested in purchasing one of these vehicles, he can contact and deliver to Ford a refundable deposit. The vehicle will then be transferred to a Texas automobile dealer, who will take title to the vehicle from Ford by assignment. If the consumer, after a test drive, wishes to purchase the vehicle he will enter into a contract with the dealer at the price stated on the Showroom web site. If he elects not to purchase the vehicle, the dealer can either return it to, or purchase it from, Ford."

Aren't there better models for selling cars? Wouldn't it make sense to try some of them?

I honestly don't know the answers to any of these questions. If any of you do, let me know.

Workplace Safety

by hilzoy

From the NYT:

"The Labor Department is racing to complete a new rule, strenuously opposed by President-elect Barack Obama, that would make it much harder for the government to regulate toxic substances and hazardous chemicals to which workers are exposed on the job."

"The rule, which has strong support from business groups, says that in assessing the risk from a particular substance, federal agencies should gather and analyze "industry-by-industry evidence" of employees' exposure to it during their working lives. The proposal would, in many cases, add a step to the lengthy process of developing standards to protect workers' health."

"Public health officials and labor unions said the rule would delay needed protections for workers, resulting in additional deaths and illnesses."

Because regulating hazardous chemicals in the workplace is currently much too easy. For instance, OSHA has been working on a silica standard since 1994 (pdf), and hasn't published it yet:

"OSHA identified silica as a priority for its rulemaking efforts in 1994. Ten years ago OSHA and NIOSH held a National Conference to Eliminate Silicosis. Silica has been on the OSHA regulatory calendar for almost ten years. A draft standard has been developed and was reviewed by SBA in 2003. A peer review of the health effects data was to be completed this month. Yet there is still no date certain for a proposed rule to be published. While we wait for OSHA to move forward, construction workers and others continue to suffer and die from debilitating lung diseases and cancer as a result of this delay."

Nor has OSHA done anything on diacetyl, the flavoring that destroys people's lungs:

"It was nearly 10 years ago when an alert physician in Missouri linked rare cases of the lung disease bronchiolitis obliterans to his patients' workplace exposure at a microwave popcorn manufacturing plant. Soon after, the Missouri Department of Health (MDOH) contacted OSHA and NIOSH. Now, dozens of workers have been identified with the debilitating disease and others diagnosed with other respiratory impairments. OSHA previously told the Senators that it "intends to propose a permanent standard addressing the hazards of flavoring containing diacetyl," but the wait continues."

According to the AFL-CIO's director of occupational safety and health (quoted in the NYT), the Bush administration has "failed to set any new OSHA health rules to protect workers, except for one issued pursuant to a court order." Quite a record!

Spending mere decades deciding how to regulate workplace exposure to chemicals that can kill people is obviously much too hasty. We need to continue to let people die for centuries, if not millenia. And requiring that OSHA consider "industry-by-industry evidence" for each chemical sounds like just the ticket. After all, while mustard gas kills soldiers, do we actually know that it would kill people if we pumped it into an automobile assembly line? Do we have any evidence that cyanide can kill beauticians in particular? Don't we need careful empirical studies before we leap to conclusions?

Come to think of it, do we have any evidence about what sorts of things might harm political appointees in the Labor Department, in particular? Aren't we just getting ahead of the evidence when we assume, say, that they could be harmed by cruise missiles, or large banks of rotating knives deployed in their direction? If so, surely they wouldn't have any objection to our carrying out a few little tests. After all, if it's OK for the workers they are charged to protect, it must surely be OK for them.

Krauthammer Annoys My Inner Pedant

by hilzoy

I don't normally read Charles Krauthammer, but Heather Hurlburt at Democracy Arsenal does, and she flagged this startling paragraph:

"In the old days -- from the Venetian Republic to, oh, the Bear Stearns rescue -- if you wanted to get rich, you did it the Warren Buffett way: You learned to read balance sheets. Today you learn to read political tea leaves. If you want to make money on Wall Street (or keep from losing your shirt), you do it not by anticipating Intel's third-quarter earnings but by guessing instead what side of the bed Henry Paulson will wake up on tomorrow."

Think about the first sentence. Krauthammer seems to be saying that whereas today we have to pay attention to politicians to get rich, back in the Olden Days people only had to read balance sheets. The whims of political leaders were, apparently, of no concern to them. Let's be nice to Krauthammer and assume that he's talking about the history of the US and Western Europe, and thus that it would not be fair to adduce the USSR or the later Qing dynasty as counterexamples.

Hurlburt notes that what Krauthammer says isn't true of the Venetian Republic. But the thing is: it isn't true of almost anywhere. It's like saying that from the time of the Venetian Republic until a few months ago, people enjoyed religious liberty or complete social mobility: it's not just false, but spectacularly false. I could pick any one of a large number of examples, but let's just stick to France under Louis XIV:

"During the reign of Louis XIV, competition for access to the spoils of government transformed the character of the French aristocracy. The great families of the realm had to establish residences in the capital or the court itself because the political and factional struggles between the king's courtiers often determined both major and minor economic decisions. Because seeking out royal patronage was more highly rewarded than staying in the provinces to oversee the local economy and local affairs, nobles moved to Paris and devoted themselves to competing for the unearned income handed out by the king. However, nobles needed to invest time and money to acquire the political information that would win them sinecures, posts in the Church, access to commercial or industrial patents of monopoly, or shares in tax farms (often using a false name or straw man). Like firms in the highly centralized nations of present-day Latin America, they had to move their offices to the capital at the expense of their provincial activities. Once transformed into courtiers, the nobility directed much of their activities toward gaining shares in short-term loans to the Crown and trying to persuade the government that the projects of their clients were best suited to national priorities. One hidden cost the mercantile economy had to bear was the extravagant court and social life of Paris, which by the time of Louis XVI consumed almost 6 percent of the state's revenues and an equally significant, but difficult to measure, proportion of private revenues. The calculation scarcely captures the full economic costs of the competition for privilege." (pp. 37-38)

An example of just how much control the King and his government exercised:

"Two of the most extreme examples of the suppression of innovation in France occurred shortly after the death of Colbert during the lengthy reign of Louis XIV. Button-making in France had been controlled by various guilds, depending on the material used, the most important part belonging to the cord- and button-makers' guild, who made cord buttons by hand. By the 1690s, tailors and dealers launched the innovation of weaving buttons from the material used in the garment. The outrage of the inefficient hand-button-makers brought the state leaping to their defence. In the late 1690s, fines were imposed on the production, sale, and even the wearing of the new buttons, and the fines were continually increased. The local guild wardens even obtained the right to search people's houses and to arrest anyone in the street who wore the evil and illegal buttons. In a few years, however, the state and the hand-button-makers had to give up the fight, since everyone in France was using the new buttons.

More important in stunting France's industrial growth was the disastrous prohibition of the popular new cloth, printed calicoes. Cotton textiles were not yet of supreme importance in this era, but cottons were to be the spark of the Industrial Revolution in eighteenth century England. France's strictly enforced policy made sure that cottons would not be flourishing there.

The new cloth, printed calicoes, began to be imported from India in the 1660s, and became highly popular, useful for an inexpensive mass market, as well as for high fashion. As a result, calico printing was launched in France. By the 1680s, the indignant woollen, cloth, silk and linen industries all complained to the state of 'unfair competition' by the highly popular upstart. The printed colours were readily outcompeting the older cloths. And so the French state responded in 1686 by total prohibition of printed calicoes: their import or their domestic production. In 1700, the French government went all the way: an absolute ban on every aspect of calicoes including their use in consumption. Government spies had a hysterical field day: 'peering into coaches and private houses and reporting that the governess of the Marquis de Cormoy had been seen at her window clothed in calico of a white back ground with big red flowers, almost new, or that the wife of a lemonade-seller had been seen in her shop in a casquin of calico'. Literally thousands of Frenchmen died in the calico struggles, either being executed for wearing calicoes or in armed raids against calico-users."

I don't think that counts as "getting rich the Warren Buffett way".

***

My best guess is that Krauthammer is doing something I recognize from reading undergraduate papers: saying something that he probably not only doesn't believe, but has scarcely even noticed, simply because it's a nice-sounding way to start a column. It's the same lazy mental habit that leads otherwise intelligent students to write opening sentences like: "Throughout history, philosophers have debated the morality of human cloning." Is this true? Obviously not. Does its truth or falsity play any role in their argument? No. Have they bothered to reflect at all on whether or not people were debating human cloning in, say, ancient Greece, or even Victorian England? No. They just need a suitably impressive-sounding opening sentence, and its actual content is of so little concern to them that they don't even notice its evident absurdity.

The thing is, though: they are students. What's Charles Krauthammer's excuse?

Who's In Charge Here?

by hilzoy

From the WSJ:

"Under fire for his role in the near-collapse of Citigroup Inc., Robert Rubin said its problems were due to the buckling financial system, not its own mistakes, and that his role was peripheral to the bank's main operations even though he was one of its highest-paid officials."

""Nobody was prepared for this," Mr. Rubin said in an interview. He cited former Federal Reserve Chairman Alan Greenspan as another example of someone whose reputation has been unfairly damaged by the crisis."

"Mr. Rubin's effort to salvage his reputation comes just after Chief Executive Vikram Pandit appeared on PBS's Charlie Rose show. Mr. Pandit, too, blamed the overall financial crisis, not Citigroup, for the problems that led the government to decide to inject money into the bank for a second time this fall."

""This was something that was bigger than Citi," Mr. Pandit said. "It was about confidence in the financial system. It was about stability of the financial system.""

Of course what's happening to the economy is bigger than Citigroup. And perhaps, if housing prices had continued to go up indefinitely, and we hadn't encountered any other shock, things would be fine. But that's irrelevant. If Mssrs. Rubin and Pandit want to know whether or not they are responsible for Citigroup's troubles, they need to ask: are there choices they could have and should have made differently that would have left Citigroup better off than it is now?

Suppose the answer is 'no'. In that case, there are several possibilities. First, Mssrs. Rubin and Pandit are not capable of making any choices at all, perhaps because they are completely controlled by our robot overlords. Second, they can make choices, but none of the choices they might have made would have left Citi better prepared for the present crisis. If so, that would say something pretty alarming about Citi's corporate governance structure. Third, there are choices they could have made that would have left Citi better prepared, but Mssrs. Rubin and Pandit had no reason to make those choices, since no one could have predicted the problems we now face.

Guess what? None of these things is true. And yet, oddly, Mssrs. Rubin and Pandit seem to think they are not responsible for what's happening to the organization they are allegedly running.

That in itself would explain a lot.

Annals Of Self-Deception

by hilzoy

From the NYT:

"In an interview conducted earlier this month by his sister, Doro Bush Koch, Mr. Bush said he wanted to be remembered "as a person who, first and foremost, did not sell his soul in order to accommodate the political process.""

""I came to Washington with a set of values, and I'm leaving with the same set of values," Mr. Bush said. "And I darn sure wasn’t going to sacrifice those values; that I was a President that had to make tough choices and was willing to make them. I surrounded myself with good people. I carefully considered the advice of smart, capable people and made tough decisions.""

"But he said he wanted to be known "as somebody who liberated 50 million people and helped achieve peace; that focused on individuals rather than process; that rallied people to serve their neighbor; that led an effort to help relieve HIV/AIDS and malaria on places like the continent of Africa; that helped elderly people get prescription drugs and Medicare as a part of the basic package; that came to Washington, D.C., with a set of political statements and worked as hard as I possibly could to do what I told the American people I would do.""

Well, I would like to be remembered as a defensive lineman for the Cincinnati Bengals. Whose wish is more unlikely, I wonder?

Mortgages And Bankruptcy

by hilzoy

A bankruptcy judge in the Washington Post:

"Homeowners are the only ones who cannot modify the terms of their secured debts in bankruptcy. Corporate America flocks to bankruptcy courts to do precisely this -- to restructure and reamortize loans whose conditions they find onerous or can no longer meet. Airlines are still flying and auto parts makers still operating because they have used this powerful tool of the bankruptcy process. Lehman Brothers will surely invoke it. But when the bankruptcy code was adopted in 1979, the mortgage industry persuaded Congress that its market was so tightly regulated and conservatively run that it should be exempted from the general bankruptcy rules permitting modification.

How far we have come. (...)

Allowing modifications is a solid solution, as evidenced by my example. This homeowner could have restructured her loan to terms resembling those of a conventional mortgage. If the court found that the market value of her home had fallen below what she owed, the secured portion that must be repaid in full would be reduced to the house's actual value; otherwise, the amount to be repaid would stay the same. The interest rate would be adjusted to reflect the prevailing market. However, because this homeowner is a riskier borrower than most, I would have raised her rate to account for that increased risk, as Supreme Court precedent requires. Instead of 14 percent, the rate would probably have been in the high single digits. This homeowner -- with her steady income -- could have made the reduced payments.

Such a solution would have been better for everyone. Obviously, it would have been good for the homeowner and the community in which she lives. Instead of another abandoned house tied up in foreclosure, her residence would be owned by a taxpaying citizen. More important, it would have been good for the lender. Whatever unknown mortgage syndicates hold pieces of this loan, they are never going to get their 14 percent return. Instead, the total recovery will be limited to the proceeds from a foreclosure sale in a depressed market. Any deficiency owed by the homeowner will be discharged as part of her bankruptcy. No one has been able to explain to me why it is not better for mortgage holders to get a fair return of principal back, albeit at a lower interest rate, than to take a lump sum through foreclosure that is probably much less than the value of the note."

Perhaps it once made sense to think that mortgages should not be restructured in bankruptcy. I don't think it makes sense now. It would be great if a repeal of this provision of the bankruptcy laws were one of the bills that will be waiting for President Obama to sign when he takes office.

Happy Thanksgiving!

by publius and ObWi Street Band

Turkey thread.

I Wanna be Your Backdoor Plan

by Eric Martin

Some interesting SOFA related goings-on in the past twenty-four hours.  A parliamentary vote on the SOFA scheduled for today was postponed until Thursday after Sunni lawmakers witheld their support pending concessions a number of issues.  The demands put forth by the Sunni bloc (acting in tandem with smaller Shiite parties) include progress on a series of familiar political issues, but there was also a twist of sorts.  From McClatchy:

Sunni parties and smaller Shiite blocs...want to put the pact to a national vote next year to affirm it.

Doing so would give the U.S. at least a year and a half to leave Iraq even if voters demand an immediate withdrawal.

That's because the vote likely wouldn't take place until July, and the security agreement requires each side to give the other notice of at least one year before ending the pact.

The reaction to the referendum concept has been warm, thus far:

"We don't have an objection to that," said Heider al Abady, a member of parliament from the Dawa party. His bloc is one of the groups endorsing the pact as a safe way to end the U.S. occupation without creating a security vacuum.

Which is not altogether unsurprising, considering the fact that Grand Ayatollah al-Sistani has conditioned his blessing of the SOFA on the emergence of a broad political consensus in support of the agreement.  If Maliki and the Kurds attempt to push through the SOFA without Sunni or Sadrist support, Sistani might come out against it which would have severe political repercussions for two parties that have used their allegiance to Sistani as their primary selling point in prior elections (frequently including images of Sistani on election-related materials).

Allow me to engage some hypotheticals: Let's assume, for the sake of argument, that the SOFA passes, but that in order to get broad support for its passage, the parties agree to hold a referendum in July.  Let's also say the SOFA is defeated in that July referendum (not exactly outlandish considering the state of Iraqi popular opinion).  If that were to occur, a 12 month clock for the removal of all US forces would begin ticking in July 2009 (the one year notice required under the SOFA).

Unless the US chose to disregard the results of the referendum and the will of the Iraqi government, those events would have the effect of mandating that all US forces withdraw from Iraq some 18 months after Obama takes office. 

Which would bear a remarkable similarity to Obama's own stated timetable for withdrawal.  If all occurs as described (a big "if" admittedly), the Iraqis will have circumvented an increasingly irrelevant Bush administration.

[UPDATE: The SOFA passed, and the parties agreed to the referendum:

Iraq's parliament approved Thursday a security pact with the United States that lets American troops stay in the country for three more years.

The vote in favor of the pact was backed by the ruling coalition's Shiite and Kurdish blocs as well as the largest Sunni Arab bloc, which had demanded concessions for supporting the deal.

The Shiite and Kurdish blocs agreed to a Sunni demand that a national referendum on the pact be held by July 30. A vote against the pact at that time could torpedo the deal.

That's one "if" down, and one to go.]

The 4% Doctrine

by Eric Martin

As discussed in a prior post, there is a showdown looming on the horizon between an Obama administration that will be faced with the stark fiscal realities of the post-Bush era, and a Pentagon maneuvering to ensure that its outsized share of the federal budget remains intact and untouched - expanded even.  The Pentagon is readying its battle plan, and has begun market-testing a catchy new slogan: Four Percent for Freedom - as in, defense spending should be fixed at 4% of GDP in perpetuity. 

If that number seems arbitrary and detached from the applicable context, that's because it is - at least in terms of assessing the need to spend the amount prescribed.  Optimally, and logically, defense spending should be based on a rational assessment of risks, needs and exigencies. By relying on a fixed percentage, rather than a review of needs, the Pentagon can obviate the risks of cuts brought about by a peace dividend, or the need for a cash-strapped country to make fiscal trade-offs. 

The 4% approach also has its advantages from a marketing perspective, and the number chosen serves multiple purposes.  For one, its proponents will claim that the US is currently spending under 4%, and that, therefore, we must increase defense spending to reach the magic ratio.  That calculation is misleading, however.  As Cernig points out, while Four-Percenters claim that our current spending is a mere 3.43% of GDP, that calculation ignores supplemental spending on Iraq and Afghanistan which, when added in, pushes spending to 4.73% of GDP.  But even if you remove Iraq and Afghanistan from the equation, as those spending items will be eventually (sooner the better), could anyone really argue that the US would be spending too little on defense if the percentage hovers around 3-3.5%?  Actually, some would:

Taking their cue from this groundswell of Pentagon support and nongovernmental advocacy, Senator Elizabeth Dole (R-N.C.) and Representative Trent Franks (R-Ariz.) introduced a joint resolution in December 2007 stating that the United States should “commit a minimum of four percent of the nation’s gross domestic product to the base defense budget.” In explaining the legislation, Franks said it was “the only way we can stop the inexorable slide of national defense.”

The inexorable slide?  Really?  Any fair accounting of US defense spending compared to the rest of the world, or any other relevant metric, would not describe the trend in recent decades, years or months as an inexorable slide.  Perhaps an inexorable drag, but that's something quite different.

The other argument will be historical in nature: pointing to past eras in which US defense spending was much higher than 4%.  Even then, however, pegging defense spending to GDP in such a manner elides the actual dollar amounts being spent due to the fact that GDP has increased so dramatically over our nation's history.  As Travis Sharp explains:

[T]he United States will spend significantly more, in inflation-adjusted dollars, for defense in FY 2009 than it did during the peak years of the Korean War (1953; $545 billion), the Vietnam War (1968; $550 billion), or the 1980s Reagan-era buildup (1989; $522 billion). The United States is also projected to spend more on defense in FY 2009 than the next 45 highest spending countries combined, including 5.8 times more than China (second highest), 10.2 times more than Russia (third highest), and 98.6 times more than Iran (22d highest). Indeed, the United States is expected to account for 48 percent of the world’s total military spending in FY 2009.

Further, as Sharp points out, there is money to be saved and, where not cut entirely, redirected to more efficient uses*:

Our current armed forces have more than sufficient budget and manpower to deal with the current threat and [fourth-generation warfare] threats. However, they must be reorganized to fight the enemy as he is rather than remaining organized to fight the enemy of the past. The United States could take some current funding away from expensive high-tech weaponry, which may be useless in future Iraq-style conflicts, and redirect it toward enhanced intelligence, diplomacy, counterinsurgency training, language competency, humanitarian assistance, and nuclear nonproliferation programs.

Bruce Falconer highlights just how difficult it is to rein in spending on the expensive - and often underperforming - big ticket items:

"The last I heard, Al Qaeda doesn't have an air force," says Winslow Wheeler, director of the Straus Military Reform Project at Washington's Center for Defense Information and the editor of the forthcoming book America's Defense Meltdown: Pentagon Reform for President Obama and the New Congress**. The F-22, which he describes as a "dog" on performance (more fragile and less maneuverable than Vietnam-era fighters), "is ridiculously expensive, and its huge cost prevents you from buying a respectable inventory of them."

But focusing on individual boondoggles like the F-22 is not the solution, says Wheeler. Instead, if Obama hopes to switch things up, he and his aides must understand that cost overruns and development delays at the Pentagon are not the exception but the rule. "I'm all for getting rid of the garbage, but if we simply trot out a cut list, we're going to get killed," Wheeler says. "The advocates [for each weapons program] inside the Pentagon will go on full alert. They'll activate their porker friends inside Congress, and that will be the end of it." Rather, he suggests, change rests on getting decision makers the real, unvarnished information they need to grapple with structural problems inherent in the defense acquisitions system.

Getting that information is not as easy as it might seem. According to retired Marine Lt. Colonel John Sayen, a former Pentagon analyst, the Defense Department's procurement bureaucracy is practiced at pushing its wish list through Congress "by downplaying costs and/or exaggerating benefits" and "quickly building a support network of vested interests to lock in a front-loaded decision before its true costs or performance become apparent." In other words, military procurement is an institutionalized scam. Even when problems surface, Congress rarely interferes. Assembly of the F-22 alone involves spending in 44 states, says Wheeler, and "people on Capitol Hill are leaving drool trails in the hallways to buy more."

The only way that we, as a nation, can continue to dedicate such a large share of our treasury to defense spending is if we either continue to grow our already enormous deficits, or severely curtail spending on all other priorities: from infrastructure, education and environmental protection, to health care, social security and other safety net initiatives.  Not to mention other unforeseen, cough, crises that might require bail outs and other spending.

Ironically, our out-of-balance spending on defense runs the risk of making us less secure as a nation if we continue to ignore our more pressing needs and sink deeper into debt.

(*I shall discuss spending priorities in a subsequent post)

(**I hope to review America's Defense Meltdown at some point in the near future)