Crowding Out, Social Security, and the Military Industrial Complex
by Bruce Webb
Smedley Butler on Interventionism
— Excerpt from a speech delivered in 1933, by Major General Smedley Butler, USMC.
War is just a racket. A racket is best described, I believe, as something that is not what it seems to the majority of people. Only a small inside group knows what it is about. It is conducted for the benefit of the very few at the expense of the masses.
I believe in adequate defense at the coastline and nothing else. If a nation comes over here to fight, then we’ll fight. The trouble with America is that when the dollar only earns 6 percent over here, then it gets restless and goes overseas to get 100 percent. Then the flag follows the dollar and the soldiers follow the flag.
I wouldn’t go to war again as I have done to protect some lousy investment of the bankers. There are only two things we should fight for. One is the defense of our homes and the other is the Bill of Rights. War for any other reason is simply a racket.
There isn’t a trick in the racketeering bag that the military gang is blind to. It has its “finger men” to point out enemies, its “muscle men” to destroy enemies, its “brain men” to plan war preparations, and a “Big Boss” Super-Nationalistic-Capitalism.
It may seem odd for me, a military man to adopt such a comparison. Truthfulness compels me to. I spent thirty- three years and four months in active military service as a member of this country’s most agile military force, the Marine Corps. I served in all commissioned ranks from Second Lieutenant to Major-General. And during that period, I spent most of my time being a high class muscle- man for Big Business, for Wall Street and for the Bankers. In short, I was a racketeer, a gangster for capitalism.
I suspected I was just part of a racket at the time. Now I am sure of it. Like all the members of the military profession, I never had a thought of my own until I left the service. My mental faculties remained in suspended animation while I obeyed the orders of higher-ups. This is typical with everyone in the military service.
I helped make Mexico, especially Tampico, safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefits of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912 (where have I heard that name before?). I brought light to the Dominican Republic for American sugar interests in 1916. In China I helped to see to it that Standard Oil went its way unmolested.
During those years, I had, as the boys in the back room would say, a swell racket. Looking back on it, I feel that I could have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.
The first question you should ask in any economic issue: ‘Cui bono’.
(Not familiar with Brown Brothers? You are probably better off. DON’T click on this link. Nothing to see, move along now.)
The formatting got odd. The last paragraph is obviously me and not General Butler.
“The trouble with America is that when the dollar only earns 6 percent over here, then it gets restless…”
Heh! The dollar only earning 6%. Those were the days, eh?
If it gets restless when it earns 6%, what does it do when it earns 0%? Or should I say, what do the Chinese do…
Butler, schmutler. Here’s the speech that Ike didn’t give on September 23, 1952. In it, he lambasts the inflationary “false prosperity” generated by the Truman administration’s rearmament program. For the backstory on this see: I like Ike (sort of) or, more comprehensively Chapter eight of my forthcoming Gift of Prosperity.
I have to admit I don’t get your point. You have to be careful… as you know, but not all our readers know… when they say “fix” social security, they mean cut it. The fact is that both problems can be fixed simultaneously, one after the other, or not at all. It makes no difference, except as a “talking point” to the folks who are trying to confuse you.
Social Security can be “fixed” if necessary by an 80 cents per week rise in the tax in 2026, and a similar rise in some years but not all years after that. Medicare can be fixed by getting a handle on medical care costs… something it doesn’t look like we know how to do (meaning we are not honest enough). But even the worst case scenario (so far) would leave the average worker with twice as much after-tax income in 2085 as he has today… AFTER paying his “bloated” medicare and social security taxes.
As for all the rest of the problems, they can be fixed too, as soon as the American public, or maybe just their congressmen can understand the concept of paying for what you buy… not necessarily “up front”.. nothing wrong with borrowing once in a while… but eventually. sooner rather than later.
though the way things are going i expect the general’s successors will soon be patroling the streets and fields of America keeping China’s new labor force in line.
Hey, we can afford everything we want. Just run a deficit and deficits don’t matter. Cheyney told us so and he knows. Johnson said the same re the Great Society and Vietnam and he was so very right.
Except Johnson was right.
Total Public Debt stayed right around $2 trillion every year from 1948 to 1981 and so dropped as a percentage of GDP under every post-war President not named Reagan or Bush. We fought Korea and Vietman and still paid down our debt. Of course we were not going up against those huge world powers Grenada, Lebanon, Panama, and Iraq.
Vietnam was a horrible waste but at least we paid for it, including the wealthy who somehow remained so with 69% top rates.
Not everything is directly about the cost of ‘fixing’ Social Security, when it comes down to it most people understand that the fix is small. The question on the table is if there are any social and economic justice risks to fixing it prior to attending to more serious unmet needs, that is whether that ‘fix’ however small actually just moves SS off the table so we can focus on the bigger picture, or whether that ‘fix’ has the effect of crowding out such things as universal heath care.
I fear the latter, and that any fix simply feeds into the narrative that has ‘greedy Boomers’ sucking on the blood of younger workers, with gramma lounging by the pool while her grandson works two jobs to put food on the table for his own uninsured kids.
In response Robert in e-mail suggested that there is no such crowding out effect vis a vis military spending, to which I suggest the answer is ‘cui bono’, as Smedley pointed out seven decades ago the military has often served directly to serve the interests of business. With the dramatic industrialization, mechanization and electronification of the military during and after WWII those benefits went from directly protecting United Fruit and Standard Oil to fueling what Ike called the Military-Industrial Complex. Deficits rolled up in service of the war machine (as Cheney reminded us) don’t matter if the dollars spent end up in capital’s pockets in excess of the taxes they would have to pay.
After Reagan and Bush I (whose Sec Def was Cheney) and Bush II/Cheney decided that rich people no longer had to pay war taxes then the sky was the limit, taxes and deficits no longer had any crowding out effect on military spending, while social spending still remained from the perspective of the wealthy a dead-weight loss.
if all you are saying is that “first we need to convince the people that “fixing” social security means leaving it alone, so they can “concentrate” on fixing health care, then i defer to your wisdom about the capacity of the public mind.
on the other hand, the “crowding out” of social spending by military spending is not only real, it is the whole point of the big shouting about “entitlements.” from their perspective, once we can get the people to stop paying their own money for retirement and medical insurance, we can take their money and spend it on military toys, money which, aside from being blown up and making us a stink to the world, goes directly into the pockets of the people who buy our congressmen.
darn, and here i was going to point out that it was Cheney who said “deficits don’t matter” to remind our Republican friends who think it is Obama’s deficit.
Once again, after Jr runs the car into the ditch, it seems a little unfair to blame dad for running up a bill to pull it out.
I never argued that military spending didn’t crowd out social spending. Instead I argued that the fact that military spending never seems to crowd out other military spending doesn’t imply that social spending can’t crowd out social spending. Different incentives being involved.
I love it when people who agree… as I do with you… can’t seem to understand that they are agreeing with each other. Social spending may indeed crowd out social spending, but in the present case there is absolutely no need for social security and medicare to crowd each other out. Only people who want an excuse to cut one or the other or both eventually would claim that there is. Indeed it would be stupid to cut either Social Security or Medicare, because these are both simply the people paying for their own needs. Needs. Which they can afford to do.
As I keep saying in case anyone new is listening. The cost of Social Security MAY amount to an increase in the taxes that will never be more than 80 cents per week in any given year, and will be zero in most years. And the cost of Medicare, even if we don’t slow the growth of medical care costs, will always be much much less than the expected rise in incomes. So the people would not be forced to choose between Social Security and Medicare, or even between both of them and Defense. They might have to choose between a secure retirement including medical care and a SECOND trip to Vegas every year.
Vietnam was a horrible waste but at least we paid for it
If will be a big move for Obama to break his promise on not raising taxes to the middle class.
Yes just as it was a big move for Bush 1 to break his “Read my lips” promise . But it was the right thing for the country and set the stage for subsequent Clinton fiscal policy.
Bush I was man enough to admit his mistakes. Junior couldn’t even think of one.
The story of the Bush family and its ties to international banking is long and sordid. It pre-dates the WWII Nazi collaborator scandal by several decades. The Harrimans, starting with Ned, were close business partners with the Bush family from Prescott on. Prescott, being no fool, married well. Where do you think all the GHW stuff comes from? That’s George Herbert Walker, mid-west banker and all around global investor. This Wikipedia page only scratches the surface. http://en.wikipedia.org/wiki/George_Herbert_Walker That’s where the real money starts in the Bush family.
I think I might be that bear with whom Bruce had the exchange. Well actually probably not.
But just in case, I discussed increasing the social security payroll tax by taxing individual payroll income over $250,000 at a rate of 2% (the worker) plus 2% (the employer). So no increase in social security spending. Sure spending more on something can crowd out spending on something else. I think that, in practice, the lock box is a hopelss wish and that money going to the Federal government is fungiable. In fact, I support the plan, because I think the increased revenue would reduce the deficit or be used for other social welfare spending.
I don’t think there is a social security problem to solve at all. I guess the trustees low cost forecast which shows no shortfall is about right. I have no expertise to share, just a guess.
I strongly believe that the military budget should be cut — a lot — to less than half the current budget (probably much less).
you want to increase the payroll tax, but you don’t think there is a social security problem to solve at all.
you are right the second time. why not read “the northwest plan”, you may have heard of Bruce Webb, he wrote it. it’s hard on me when i see regular contributors to AB who don’t seem to have read the answer that appeared right here to a problem they are still worried about though they think it might not exist.
are you okay?
if you can’t talk just now, nod twice.
re teh brown brothers
i may not have read the article very effectively, but it seems to me there isn’t much evidence that Bush was a Nazi sympathizer. he was a money sympathizer. pretty much, i think, the same as all the people who make policy in this country. what that means is that concentration camps are just an “internal matter,” quaint foreign customs that have no effect on business decisions, including those of the State Department, unless other business decisions conflict.
Trading with the enemy does not require sympathizing with that enemy. Not even empathy is a necessary component. Simply carrying on business in the name of profit, but with an enemy whose goals may be furthered by such business, is the issue. Business as usual generally puts profits above the needs of workers and any one else who may become collateral damage to that quest for profit. Profit in and of itself is not good or evil. It is the activity that is pursued in one’s efforts to gain profitability that needs to be judged. Suggesting that the profit motive excuses all actions aimed at attaining that goal misdirects attention from the evaluation of the actions of the profit seeker. Al Capone was only interested in profit. That didn’t make his actions right.