Request for McCain: Please fire Concord from your economic team

The Weekly Standard recently reported the makeup of John McCain's economic team: Jack Kemp, Phil Gramm, Warren Rudman, Pete Peterson and the Concord group.  I am disappointed, because that team is way too diverse.  Jack Kemp definitely gets it; I certainly hope he is leading the team.  I don't know enough about Gramm's positions, so I'll remain neutral on him.  But Rudman, Peterson, and the Concord group should be fired immediately. 

Reason: Although Jack Kemp clearly understands that there are some things more important than deficit reduction (or surplus worship), Rudman-Peterson-Concord do not.  If McCain's way of getting more up to speed on economic matters is to let that diverse bunch slug it out behind the scenes, then he needs to rethink that strategy as soon as possible.  Better would be to put Jack in charge, and swiftly uninvite the Concord crowd.

Why?  I'll explain by starting with something on which I presume we can agree unanimously:

War prevention should be one of our nation's top priorities. 

[We unanimously agree on that, correct?  If not, please try to explain why in a comment.]   

We can and should have a lively debate about how to prevent war; for example, should we...

(1) ...achieve peace through strong intelligence, skilled diplomacy, and state-of-the-art military capability? 

Or, should we instead...

(2) ...hope for peace by cutting military spending to the bone, while being extra nice to everybody in the hope they'll like us in return, and therefore decide not to hurt us? 

In short, how to prevent war is a healthy, worthwhile debate.  What should not be up for debate is whether investing in war prevention is more important than deficit reduction or surplus worship.

Borrowing money for the necessary investments (in intelligence, diplomacy, and military capability) to prevent a global thermonuclear war was a good investment; borrowing money for the necessary investments to prevent a crippling terrorist attack and two subsequent wars would have been a good investment, too.  [Anyone who thinks war in Iraq, or even Afghanistan, would have happened if 9-11 had been prevented is invited to explain that in a comment below.  Also: Would 9-11 have been prevented if we had just spent more money on national security?  Not necessarily, because it would also have required effective strategy, coordination, and leadership; but at least one variable would have been eliminated: the diversion of money out of national security into surplus-enhancement.]

Rejecting war-prevention investments in favor of deficit reduction (or surplus worship) is not just foolhardy, green-eyeshade, myopic, politically-motivated, grandchildren-impoverishing mismanagement; it also costs many, many lives, as well as the big deficits that always accompany wars.  [My judgment, of course; if you've been to this blog before, you probably know that already.] 

Focusing successfully on war prevention instead of deficit reduction yields the benefit of eliminating the big-deficit effect of wars.  In other words, focusing mainly on what we get for the money (war prevention) ends up costing less than foolishly focusing mainly on the money.  Ironic, isn't it?

My beef with Concord
The Concord Coalition still, to my knowledge, has not defined the worn out buzz-phrase "fiscal responsibility" they lean on so frequently—and I've searched their website up and down for a definition; I see "eliminating the deficit" mentioned, but that's not specific enough.  Does it mean balancing the budget even if war-prevention must take a back seat, as it did in the 1990s?  Or is it even worse than that: running surpluses, to pay off the debt before our grandkids inherit it?  (I'll stop there, because I doubt that Concord would agree with the definition I recommended in this article about "fiscal responsibility.") 

Still waiting, nine years later
Another beef: Warren Rudman still has not answered the two simple questions I asked him nine years ago, almost two years before the 9-11 attacks that kicked off two expensive wars.  And nobody from Concord has responded to my 2005 reminder, "Still waiting, six years later."  Here are the key excerpts from my letter to then-Senator Rudman [the war-prevention question is the second one]:

To: Senator Warren B. Rudman, Concord Coalition
From: Steve Conover, Sr.
Date: January 25, 1999

Concord's position seems to be that "growing debt is undesirable, because it represents a growing burden on our children." That leads to the first of my two questions:

1. If the USA's Gross Domestic Product grew at a slightly faster rate than the federal debt grew, year in and year out, would the USA's fiscal health be getting worse because of the increasing debt, or would it be getting better because of the improving debt-to-GDP ratio?

Next, I presume you are aware of the precipitous decline in defense spending during the Clinton administration. This condition alarms me greatly, because a strong defense deters war, while a deteriorating defense invites misadventure by foreign rivals. Moreover, a Balanced Budget Amendment, which Concord advocates, would forbid borrowing except in cases of national emergency. That wording puzzles me, and leads to my second question:

2. Why should it be permissible for the government to borrow money to win a war - yet impermissible to borrow money beforehand, to prevent that war from starting?

I've been waiting and listening patiently for satisfactory answers for nine years.  I've never heard one yet.  Until I do, I'll stick with my recommendation to John McCain: Clean house; put Jack Kemp in charge, and get rid of the Concord bunch. 

And if you don't want to do it that way, then I recommend sending Jack over to Obama's team, where his talent won't be wasted. 

=============
End note:

Ron Paul was mentioned in that same article, so I need to add this note, just so there's no confusion as to where I stand on Ron Paul's ideas about monetary economics (...i.e., that the Fed is a conspiracy, gold is king, "more money" means "inflation," etc.).  Here is my position: 

I have as much enthusiasm for placing gynecologist Ron Paul in charge of monetary policy as I have for placing economist Ben Bernanke in charge of maternity wards and pap smears.

I explained this in more detail in the article, Two different definitions of "inflation": Ron Paul's, and Ben Bernanke's.

Comments

[Steven]

Megan McArdle had a great comment on McCain and economic policy:

"McCain is not a classical liberal; he's the product of an intensely hierarchical honor culture that he seems to think would substantially improve the rest of us if we adopted more of its values. I have no shortage of respect for the military, and their willingness to place their own lives between the rest of us and war's desolation. But that doesn't mean I think America would be a better place if we had a more martial state. His record bespeaks little respect for spontaneous order and individual freedom. What free-market instincts he evinces seem to have come as part of the conservative ideas combo-pack he bought because it was cheaper than buying the parts individually--all he really wanted was the national greatness and the moderately conservative social structure."

http://meganmcardle.theatlantic.com/archives/2008/02/obamarama_2.php

[Jim Thornton]

Clausewitz defined war as politics by other means. Nation states employ war to acheive political goals. When discussing national defense the prevention of war is paramount, but at times it is advantageous to wage war. Preemptive war is an example and is justified by an enemy that cannot be deterred and must be destroyed. Nazi Germany probably fits this criteria. The military must practice it's craft from time to time. Joint forces employing a unified command and control system against Cuban forces in Grenada was an example of the US military employing new tactics and drawing valuable lessons learned that in turn were applied in Desert Storm. Perhaps your premise should have been "Preventing an unwanted war should be a top national priority."

[GolfinGuy]

While I agree with 'war prevention' as a worthy investment - I (possibly) disagree that Iraq is something we should have focused upon.

Eliminate the Iraq investments (which I believe were unnecessary) and we may have had that balanced budget that would have won you that bet.

So, while I agree that a balanced budget or a reduced deficit mean little - wasted funds under the falsehood of security are even worse. True security sure, but Iraq has been a mess.

[Bob]

Steve, you'll get your response when pigs fly. Mox nix, though. Regardless of who Obama has selected
he's still a Chicago machine, Illinois lib. You want war prevention? Go with McCain as the lesser of the evils.

[Gilleland]

Steve,
You've given the Concord Coalition the opportunity to expand and refine their thinking and platform around government fiscal responsibility. I applaud you for that.

As someone who finds value in their analysis and reports, I can see that they would be well served to address your point and reconcile their views with it.

However, given our projected long-term fiscal imbalance (their main concern that it isn't being addressed) I can see why they are "staying on point" and not diluting their message with something more nuanced.

Personally, I think they deserve some slack. To my knowledge they haven't come out against the value of investments (deficit spending or not) that mitigate the risks of war so although they haven't addressed your very valid point they also aren't directly working against it either.

Granted: they would be a stronger organization if they addressed this concern.

[Steve]

Gilleland:

Thanks for your note; good points. My position is: I've tried locic and gentle persuasion for years and years; it hasn't worked. My patience is running out, and so is my lifespan. Maybe not-so-gentle persuasion will work better. I'll find out.

Their message is oversimplified to the point that it's dangerous, not helpful. Einstein said "Everything should be made as simple as possible, but not simpler."

Maybe getting fired would help nudge their message in the right direction.

[Andy]

GolfinGuy:

Although it's not possible to be 100% sure, I think all of us including Steve would agree that the money invested to prevent the Iraq war would have been significantly less than the money already spent on the war, not to mention the money we have yet to spend.

Steve,

I haven't had the time to comment since before you told everyone to identify themselves. I'll send you an email.

[Chris B]

I think you set up a straw man as the second argument for war preventin. Nobody is advocating that the United States should cut military spending by 50%. However, when 48% of the defense spending inthe world is done by the United States, you have to ask yourself - How much is enough? (source is in the URL linked to under my name). There is prudent spending to "prevent foreign misadventures" and there is taking from other programs that need the money more.

Some examples are the ludicrously expensive F-22 program - did the Air Force need to design such an expensive jet ($137 million each- claimed cost... after $62 Billion in development). Or, do they need to increase the funds for every service in lockstep. I think we can all agre that the Army and Marines are bearing the brunt of the Iraq war - why should the increases for these branches be matched in the Navy and Air Force (oh right, because Senators need to win their home seats)

[Andy]

Chris B,

"There is prudent spending to 'prevent foreign misadventures' and there is taking from other programs that need the money more."

Why should any investment be scrutinized in terms of opportunity cost for other programs? I'm not saying your F-22 example is right or wrong, but if we accept that it is fundamentally sound practice to employ borrowing in order to fund good investments, then shouldn't the focus be the economic integrity of each investment in and of itself and not comparing total dollar amounts between them?

[Chris B]

The problem with comparing each investment on its merits when you are borrowing for them is that here is never going to be any end to that.

There is a good case for building affordable housing, universal health care, keeping the military well funded, etc etc. All of these investments can be justified on their own. There has to be a line drawn somewhere in the budgeting process in terms of TOTAL expenditure. In my opinion, in the United States, the military eats up too much of the nite amount of dollars there are - preventing more productive expenditures elsewhere. It is a reality that if the Military gets 500 Billion dollars that means some money is not available elsewhere for some other priority. And, most of these investments are not scrutinised on their benefits to the American economy, or even to the american military, but on other criteria (does it help out congressman X, does it ensure that the Air Force's budget goes up, does it help some firm that contributed to our campaign etc etc)

[Mike H.]

Kudlow's interview with Gramm makes him sound relatively reasonable. I think McCain is fine having him on board.

http://tinyurl.com/2yxh9q

[Andy]

Chris B,

In your opinion, where should the line be drawn in terms of total expenditure? (For the record, I'd agree that we're currently past that line.)

[Lou]

"War prevention should be one of our nation's top priorities."

Sure it should and I wish it were. And I agree you don't prevent war with wishful thinking.

But spending for defense is not this country's problem. We are unable to come up with an effective plan of action and execute it.

This is not an economic question. We seem unable to either find or define who our enemies are in this war. A bloody game of international wack-a-mole is no substitute for effective policy.

You know if you have a hammer everything looks like a nail. I guess our military strategy is if you have bombs everything looks like a target. And, I guess, if you're an economist, you've got to talk about fiscal responsibility even if the questions on the table have little, if anything, to do with economics

[rg]

Where is this US paranoia to be permanently under attack come from?

Why do Americans think they are more exposed to attacks then anybody else? After all this is the justification for the biggest "defence" budged in the world.

And finally, IF the US really is more exposed to attacks then anybody else, WHY do Americans think that is the case?

rg

[Steve]

The USA spends less of its income on the military than 27 other countries do, including China, Singapore, Syria, Saudi Arabia, and Chad, according to this ranking list: http://tinyurl.com/3b77yh

The porcupine and the cockle bur have the same defensive strategy, but the porcupine's strategy requires significantly larger quills.

Metaphors aside, my wishful-thinking list includes seeing all countries' so-called defense expenditures separated into "defense" and "offense" expenditures. That would liven up the debate. It will never happen, of course -- and even if someone attempted it, they'd need to add a third category named "can't tell which."

[rg]

Thank you Steve

I am well aware of what you say in your response, however, it does not answer any of the questions I have asked above.

Thanks anyway, may be somebody else will answer.

By the way, I do like your blog very much, it is just that I fail to understand this paranoia from the US.

But like I said, IF the US really is more exposed to attacks then anybody else, WHY do Americans think that is the case? After all, it has not always been that way, right?

rg

[Rodger Malcolm Mitchell]

Don't be too frustrated with the Concord Coalition never answering your questions. They have one mantra - "Debt is bad" -- which they never justify with any data.

I once joined their blog to see what they say, and later I was removed, because I asked too many embarrassing questions, like for instance, "What is your proof?" (They hate that.)
If you would like to see the discussions, go to: http://rodgermitchell.com/extras.html
You'll find it amusing, because it demonstrates hilarious the mindlessness of this group.

[Gilleland]

With the prospects of low to moderate economic growth at best and a "tsunami" of entitlement spending in the coming years, the Concord Coalition is right to be concerned about our current debt load and likely needs for future borrowing.

Since I have been reading their analysis and positions over the past 3-4 years they have all been with our future liabilities in mind--not a narrow minded belief that "debt is bad".

They are right to be sounding the warning and doing so with bi-partisan support with the Brookings Institute, Heritage Foundation, and the GAO.

It is somewhat dissapointing that they diminsh the importance of economic growth as an important factor that can help resolve the imbalance but on the whole they are doing a great service to raise the alarm.