Monday, June 13, 2011

Will Wall Street Weaken America's National Security?

The defense budget will shrink. That's inevitable, given the toxic swirl of today's federal budget/debt ceiling/tax laws politics. A lousy economy generates less tax revenue. Social Security, Medicare and Medicaid are hard to cut because you'd have to hurt a lot of voters. The federal payroll and the non-Defense, non-entitlement portions of the federal budget are relatively small. Cuts to them won't have much numerical impact. The Defense budget is large, and wears an obvious bullseye on its back.

Outgoing Secretary of Defense Robert Gates has already warned of cuts. He also gave our NATO allies a deserved lecture on increasing their defense capabilities so they can contribute more effectively to the alliance. When America stepped into the background, NATO's air campaign against Muammar Gaddafi sagged, and almost left the Libyan rebels high and dry. The major powers of Europe, unable to effectively spank a crummy tinpot dictator on the other side of the Mediterranean? Gates' admonishment to NATO is another signal that America won't have the resources to be the world's full-time peace officer.

Let's remember that all this goes back to the financial crisis of 2007-08, which originated from greed, recklessness, idiocy, and appallingly bad risk management on Wall Street. However much one might blame Presidents Bush and Obama for proposing taxpayer funded bailouts, however much one might criticize Alan Greenspan, Ben Bernanke and their colleagues at the Fed for printing money and creating asset bubbles and inflation, the root of the problem lies with the big banks. When executives from the major banks now whine about the costs of regulation and heightened capital requirements, bear in mind that America's international stature suffered gravely and will continue to suffer gravely because of the bank-spawned financial crisis. And America's ability to defend itself has been and will be reduced because the big banks weren't kept in line. This is a threat that shouldn't be allowed to recur.

No comments: