Saturday 24 March 2018

Cold war defense spending

The new deficit heavy spending bill increases significantly big ticket, set-piece conflict type item spending. Someone on twitter remarked it was like we are back to 1986.

The truth is we are in 1986, except we are the Russians fighting the Muj in the mountains, there is no real threat from large standing armies.

None of the big ticket items are designed to fight asymmetric warfare. Asymmetric warfare calls for more drones, robots and better armour and more equipment to the on the ground local allies. You wonder how much of the R&D money will go on that type of equipment.

Here is a summary of the big-ticket items:

The Department of Defense is set to gain $61 billion more than last year's enacted funding for a top line of $700 billion.

The funding will be spread over the Pentagon's base budget of $589.5 billion and $65.2 billion for the overseas contingency operations, or OCO, budget. The remainder of the $700 billion is appropriated to other defence-related programs outside the Department of Defense.

The omnibus allocates $144.3 billion for military equipment procurement, including big-ticket items such as:
  • $23.8 billion for 14 Navy ships
  • $10.2 billion for 90 F-35 fighter jets
  • $1.8 billion for 24 F/A-18 fighter jets
  • $9.5 billion for the Missile Defense Agency
The defense-friendly bill also provides $238 billion for operations and maintenance, $89.2 billion for research and development, and $137.7 billion for personnel pay – a 2.4 percent increase from fiscal year 2017.
Source CNBC

So basically its equipment to menace Russia, challenge China and threaten North Korea and Iran. There is $45bn or so there for the Navy to bomb standing armies with.

Russia in my view is no real threat. China has zero intention of intervening anywhere. North Korea is a weak paper tiger. Iran could be attacked from ground bases and is likely better off boxed in and isolated than attacked.

In terms of China's influence, they are expanding their influence via OBOR across Asia, Africa and Central Asia. And they are exporting heavy industrial, infrastructure, clean energy and cheap finished goods.

What does America export to these countries? Generally services, branded goods, IP, some high-end industrial goods.

Put simply China and the US are not directly competitive anyway.

The only real way to explain this is a mix of boondoggle waste for the military-industrial complex, paranoia in the deep state about China and Iran and a generalised effort to stimulate manufacturing related industries. 

What would Bernie have spent $45bn on? Clean energy, EV, energy storage, efficiency technologies, education, supporting exports to EM perhaps?  Or just not spent the money.

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