Month: May 2012

Categories
NY Analysis

Missile Defense Debate

Observers describing the fall of the Soviet Union have noted that President Reagan’s 1983 proposal to develop an anti ballistic missile defense system played a role in the Kremlin’s loss of confidence that led to the breakup of the USSR.  Decades later, this unique defensive weapons concept remains at the center of national and international controversy.    

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   The need for defense against a missile attack aimed at the United States and its allies has become more pronounced than ever.  China is now a major threat, along with several other states.   Iran already has medium range missiles capable of hitting targets throughout the Middle East and Southern Europe, and, with assistance from the Russians and North Koreans, will have an ICBM capable of targeting the USA by 2015. (There are also some intelligence reports that Tehran may share this technology with Syria.)
   North Korea’s No Dong missile can reach US allies Japan and South Korea, and is expected to soon perfect its Taepo-Dong 2 missile which can target America.  Even more worrisome, Pyongyang is developing a road-mobile ICBM, which could make it immune from allied efforts to prevent a launch of a nuclear strike against American soil.
   NATO Secretary General Anders Fogh Ramussen, As quoted in a National Review article, is concerned that over thirty nations have acquired or are seeking to acquire ballistic missile technology.
   Not to be forgotten, Russia has modernized its ICBM capability. The Obama Administration’s New START Treaty with Moscow mandates that Washington reduce its strategic capabilities, while allowing the Kremlin to expand theirs. While the U.S. delays implementing an effective ABM shield, START allows Russia to make strategic gains.It wasn’t just Republicans that were infuriated.  Rep. Denny Rehberg (D-Mont.) was quoted in The Hill newspaper stating that “The new START treaty with Russia will go down as one of the worst, most one-sided deals in our country’s history.”
   The ability to defend against an incoming missile by means other than the threat of launching a counter attack against an aggressor helps eliminate the threat of a nuclear exchange escalating out of control.  Ellen Tauscher, the State Department’s Special Envoy for Strategic Stability and Missile defense, noted that “it presents an opportunity to put aside the vestiges of cold war thinking and move away from Mutually Assured Destruction toward Mutually Assured Stability.”
   The threat comes from both long-range ICBMs and theater-range missiles. As recently noted by the State Department’s Frank Rose, who serves as the Deputy Assistant Secretary at the Bureau of Arms Control, “Today, the threat from short-, medium, and intermediate range ballistic missiles is likely to increase both in quantitative and qualitative terms in the coming years, as some states are increasing their inventories, and making their ballistic missiles more accurate, mobile, and survivable.”
   In response, the House of Representatives included $100 million dollars for ABM development in its version of the 2013 Defense Appropriations Bill this month. The funds would be used to develop a missile defense site on America’s East Coast.  (Two other sites exist in Alaska and California.)  The new site could become operational by 2015, employing 20 ground-based interceptors at a total cost of approximately $2 billion.
   It’s the latest move to provide some protection to the US homeland.  Last November, House Members Mike Turner (R-Ohio), Mike Rogers (R-Alabama), Trent Franks (R-Arizona) Douglas Lamborn (R-Colorado) and Mac Thornberry (R-Texas) urged the Obama Administration to move ahead with missile defense.
   The Obama Administration and Congressional Democrats have been reluctant to implement missile defense, opposing the House’s appropriation for the East Coast site. Rep. Jared Polis (D-Colo.) is seeking to defund the ABM program and redirect the funds to domestic, nonmilitary programs.  The President’s opposition has been longstanding.  In 2001, then-Senator Obama stated that he was opposed to missile defense; as a candidate for president, he pledged to eliminate funding for it. The President continues to advocate the slashing of funding and implementation plans for ABM systems, and is committed to completely prevent any space-related ABM plans.
   The opposition has resulted in significant embarrassment for the White House.  Plans to move ahead with limited ABM protection against an Iranian threat to Europe were a product of extensive negotiations between the Bush Administration and Eastern Europe.  Former Soviet satellites in Eastern Europe, where key ABM elements would be based, had to endure a war of words from Moscow, which has persistently opposed any NATO self-protection measures.  However, President Obama proclaimed on Sept. 17, 2009, that he was unilaterally stopping the plan. The date he announced this was the 70th anniversary of the Soviet invasion of Poland. The President’s decision infuriated Warsaw’s leaders, who had to expend significant political capital to gain approval from their voters.  The resulting loss of Eastern Europe’s trust in the White House directly led to the Czech Republic’s withdrawal from related agreements.
   Thus far, despite wobbling on the part of the White House, Moscow has not been able to dissuade European governments from support for ABM protection.  In an interesting development, Bloomberg News recently reported that France’s new socialist-minded President Francois Hollande has solidly backed missile defense.
   The second major White House embarrassment came in March.  At a meeting in South Korea at a global security summit, the president, believing that microphones were turned off, pleaded for “space” and “time”on the issue of missile defense with Russian President Medvedev.  “This is my last election,” he stated.  “After my election, I will have more flexibility.”  Medvedev replied that he would “transmit this information to Vladimir.”
   Rep. Turner immediately demanded an explanation.  His insistence that the President define what “flexibility” he was offering has not been adequately answered by the White House. The House of Representatives was so enraged that it included language in the recent appropriations bill limiting the President’s ability to negotiate with Moscow on nuclear arms issues.
   Distrust of the Administration’s attitude towards missile defense has been high since the President conceded to Russian demands to cancel plans for additional ground-based interceptors in Europe.  The concession didn’t satisfy Moscow, which now demands written, legislative guarantees that the interceptors be forbidden from countering any Russian missiles.
   Despite their opposition to American ABM efforts, Moscow has long been a leader in antimissile efforts. In 1962, the USSR initiated construction of the globe’s first operational ABM system, and engaged in a major upgrade in the late1970’s.  Its effectiveness, however, was not considered especially high, leading to Moscow’s fears that superior American technology would provide the U.S. with an advantage.
   Russia has conceded the fact that the ABM systems being deployed by the US are of little consequence to the Kremlin’s vast nuclear ICBM force. The Kremlin continues to press for concessions from Washington anyway, despite numerous ongoing trust-building efforts and joint projects on the part of NATO and the United States.  Part of Moscow’s bluster may be part of an effort to take advantage of what they clearly perceive to be a uniquely friendly White House.  Bloomberg News quoted Russian Deputy Defense Minister Antoly Antonov as saying that Moscow seeks to gain long term legislative guarantees against ABM now because “What if a new leader comes in November and dismisses all that the previous one has done?”
   In an effort to rapidly solidify concessions given by President Obama before a potential new administration has the chance to replace it, Moscow officials have resorted to threats reminiscent of the Cold War.  Despite Washington’s concessions to Russian demands that have already alienated the Obama Administration from American allies in Eastern Europe, the Associated Press reports that Russia’s top military officer, Chief of general Staff Nikolai Makarov threatened a pre-emptive strike on NATO missile defense facilities in Eastern Europe if they are built.
   The Russian threats, which are not particularly creditable, are rather hypocritical since Moscow continues to develop its own ABM capability.  Russian media widely covered the combat-ready status of a new ABM facility in Kaliningrad in late 2011, for example.
   Although continuing to face political obstacles, U.S. ABM technology, both for long and theater range threats, has experienced significant successes. This month, the Aegis Ashore program has been green lighted for deployment in Romania by 2015 and Poland by 2018, according to the Missile Defense Briefing Report. The existing sea-based system had a major success on May 10 in its interception of a short-range ballistic missile target with the Navy’s new second generation missile defense interceptor.  This advanced capability, notes the Missile Defense Advocacy Alliance, will allow the U.S. to handle more sophisticated missile threats.

Significant numbers of nations, some of which are openly threatening U.S. interests and allies, are gaining or have already gained advanced nuclear-capable missile technology.  The time for Washington to take protective measures is now.

Categories
NY Analysis

Higher Taxes Will Harm The Economy & Worsen Unemployment

As of May 10, the federal deficit was $15,678,869,907,107.48, according to the National Debt Clock.org site.  The question of whether Washington can reduce the deficit while avoiding a worsening of the economic climate has come to a head in the debate over the expiring Bush Tax Cuts.

   Cutting federal spending is a difficult maneuver in an election year.  However, there has been a 21.4% increase in federal spending over the past two years, according to the Wall Street Journal.  Government spending as a share of the economy is about 24% under Obama, several points higher than under President Bush and significantly higher than the historical average of 20.7%, according to U.S. Government Spending.com. A 6.2% increase in federal employees during the Obama Administration, (CNN/Money) and the $787 billion stimulus account for a portion of that hike.

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FEDERAL RECEIPTS/OUTLAYS/DEFICITS
(From Tax Policy Center statistics)
(Billions of dollars, in constant 2005 dollars)
                         YEAR                         RECEIPTS                         OUTLAYS                        DEFICIT
                         1952                          635.6                               650.2                               14.6
                         1962                          659.7                                707                                  47.3
                          1972                         908.1                                 1010.4                            102.4
                          1982                         1202.8                                1452                              249.2
                          1992                         1467.5                                1857.9                           390.4
                          2002                         2028.6                                 2201.3                           172.7
                           ——————————————————————————–
Statistics under Obama Presidency
(2008=Last year of Bush Presidency)
                          2008                        2,288.1                                 2703.8                            415.7
                          2009                        1899                                      3173.4                            1274.4
                          2010                         1927.9                                   3081                               1153
                          2011                          1998.7                                  3126.3                           1127.6
The rate of deficit increase during the three years of the Obama presidency exceeds the general rate of increase per decade over the past half century.
Should tax increases be employed to reduce the deficit?  Should those increases come from allowing the Bush Tax Cuts to expire?
FACTCHECK has refuted claims by DNC Chair Howard dean that “60% of the deficit is due to the Bush Tax Cuts.” According to Harvard Economics Professor Martin Feldstein’s Wall Street Journal article,
“Historians and economists who’ve studied the 1930s conclude that the tax increases passed during that decade derailed the recovery and slowed the decline in unemployment. That was true of the 1935 tax on corporate earnings and of the 1937 introduction of the payroll tax. Japan did the same destructive thing by raising its value-added tax rate in 1997.”
Taxes are scheduled to skyrocket in 2013.  34% of the increases are due to the expiring Bush Tax Cuts, 25% from the expiration of the payroll tax cut, and the remainder from various provisions of President Obama’s health care reforms.  Top rates will climb to 39.6% from 35%, the child tax credit would shrink, the capital gains tax would soar to 20% from 15%, (which could play a major role in a harsh employment picture) and the estate tax would affect more families, as noted in a Heritage/CRS report.
Bloomberg News has described how Republicans, particularly guided by Rep. Ryan, have produced various proposals to prevent the hike.  Senate Democrats  blocked these proposals, although there is general agreement that some protection for taxpayers in the under $200,000 bracket is required.
The higher taxes under consideration would, at first glance, appear capable of reducing the deficit by about 17.7%, as a recent NPR report argued.  But the reality of that concept’s approach is less optimistic. History indicates that tax hikes deepen and prolong economic downturns, promote long term unemployment, and makes the U.S. less competitive in the global economy.  In the final analysis, a reduced economic outlook would reduce federal revenues far greater than tax hikes would increase them.
Heritage examined the effects of tax hikes and cuts during the 1990s.
“The 1993 Clinton tax hikes slowed economic growth during that decade, despite the common assumption that it was a period of rapid expansion.  It was not until a tax cut later in the decade that growth took off.  Lower rates paved the way for faster growth.  The 2003 Bush tax cuts helped the economy recover from a recession [initiated by the “Dot.com” bubble burst] and put it on a stronger footing in the face of growing headwinds [caused in part of the events of 9/11.]”
The impact of higher taxes on the prolonged employment downturn is particularly worrisome, particularly in light of historical analysis.  Under the current administration, the latest (April) unemployment rate is 8.1%, continuing the trend of high unemployment rates which have seen, in April of their respective years,  8.9% (2009), 9.9% (2010), and 9.0 (2011).  These are dramatically higher than the rates experienced during the prior Administration, which ranged from a low of 4.5% to a high of 6.0%.  But these statistics reveal only part of the ominous trend.  Long term unemployment (27 weeks or longer), at 5.1 million, represents 41.3% of all those unemployed, and there are 7.9 million “forced part timers” as well.  Civilian labor force participation has declined to 63.6%, a sharp drop from 2000 (67.1) and even from 2010 (64.7).  The severe, detrimental effects of the past several years of high unemployment will continue even after jobs rebound.  As noted by Christine Dugas in a USA Today article, many families who lost jobs used savings to pay current bills and went into debt.  Even after securing new jobs, they are not going to spend at normal levels until those debts are paid.
This must be contrasted with the policy of the prior administration.  Faced with an economic downturn, President Bush lowered taxes, which produced significantly lower unemployment rates.  The Tax Foundation notes that these followed historical precedent.  When President Kennedy cut taxes, and when President Reagan did the same, the economy accelerated.
Although a 2010 Pew study argued that continuing the Bush tax cuts would negatively impact the national debt, it noted that “many who are concerned about the high cost of extending the tax cuts acknowledge that it would be unwise to let them expire while the economy is still fragile.
The Tax Foundation argues that those who claim that the Bush tax cuts didn’t aid all economic groups are incorrect.
“Virtually every tax return received a tax cut as a result of the 2001 and 2003 Bush tax cuts.  Even many tax returns at the very bottom of the income scale that paid no income taxes to the IRS saw an increase in their refundable credit amount.”
The argument that tax increases reduce budget deficits lacks substantiation.  Alvin Rabushka, writing for the Hoover Institute, noted that between 1950 and 1992, total federal receipts rose from $39.4 billion to $1.09 trillion.  Total spending over the same period increased from 42.6 billion to 1.38 trillion.
“Deficit reducing tax increases in particular, show no perceptible impact on deficit reduction;  indeed, they appear to have the perverse effect of increasing future deficits.”  Tax increases retard economic development which eventually increases the deficit.
In the final analysis, tax revenue will never be sufficient if federal spending is unchecked, and if the economic activity upon which it is based is unhealthy. Domestic non defense spending growth over the past eighty two years reached a peak rate of increase in the past several years–a self defeating treadmill to nowhere.  At a time when unemployment continues to soar and the economy continues to stagger, significant tax increases are demonstratively counterproductive.

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SOUTH CHINA SEA FLASHPOINT

Philippine President Benigno S. Aquino III warned Southeast Asian nations during April about Beijing’s increasingly aggressive posture in the South China Sea.  The area is becoming one of the most dangerous hotspots on the planet.

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   Despite talks going back to 2002, regional tensions have not only remained high but have continued to escalate.  China Brief has outlined a number of incidents. In 2009, Chinese vessels clashed with the American surveillance ship “Impeccable.” In 2010, although the United States maintained an officially neutral position (but with an increased area presence,) China informed the United States that it would not tolerate what it termed America’s “interference.” In 2011, Vietnam accused Chinese vessels of cutting cables on one oil survey ship and ramming the cables on another.
  Tense standoffs have occurred between Chinese and Philippine vessels, continuing into 2012.  Last month, three Chinese patrol boats confronted a Philippine naval ship near Scarborough Shoals in a dispute over fishing rights.
   A Foreign Policy report by Robert Kaplan describes the South China Sea as the “future of conflict” in the world.  The reasons are clear.  For the first time, China’s land borders are secure, allowing it to concentrate on expanding its influence abroad.  The shipping that supplies a resource-hungry planet moves significantly through the region, which in itself is a future source of energy exploitation.  Kaplan notes that “more than half the world’s annual merchant fleet tonnage passes through…and a third of all maritime traffic.”  Indeed, more than six times the oil that passes through the Suez Canal and seventeen times that which passes through the Panama Canal transits the South China Sea’s choke points.
   Beijing, thirsty for energy assets and with a newly powerful navy, maintains that it has sovereignty over almost all of the South China Sea, contradicting the claims of other area nations and in defiance of the United Nations Law of the Sea.
   The BBC reports that Chinese officials base their claims on the explorations of Chinese navigators in ancient times, a concept not only refuted but mocked by others.  Last February, Lt. General Juancho Sabban of the Philippine Armed Forces’ Western Command noted in a BBC interview, “By the same logic, Filipinos travelled to China centuries ago, so the Philippines should be able to claim some of China.”
  China’s claim is ironic, at best.  The last standing of the great Communist powers is using, essentially, a type of historical imperialist act that it has universally condemned in other nations to justify its own actions.
   Beijing has not been cooperative in attempts to negotiate the issue through regional talks, preferring to deal separately with each national claimant, a tactic that allows it to use armed intimidation as an effective tool. On April 28, China’s General Luo Yuan said his nation should be prepared for “war at all costs” to enforce its claims, according to a commentary posted onchina.org.cn. China has rejected attempts to litigate the matter before the International Tribunal on the Law of the Sea.
  
  The problem can be seen most clearly in the heated territorial disputes between Manila and Beijing. While disagreements between the two nations have existed for some time, the rise of China’s armed forces and the sharp reduction of the American Navy have transformed the problem from a political argument between diplomats to a military flashpoint between warships. As 2011 drew to a close, The Jakarta Post reported  on an Indonesia Center of Democracy, Diplomacy and Defense study noting an escalated naval presence in the South China Sea that included 27 Chinese vessels, 26 from Taiwan, two from Malaysia and one from the Philippines.
   Two particular areas, the Spratly Islands and the Scarborough Shoal, are the focus of an inflammatory disagreement between Manila and Beijing. They have, as noted by the CIA, no indigenous population, but rest in strategic waters relatively close to the Philippines.
  As noted in an April Congressional Research Service Report written by Thomas Lum, “In 2011, Chinese naval forces reportedly harassed Philippine fishing and oil exploration vessels and erected structures in disputed waters of the South China Sea near the Philippine island of Palawan…The Philippine government has demanded that Beijing negotiate a code of conduct and settlement of claims with the principal regional body, the Association of Southeast Asian Nations (ASEAN.)”  Philippine President Aquino increased his nations’ paltry defense budget (about 0.9% of GDP, according to CIAestimates,) and called for more U.S. assistance.
   The over 100 Spratly Islands are a resource-rich region claimed in whole or part by The Philippines, China, Taiwan, Vietnam, and Malaysia. Brunei also claims some portions of the abundant fishing grounds in the area.  Similarly, The Scarborough Shoal is also a resource prize.  The Georgetown Journalhas reported that estimates of at least 7 billion barrels of oil (at least 80% the capacity of Saudi Arabia) and up to 900 trillion cubic feet of natural gas lay in the region. The Congressional Research Service report notes that the oil and natural gas reserves lie within the Philippines’ 200 mile Exclusive Economic Zone, although China has also laid claims to them.
   The Obama Administration has refused to officially back Manila’s rights to the Spratlys and Scarborough Shoal, but has engaged in joint regional exercises with the Philippine armed forces (AFP) a position consistent with that of its predecessors.  At a joint meeting in Washington on April 30 that included U.S. Secretary of State Hillary Clinton, Defense Secretary Leon Panetta, Philippines Foreign Secretary Albert del Rosario, and Philippines Defense Secretary Voltaire Gazmin, Clinton stated:
   “We both share deep concerns about…recent tensions in the South China Sea…In this context, the United States has been clear and consistent.  While we do not take sides on the competing sovereignty claims to land features in the South China Sea, as a Pacific power we have a national interest in freedom of navigation, the maintenance of peace and stability, respect for international law, and the unimpeded, lawful commerce across our sea lanes.  The United States supports a collaborative diplomatic process by all those involved for resolving the various disputes that they encounter.  We oppose the threat of force or use of force by any party to advance its claims.  And we will remain in close contact with our ally, the Philippines.”
  Tensions sparked by China’s aggressive actions in the South China Sea have sparked a review of the inadequate strength of the Philippine Armed Forces (AFP.)   The AFP is among the weakest in the world for a nation of its size-ranked 140th in strength by the CIA. Manila’s Defense Secretary Gazmin believes China has singled out the Philippines for particularly harsh treatment because of its weak military, according to a report in the Philippine Daily Inquirer. The military of its chief external opponent, China, (there are ongoing internal indigenous issues as well) is among the worlds’ most powerful. As recently analyzed in The NY Analysis of Policy & Government, Beijing’s maritime strength is rivaled only by the US Navy in power. China’s submarine force is nearly double that of America’s. By 2015, its total fleet will be larger than that of the U.S. Navy.
  In April, Manila appealed to Washington for help in improving the woefully inadequate condition of its armed forces. Foreign Secretary del Rosario was candid in his assessment of the Philippines’ inadequate military, and urged the United States to step up its military assistance.  Last month, as part of a regularly scheduled series of exercises, U.S. and Philippine forces engaged in a joint training maneuver entitled Balikatan 28.  Not unexpectedly, Beijing took offense.
  The South China Sea will remain a dangerous flashpoint, made more perilous by the reduced size of the U.S. Navy and the inability of regional nations to counter China’s military prowess.