Tax abatement of the rich/collapse of US military strength

Hawks beware, U.S. military preparedness stands at the brink!

Watch the deficit. It currently stands at roughly two-thirds of one year’s U.S. GDP (gross domestic product), amongst the highest of any developed country.

Trump’s tax proposal, besides providing a largesse for the very wealthy, doesn’t come near collecting enough in taxes to cover the annual budget, causing the deficit to grow by leaps and bounds (one-and-one-half trillion to two trillion dollars over the decade).

Proponents say that by not taxing corporations and “pass-through” businesses, they’ll grow tax revenue.

Utter nonsense!

The deficit will expand exponentially to the point that, before the decade’s end, it will EQUAL the nation’s GDP.  Very Dangerous!  This could cause runaway inflation. It will certainly make our Treasury bondholders nervous, indeed (China and similar sovereign wealth funds), as they begin to fear an Argentina-like default, as interest rates rise and the cost of turning over older Treasuries becomes ever more expensive over an expanding indebtedness.

What’s that got to do with our military strength?  PLENTY!  The Iraq war, as measured by experts across the political spectrum, has cost the U.S. three trillion dollars (including direct battlefield costs, rearming and re-equipping, returning troops, and VA services.

How did we pay for the war, a small one at that? We borrowed the three trillion (that’s three-thousand, thousand million) dollars.

Neither Bush nor Obama could balance the budget, even with yesterday’s tax rates, so the deficit grew and grew. We’re now going to blow another 1- to 2-trillion on tax relief for the rich, bringing us to a future deficit equal to the GDP.

SO WHAT?  It means that there’s no more money for future wars NOR THE MEANS FOR PREPARING FOR ONE.

Another war would cost in the 5- to 6-trillion dollar range, and there is no longer that kind of borrowing capacity.

Take the South China Sea or the Straits of Malacca, two tension spots vis-a-vis China. Were things to heat up between our two Superpowers (we’re not talking war yet!), how do we pay for the costs of protecting our interests in the area? – (re-building submarine and carrier capabilities by then three to four decades obsolete).

Borrow from the Chinese? Like Hell!! Besides, with the U.S. up-the-gazoo in debt, the Chinese could easily threaten to abruptly dump their vast reservoir of U.S. Treasuries on the world market, further destabilizing the U.S. currency and bond situation. The threat of economic panic would essentially force the U.S. into a one-down situation toward any major military threat a decade from now.

North Korea, Russian-invasion of Estonia, a resurgence of the Taliban…We’d be rendered impotent despite being the the most powerful military establishment in the world, for want of the dollars to keep that establishment fighting for the two, three or more years required to win against a formidable foe. One of the most fundamental rules of warfare, across centuries and governments, is the necessity of having good credit with which to create and support large military adventures. We’re giving ours away for a bowl of porridge, to the wealthiest of our citizens!!! RMV

 

 

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3 Comments

  1. RMV starts this opinion piece with a warning to the “Hawks”: “U.S. military preparedness stands at the brink!”

    Given the fact that our USA and western values are being threatened by mortal enemies who are growing more powerful day by day, his concerns are justified. Wars are expensive. We need a strong economy producing lots of resources to withstand the onslaught of barbarians at our gates. Given the fact that ICBMs can fly over gates, the world itself has become the battlefield. To the degree that past Presidents have allowed, or are allowing, our enemies to acquire such weaponry our situation is both more precarious and more expensive. Bottom line: We win, or else we die.

    The most important question would be: Will the proposed tax cuts stimulate or diminish the growth of needed resources? Given that all sectors, all classes, all races, all groups of any positive nature in our country (or in the Western World) will be harmed or destroyed should we lose these wars, tax cuts that will “unevenly” benefit those who are presently contributing the most through taxes pales in significance. What is most important is not the forcing of more equal distributions of wealth. Instead we need to ask: Will money left in the hands of proven producers be used to strengthen our country (grow resources measured by GDP) more so than that same money if taken from them to be redistributed relative to politician’s interests?

    Given that taxes are currently paid disproportionately by those who create resources used by all, it is likely that rewarding them is a better plan than punishing them. Aside from the fact that it probably “works” better and is thus more moral, some would also argue that it is a matter of “fairness” that those who contribute more SHOULD receive more.

    RMV seems to be ignoring the fact that we do not stand alone and our enemies too will find the wars they wage to be expensive. We, by expanding our economy can withstand better the ordeals brought on by conflict. Gorbachev in great part dissolved the Soviet Union because he realized that their system could not compete economically. (Putin seems to be driven by a different (but related) set of agendas – As with most despot leaders – of a personal nature.)

    Our current debt has been caused by many forms of irresponsible promising and spending. The Obama years almost doubled all previous debt and his economic policies kept us for the first time in US history below a 3% GDP growth for each of his years in charge. The great debt of WW2 was something we left behind with robust expansions of productivity. Tax cuts that will cause a growth of America’s GDP describe an important factor if we are to win unavoidable future wars.

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