Written by G. Ross Stephens   

Over three decades, since Ronald Reagan was inaugurated, we have privatized defense and national security and militarized the economy and foreign policy. If you peruse the Historical Tables of the federal budget, you will find that only about 20 percent goes to our war department (Department of Defense, DOD). What we actually spend for national security and wars past, present, and future is hidden in the budgets of at least eight other federal agencies.

Over the last decade spending for national security/war, including servicing war-incurred debt, amounted to 43 - 50 percent of total federal outlay; three-times Social Security/ Medicare expenditures. Nobel prize economist Joseph Stiglitz called Iraq our $3 trillion war. The Center for Defense Information (CDI, 9/6/2011) tallied the ultimate cost of post-9/11 wars at between $4.7 and $5.4 trillion. Amounts no nation can afford, much less a country that eviscerated its own revenue base by tax abatements and giveaways to corporations and the wealthy. The top ten percent of taxpayers owns 71.5 percent of the wealth and 90.3 percent of the stocks, bonds, and mutual funds. Between 1981 and 2005, federal taxes on business declined 43 percent as we privatized defense.

Since 9/11, 50 to 60 percent of DOD outlay and about 55 percent of the defense activities of the eight other agencies went for procurement contracts. For the Energy Department it’s 85-90 percent(atomic weapons). For intelligence activity, 70 percent. If any government service should be kept ‘in-house’ and not ‘farmed-out’, it’s intelligence.

September 10, 2001, Secretary Donald Rumsfeld lamented that DOD could not account for $2.3 trillion in current and past expenditures. The next day the world changed, there was a feeding frenzy by corporations seeking a piece of the action, the number of contracts nearly tripled over the 1990s, and trillions extra thrown at the department.

DOD’s Defense Contract Management Agency (DCMA) alone has nearly 330,000 single- and multi-year contracts and 11,000 employees. If two-thirds of these employees are auditing contracts, that means each is responsible for 45 contracts worth $80 to $100 million – an impossible task leading to cost- overruns, waste, fraud, and corruption. Contractors are protected from disclosure by the security classification of information. The question is, who, if anyone is monitoring the contracts of the other eight agencies?

Another costly problem is giving up a ‘citizen military’ provided by the draft for a professional voluntary/mercenary (contract soldiers) military. During much of our decades-long wars in Afghanistan and Iraq, there were more contractors on the ground than official military personnel, including corporation provided mercenaries at about three-times the cost of regular military. But the voluntary military is far more costly than personnel supplied by the draft. During the Korean War there were 15 enlisted for every officer; now there are six. It costs one million dollars a year to keep a soldier in Afghanistan. Military personnel receive extra compensation for almost anything they do; some large extras are tax-free. Navy personnel even get extra comp for going to sea. Bonuses for re-enlisting range from $4k to $90k tax free. It has become almost a ‘rite of passage’ for military officers and DOD civilians to become or be hired as contractors after they retire, double-dipping.

Further, there is the problem of the multiplier effect – the amount a dollar of federal expenditure increases the income of individuals and businesses. It is far lower for defense than for domestic services and infrastructure. This, because so much is spent overseas, is very costly per unit, blown up, worn out, subjected to cost overruns, or outdated before it is ever used. The F-22 fighter cost $432 million a copy, plus untold millions in maintenance, and never used in combat. Now, DOD wants the F-35. The U.S. has 53.5 percent of the world’s naval tonnage and spends more on war than the rest of the world combined. Not counting other agencies, the Defense Department alone has 539,000 military bases and sites in the U.S. and around the world. Is this necessary? Spending for war creates fewer jobs and is a drag on the rest of the economy. When a nation spends this much, you need war to justify the expenditure.

The military-industrial complex is alive and well, though the rest of the economy is not. The domestic infrastructure is falling apart. Only military and prison infrastructure is up to date – as we have been busy building infrastructure in Iraq and Afghanistan. The nation is broke and incapable of diagnosing its own problems. Our war-machine has a lock on Congress with military bases and contracts in every state and Congressional district. At least half the tax base is exempt from taxes. We will never solve our debt problems until we drastically reduce war expenditures, take care of domestic problems, and tax wealth and income where it's located. Many great nations self-destructed overspending for war. When you’re in a hole, stop digging.