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February 17, 2005

Rethinking The Surplus


Steve Conover has been working his magic again. This week he looks at that chimeric creature, the Clinton-era budget surplus:

...in the mid/late '90s, "The Peace Dividend" joined forces with an economic-boom-driven surge in tax receipts to create a budget surplus. What a bonanza, we all thought. Well, almost all of us, anyway . . .

He started looking at the relationship between GDP growth, tax receipts, and spending patterns and came to an interesting conclusion:

Our 1990's decision to reduce national security spending, i.e., our decision not to invest "The Peace Dividend" in enhancing future peace prospects, was a huge factor in the creation of the falsely-revered surplus. (Falsely-revered because it made only a small dent in our ho-hum debt burden.)
Would the Pentagon, Foggy Bottom, and Langley have used a reinvested Peace Dividend to successfully counter the asymmetric threats which subsequently destroyed embassies in Kenya and Tanzania, killed seventeen servicemen on the USS Cole, or murdered thousands on 9-11-01? Maybe, maybe not; I'd like to think so, because I'm an optimist. But we'll never know.

A related (and perhaps ultimately more important) question that springs to my mind:

We will never know whether increased defense/intel spending would have prevented those disasters. Terrorist attacks are hard to prevent on an individual basis.

But did we, by our open throttling back on defense and intel spending during the 1990's, signal to the world that we were no longer serious about counter-terrorism? And in so doing, did we encourage and invite future attacks?

That's a question I'd like the answer to.

Posted by Cassandra at February 17, 2005 09:37 AM

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We've been signaling that we're soft on terrorism ever since before the Beirut bombing of the Marines. How many people know that the Marines that went into Lebanon in the 70's (one platoon in a couple of LSD's, if I remember correctly) were completely unarmed so as not to accidently provoke anyone? Reduced defense spending in the '90's had very little to do with the signals we sent the rest of the world. Khobar Towers was a much larger signal.

Posted by: Rex at February 17, 2005 12:06 PM

That chart.....I am going to have to study on that.....I think there might be an epiphany in there somewhere.

Posted by: Pile On® at February 17, 2005 05:56 PM

Could I make one teensy, tiny point about this "surplus" business?
The American government is in debt. The American government has operates on a yearly budget. In some years it has taken in more than it has spent, but that does not mean that it has extra money. It is still in debt. The debt is still there; there is no "peace dividend".

Posted by: MrsPurpleRaider at February 17, 2005 06:46 PM

We borrowed money every year -- even the years with the surplus. We don't count inter-agency IOUs in the debt (though under GAAP, companies than loan money between subs or divisions must). The Govt. does not operate under GAAP. The only issue is how all revenues match all spending, including those things currently off the books.

Posted by: KJ at February 17, 2005 07:30 PM

absolutely right. But how are we going to get an accurate accounting?

Posted by: MrsPurpleRaider at February 17, 2005 07:39 PM

Elect livid terriers I guess. But make sure they are strong on national defense. :-)

Posted by: KJ at February 17, 2005 07:42 PM


Prior to 9/11--under the watch of a Republican administration which now seems to have had plenty of evidence, if it had cared to pay attention, that something was coming from the skies--the most deadly terrorist attack against Americans was in 1983, under another Republican administration, against a Marine barracks in Beirut. This was during a period of massive increases in defense spending, and what did that administration do? Pull out of Lebanon. I'm not sure that the terrorists spend that much time reviewing our defense budgets. Rather it appears that they just wait for Republican presidents. Still, I see your point: it's all Clinton's fault, despite the fact that the peace dividend originated under the first Bush administration, you know, those cuts in defense and weapons that Cheney championed and then beat Kerry over the head with.

Posted by: Bloggerhead at February 18, 2005 02:33 AM


[long sigh...]

You don't know me, and I am not about to get into this at length, but let me say this:

My husband was in the Pentagon on 9/11, working in anti-terrorism, as it so happens. So unless you're some kind of closet expert, he knows a bit more about it than you do. I also have family members in other positions who have some knowledge of this matter that I can't comment on.

What we had were a million vague, unactionable warnings. End of story. In the unlikely event we'd had a specific threat and tried to do anything about it, people like you would have been shrieking about neocon conspiricies, civil liberties, and racial profiling - even after 3000 dead we can't get America to be serious about national security. Get real.

'It appears they wait for R pres" - c'mon... nice that you ignore the 1st WTC attack, Oklahoma City the Cole, Khobar towers, the 2 embassy attacks, I could go on and on...

Re: it's all Clinton's fault: I never said that.

You make my Hume case for me here as well.

Due to your overwhelming bias, you are determined to read something into a short post that says nothing of the kind. Should I resign now too?


But did we, by our open throttling back on defense and intel spending during the 1990's, signal to the world that we were no longer serious about counter-terrorism? And in so doing, did we encourage and invite future attacks?




Got it?

Posted by: Cassandra at February 18, 2005 05:06 AM


I got it. I kinda made this an Rep/Dem issue, when it's not clear that's how you were taking it. For that, I should apologize. It's not that I'm so blindly partisan; I'm just irretrievably obnoxious is all.

I do think that, for your own partisan reasons, which you have fairly acknowleged, you wish to minimize this administration's failure to take seriously the outgoing administration's warnings about terrorism and it's apparent failure to do anything at all about those "million" warnings. I mean, is there really such a thing as an "unactionable" warning? Surely, there was some action that could have been taken.

By the way, I don't think Hume should be fired or resign. Denunciations, retractions, calls to resign, apologies, these are, for me, merely blogospheric conventions that serve for amusement only, kind of like snark. (Unless I'm doing the apologizing, of course.) It's enough that the record be reviewed and an attempt be made to hash things out. And we certainly have enough of that.

Posted by: Bloggerhead at February 18, 2005 11:40 AM

Bloggerhead, something bad is going to happen to you sometime in your life. Consider yourself warned, now quick...take action.

Posted by: Pile On® at February 18, 2005 11:51 AM

Bloggerhead, FWIW, if you were familiar with my writings on the 9/11 commission, I thought the entire undertaking was asinine.

Why? Because I don't think the Clinton administration was culpable for 9/11 either.

I agree with Dr. Rice. We were all asleep at the wheel. I see no useful point in recriminations or looking back - the truth is, even knowing what we did wrong then won't give us the balls to fix it. It just sets Peter against Paul, which delights al Qaeda no end. They are laughing themselves silly at the foolish Americans who don't understand where the real danger lies.

I think we need to stop blaming each other and look ahead.

Posted by: Cassandra at February 18, 2005 11:53 AM

If you did not want to make this a Rep/Dem issue, why talk about THIS administration's failure, and then skip back to 1983, emphasizing that that was another Republican administration, while ignoring the Democrat administration in between?

The "peace dividend" was a leftist fantasy, based on the idea that they are entitled to spend everything the American people make. It was not Republicans who urged cutbacks in the military. It was the left, who have been doing so for the entire half century that I have walked this earth.

Cassandra, don't be so defensive. You said nothing "partisan", or wrong. Bloggerhead's posts are "partisan", without the thought that you have put into yours.

Posted by: MrsPurpleRaider at February 18, 2005 08:26 PM

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