Category Archives: Sequester

America’s Strategy Deficit

Leading from behind.
By PEGGY NOONAN Updated Jan. 30, 2015 6:33 p.m. ET

Something is going on here.

On Tuesday retired Gen. James Mattis, former head of U.S. Central Command (2010-13) told the Senate Armed Services Committee of his unhappiness at the current conduct of U.S. foreign policy. He said the U.S. is not “adapting to changed circumstances” in the Mideast and must “come out now from our reactive crouch.” Washington needs a “refreshed national strategy”; the White House needs to stop being consumed by specific, daily occurrences that leave it “reacting” to events as if they were isolated and unconnected. He suggested deep bumbling: “Notifying the enemy in advance of our withdrawal dates” and declaring “certain capabilities” off the table is no way to operate.

Sitting beside him was Gen. Jack Keane, also a respected retired four-star, and a former Army vice chief of staff, who said al Qaeda has “grown fourfold in the last five years” and is “beginning to dominate multiple countries.” He called radical Islam “the major security challenge of our generation” and said we are failing to meet it.

The same day the generals testified, Kimberly Dozier of the Daily Beast reported that Lt. Gen. Michael Flynn, a retired director of the Defense Intelligence Agency, had told a Washington conference: “You cannot defeat an enemy you do not admit exists.” The audience of military and intelligence professionals applauded. Officials, he continued, are “paralyzed” by the complexity of the problems connected to militant Islam, and so do little, reasoning that “passivity is less likely to provoke our enemies.”

These statements come on the heels of the criticisms from President Obama’s own former secretaries of defense. Robert Gates, in “Duty,” published in January 2014, wrote of a White House-centric foreign policy developed by aides and staffers who are too green or too merely political. One day in a meeting the thought occurred that Mr. Obama “doesn’t trust” the military, “doesn’t believe in his own strategy, and doesn’t consider the war to be his.” That’s pretty damning. Leon Panetta , in his 2014 memoir, “Worthy Fights,” said Mr. Obama “avoids the battle, complains, and misses opportunities.”

No one thinks this administration is the A Team when it comes to foreign affairs, but this is unprecedented push-back from top military and intelligence players. They are fed up, they’re less afraid, they’re retired, and they’re speaking out. We are going to be seeing more of this kind of criticism, not less.

On Thursday came the testimony of three former secretaries of state, Henry Kissinger (1973-77), George Shultz (1982-89) and Madeleine Albrigh t (1997-2001). Senators asked them to think aloud about what America’s national-security strategy should be, what approaches are appropriate to the moment. It was good to hear serious, not-green, not-merely-political people give a sense of the big picture. Their comments formed a kind of bookend to the generals’ criticisms.

They seemed to be in agreement on these points:

We are living through a moment of monumental world change.

Old orders are collapsing while any new stability has yet to emerge.

When you’re in uncharted waters your boat must be strong.

If America attempts to disengage from this dangerous world it will only make all the turmoil worse.

Mr. Kissinger observed that in the Mideast, multiple upheavals are unfolding simultaneously—within states, between states, between ethnic and religious groups. Conflicts often merge and produce such a phenomenon as the Islamic State, which in the name of the caliphate is creating a power base to undo all existing patterns.

Mr. Shultz said we are seeing an attack on the state system and the rise of a “different view of how the world should work.” What’s concerning is “the scope of it.”

Mr. Kissinger: “We haven’t faced such diverse crises since the end of the Second World War.” The U.S. is in “a paradoxical situation” in that “by any standard of national capacity . . . we can shape international relations,” but the complexity of the present moment is daunting. The Cold War was more dangerous, but the world we face now is more complicated.

How to proceed in creating a helpful and constructive U.S. posture?

Mr. Shultz said his attitude when secretary of state was, “If you want me in on the landing, include me in the takeoff.” Communication and consensus building between the administration and Congress is key. He added: “The government seems to have forgotten about the idea of ‘execution.’ ” It’s not enough that you say something, you have to do it, make all the pieces work.

When you make a decision, he went on, “stick with it.” Be careful with words. Never make a threat or draw a line you can’t or won’t make good on.

In negotiations, don’t waste time wondering what the other side will accept, keep your eye on what you can and work from there.

Keep the U.S. military strong, peerless, pertinent to current challenges.

Proceed to negotiations with your agenda clear and your strength unquestionable.

Mr. Kissinger: “In our national experience . . . we have trouble doing a national strategy” because we have been secure behind two big oceans. We see ourselves as a people who respond to immediate, specific challenges and then go home. But foreign policy today is not a series of discrete events, it is a question of continuous strategy in the world.

America plays the role of “stabilizer.” But it must agree on its vision before it can move forward on making it reality. There are questions that we must as a nation answer:

As we look at the world, what is it we seek to prevent? What do we seek to achieve? What can we prevent or achieve only if supported by an alliance? What values do we seek to advance? “This will require public debate.”

All agreed the cost-cutting burdens and demands on defense spending forced by the sequester must be stopped. National defense “should have a strategy-driven budget, not a budget-driven strategy,” said Mr. Kissinger.

He added that in the five wars since World War II, the U.S. began with “great enthusiasm” and had “great national difficulty” in ending them. In the last two, “withdrawal became the principal definition of strategy.” We must avoid that in the future. “We have to know the objective at the start and develop a strategy to achieve it.”

Does the U.S. military have enough to do what we must do?

“It’s not adequate to deal with all the challenges I see,” said Mr. Kissinger, “or the commitments into which we may be moving.”

Sequestration is “legislative insanity,” said Mr. Shultz. “You have to get rid of it.”

Both made a point of warning against the proliferation of nuclear weapons, which Mr. Shultz called “those awful things.” The Hiroshima bomb, he said, was a plaything compared with the killing power of modern nuclear weapons. A nuclear device detonated in Washington would “wipe out” the area. Previous progress on and attention to nuclear proliferation has, he said, been “derailed.”

So we need a strategy, and maybe more than one. We need to know what we’re doing and why. After this week with the retired generals and the former secretaries, the message is: Awake. See the world’s facts as they are. Make a plan.


What Shutdown?

Don’t hear much about this from the White House or Democats.
This week’s big economic reports—October jobs and third-quarter GDP—reveal an economy that continues to plod along. At least it’s growing and creating some new jobs, but growth remains too slow to lift incomes for most Americans.

The reports highlight two points that deserve more attention. The first is how little the private economy was damaged by the government shutdown. The Bureau of Labor Statistics reported no major impact from the shutdown on hiring by private employers, who added 212,000 jobs. Washington views itself as the main driver of growth, but the opposite is closer to the truth. The shutdown underscored how much of the government could go away with little impact on growth.

Slow growth also can’t be blamed on the budget caps and automatic sequester budget cuts. The Commerce Department’s national economic accounts have a Keynesian bias that treats government spending as a net positive for GDP and a cut in spending as a negative. Yet the economy grew by 2.8% in the third quarter despite the shutdown and decline in overall government spending. So much for the negative growth “multiplier” effect from spending cuts that is built into Keynesian economic models.

Even on Keynesian terms, government spending was a net positive (+0.04%) contributor to third-quarter GDP because the modest decline in federal spending was offset by a larger increase in state and local spending. Government overall lost a mere 8,000 jobs in October. Our view is that the current overall reduction in federal spending is healthy for the economy because it contributes to lower borrowing costs and makes future tax increases less likely.

A more troubling theme in the latest economic data is the decline in business investment. More than a third of the 2.8% growth rate came from businesses building up inventories. Unless companies can find more demand for their products in the coming months, these inventories will have to be worked down and growth in future quarters will be slower.

Business investment—in factories, equipment and the like—slumped to a disappointing 1.6% increase in the third quarter. Economist David Malpass looked at the numbers and found that, “On a year-over-year basis, growth in business investment has slowed to 2.7%, down from a 10.4% [year-over-year] rate in the first quarter of 2012 and a 6% average real growth rate from 2003-2007.”

Could it be that this 2013 investment slowdown is related to the big investment tax increase that President Obama imposed in January? Just asking. The tax increase reduced the net profit of small business and the return on capital gains and dividends from business investments. When you tax something more, you get less of it.

We can’t recall a President who has talked more about the need to increase investment but done so little to promote it. Perhaps that’s because he defines investment mainly as something government does. But without more private investment, you can’t lift productivity and worker incomes. Average hourly earnings rose only two pennies in October to $24.10, and they’re up by only 2.2% for the year—barely ahead of inflation.

Perhaps the pickup in October hiring is a hint of faster growth to come. At least Washington, with its current legislative gridlock, is doing less active harm. A year delay or more in the unfolding debacle of ObamaCare would help even more.

Review & Outlook: What Shutdown? –


Don’t Abandon the Sequester

Republicans aren’t the dumbest politicians there are, but they’re in the running… Especially if they lose this advantage.
The way the budget showdown is going, Democrats may soon require the Republicans to pay ransom before they’ll allow the GOP to reopen the government and raise the debt ceiling. That’s how badly the party’s Ted Cruz faction has messed up the politics of all this. But we sure hope part of that price won’t be to abandon the budget caps that are the only restraint on President Obama’s spending plans.

Democrats hate the spending caps and sequester because they squeeze their pet domestic programs, and two recent reports illustrate how much. The Congressional Budget Office’s latest monthly update, for the first 11 months of fiscal 2013 through August, shows that total federal outlays are down $127 billion over the same period last year. This means that when the report comes in for the full fiscal year overall federal spending may have fallen two years in a row for the first time since the end of the Korean War.

Meanwhile, the Congressional Research Service has released a new report that shows the sequester caps are providing better fiscal discipline than any budget deal has since 1980. The report looked at nine major deficit reduction deals and concludes: “In nominal (i.e., not adjusted for inflation) terms, the Budget Control Act achieves the greatest amount of deficit reduction of any act since 1980 over five years, based on the estimates produced near the time of enactment where five year totals are available.”

Adjusting for inflation, the report finds that the Budget Control Act’s estimated deficit reduction over five years will be second only to the 1990 George H.W. Bush-George Mitchell deal. The Bill Clinton package of 1993 that liberals love came in third.

Keep in mind that a little less than half of all the deficit reduction in 1993 and about 40% in 1990 came from tax increases. The 2011 Budget Control Act is reducing future deficits through spending cuts alone. This means the current sequester isn’t hurting economic growth by reducing incentives to save and invest.

As for the politics of the sequester, a poll released last week finds that the sequester cuts of roughly 5% across the board (about 8% in defense) have barely been noticed by most Americans. The United Technologies-National Journal poll asked: “Have you seen any impact of these cuts in your community or on you personally since they took place, or not?” Seventy-four percent said they’d seen no impact, while 23% said they had.
The harm that President Obama predicted in January, and that Democrats keep claiming, simply hasn’t appeared. This polling on the sequester is a lot better for Republicans than the blame they’re getting for the shutdown.

It would be better government if Congress could set spending priorities, and defense spending in particular can’t keep falling without harming U.S. security. Many Senate Republicans would like to abandon the sequester to spend more on defense or go back to allocating domestic pork.

But the sequester is the only leverage that Republicans have in any negotiation with President Obama once the debt ceiling is inevitably raised and the partial shutdown ends. If Republicans abandon the sequester now as the price of reopening the government, they will be back at the same old stand of Mr. Obama insisting on another tax increase in return for any entitlement reform. It would turn a political retreat into a policy rout

Review & Outlook: Don’t Abandon the Sequester –


Flight Delay Rebuke

If you ran a business this way…

It isn’t quite Ronald Reagan breaking the 1981 air-traffic controllers strike by firing 12,345 of them, banning them from government employment for life, and decertifying their union. But it’s close enough for cheering. On Thursday night the Senate unanimously reversed the Federal Aviation Administration’s sequester furloughs, and the House followed on Friday with a veto-proof majority, 361 to 41.

Remember when the sequester’s spending cuts were going to incite mass uprisings for higher taxes? Instead, Senate Democrats and the White House blinked, not least because the FAA’s transparent political strategy was to use incompetent government as a bludgeon on behalf of bigger government. The American public waiting in departure lounges figured this out, which is presumably why the political capitulation is so total.

The FAA’s all-hands furloughs managed to convert a less than 4% FAA budget cut into a 10% air-traffic control cut that would delay 40% of flights. The 6,700 flights that the FAA threatened to force off schedule every day is twice as many delays as the single worst travel day of 2012.  [Yes, this is how Obama thinks.]

The Democratic surrender has non-elected liberals in full revolt, claiming Washington somehow bowed to wealthy business travellers—as if the 99% don’t save for vacations and two million people aren’t in the air every day. Their advice is that the White House should have let the delays mount until Congress also agreed to turn off the entire sequester for low-income housing grants, Meals on Wheels and everything else.

Let us hope for the sake of the poor that other bureaucracies are managing the modest sequester cuts more responsibly than the FAA. But the larger point is that from the beginning the FAA’s delays were deliberate and avoidable. The FAA has ample legal discretion to protect core services but chose instead to maximize disruption. It is a sign of the FAA’s institutional culture of failure that it can’t even sabotage itself successfully.

The Senate bill clarifies that the FAA has the authority to cut waste and nonessential items before it lays off controllers—which the White House falsely claimed the sequester law prohibited it from doing. The six-page bill also specifically identifies $253 million in discretionary unspent airport grants that can be used for air control instead. That’s among the $34 billion in so-called “unobligated funds” that the Department of Transportation has on hand this year despite sequestration.

Prior to its bipartisan humiliation, the FAA tried to promote the illusion that it was doing a good job until the sequester came along. While we’re glad passengers will now endure fewer pointless delays, the FAA will be dysfunctional no matter how much money it gets and deserves to be punished for its recklessness with a more Reaganesque solution.

To wit, Congress ought to abolish the FAA and privatize the air navigation system the way that Canada and other developed countries have. A nonprofit corporation funded by user fees would make better cost-benefit decisions, tap capital markets, replace old-fashioned technology in a timely way and discipline high labor costs.

In addition to NavCanada, Germany, France, Australia and more than 50 others have made the transition to commercial airspaces. No less than Al Gore tried do this when he was Vice President, only to be routed by the unions. Republicans should try again as a plank of a platform to reform and modernize a government that serves itself before it serves America.

President Obama’s latest sequestration gambit backfired for the same reason his previous attempts this year have flopped. The sequester cuts, while often dumb, aren’t hollowing out the basic services that voters expect from their government. They are showing instead that government can safely and sensibly be cut if politicians are willing to set priorities and make choices.

A version of this article appeared April 27, 2013, on page A12 in the U.S. edition of The Wall Street Journal, with the headline: Flight Delay Rebuke.

Review & Outlook: Flight Delay Rebuke –