Great Moments in Ronald Reagan’s Life

The routine on the plant tour could be physically and mentally taxing. As occasional traveling aide Ed Langley reported, however, “There is [a] way that Ron stays fresh on these trips. He makes them an adventure. There has to be a set pattern to the talks, but he always seems to find a way to vary the routine. Consider what happened today.” At a reception for middle-management employees, one of the wives asked Reagan what she could do about her young son. The boy was depressed. He thought he might want to be an actor, but that was about the only bright spot on an otherwise bleak horizon. Nothing she tried seemed to lift the boy out of the dumps. The company spokesman thought about it for a moment and then said he would call on Saturday morning but that the boy should not be told.

Saturday was supposed to be Reagan’s day off. He had finished a full schedule on Friday, with another reception that night. He had every right just to stay in bed, but he kept his promise to the boy’s mother. He wanted the meeting to seem spontaneous, so aides George Dalen (who had replaced Earl Dunckel) and Langley were enlisted in a scheme to poll every other house on the boy’s street. Reagan would ring a doorbell and say, “I’m Ronald Reagan and I’m conducting a survey on the General Electric Theater.”

The report continued: “At the target house, we bounded into a cramped living room and confronted an incredulous mother and her sullen, furtive, indeed loutish son. Reagan’s performance was astounding. Laughing, rumpling the brat’s hair, spieling his cleaned-up dirty jokes, Reagan said he’d show the two of them how movie fights were staged. 

George Dalen and I had been through this routine lots of times before audiences of GE workers. Coats off, George and I attacked Ronnie with fake punches, but the White Knight, supposedly wiping blood from his lips, laid into us, and George and I took our falls over the furniture and skidded across the rugless floor.”

“The boy was so captivated,” Langley continued, “he wanted to try a pulled punch on Reagan, and did. Reagan went back on his heels, disbelief on his face, staggered and fell on the sofa. Bouncing up immediately, he hugged the boy and told him he’d make a great film actor. Then he sat down, and became a father and a father confessor. He had the kid and his mother crying and begging him not to go, to stay for supper, to keep in touch. There’s no doubt in my mind that he will.”

This is from Thomas W. Evans, The Education of Ronald Reagan: The General Electric Years and the Untold Story of His Conversion to Conservatism, Columbia University Press, 2006.

I’m thoroughly enjoying it.

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A Rising Demand for Money Won’t Save Us from Inflation

According to popular thinking, not every increase in the supply of money will have an effect on the production of goods. For instance, if an increase in the supply is matched by a corresponding increase in the demand for money, then there will be no effect on the economy. The increase in the supply of money is neutralized, so to speak, by an increase in the demand for money or the willingness to hold a greater amount of money than before.

What do we mean by demand for money? In addition, how does this demand differ from the demand for goods and services?

Demand for Money versus Demand for Goods

The demand for a good is not essentially the demand for a particular good as such, but the demand for the services that the good offers. For instance, an individual’s demand for food is on account of the fact that food provides the necessary elements that sustain an individual’s life and well-being.

Demand here means that people want to consume the food in order to secure the necessary elements that sustain life and well-being.

Likewise, the demand for money arises on account of the services that money provides. However, instead of consuming money, people demand it in order to exchange it for goods and services.

With the help of money, various goods become more marketable—they can secure more goods than in the barter economy. What enables this is the fact that money is the most marketable commodity.

Take, for instance a baker, John, who produces ten loaves of bread per day and consumes two loaves. The other eight loaves he exchanges for various goods such as fruit and vegetables. Observe that John’s ability to secure fruits and vegetables is on account of the fact that he has produced the means to pay for them, which are the loaves of bread. The baker pays for fruit and vegetables with the bread he has produced. Also, note that the aim of his production of bread, in addition to having some of it for himself, is to acquire other consumer goods.

Now, an increase in John’s production of bread, let us say from ten loaves to twenty a day, enables him to acquire a greater quantity and a greater variety of goods than before. Because of the increase in the production of bread, John’s purchasing power has increased. This increase in the purchasing power cannot always be translated in securing a greater amount of goods and services in the barter economy.

In the world of barter, John may have difficulties securing the various goods he wants by means of bread. It may happen that a vegetable farmer does not want to exchange his vegetables for bread.

To overcome this problem John would have to exchange his bread first for some other commodity that has a much wider acceptance rate than bread. John is now going to exchange his bread for the acceptable commodity and then use that commodity to exchange for the goods he really wants.

Note that by exchanging his bread for a more acceptable commodity John in fact raises his demand for this commodity. Also, note that John’s demand for the acceptable commodity is not to hold it as such, but to exchange it for the goods he wants. Again, the reason why he demands the acceptable commodity is because he knows that with its help he can convert his bread production more easily into the goods he wants.

Through a process of selection, people have settled on gold as the most accepted commodity in exchange. Gold has become money.

What It Means When the Demand for Money Increases

An increase in the general demand for money, let us say on account of a general increase in the production of goods, doesn’t imply that individuals sit on the money and do nothing with it. The key reason an individual has a demand for money is in order to be able to exchange it for other goods and services.

Let us assume that for some reason some individuals’ demand for money has risen. One way to accommodate this demand is for banks to find willing lenders of money. With the mediation of banks, willing lenders can transfer their gold money to borrowers. Obviously, such a transaction is not harmful to anyone.

Another way to accommodate the demand besides finding willing lenders is for banks to create fictitious money, i.e., money out of “thin air”—unbacked by gold—and lend it out.

Creating Money out of “Thin Air” Leads to Exchanging Nothing for Something 

Once employed in an exchange for goods and services, money created out of “thin air” sets in motion an exchange of nothing for something. The exchange of nothing for something amounts to the diversion of real wealth from wealth-generating to non-wealth-generating activities masquerading as economic prosperity. In the process, genuine wealth generators are left with fewer resources at their disposal, which in turn weakens their ability to grow the economy.

In contrast, when money is not generated out of “thin air” an individual who has secured proper money has exchanged something useful for it. He then exchanges the money for something else: with the help of proper money, something is exchanged for something. 

Once banks curtail their supply of credit out of “thin air,” this slows down the process of exchanging nothing for something. This in turn undermines the existence of various false activities that sprang up on the back of the previous expansion in credit out of “thin” air—an economic bust emerges. 

We can thus conclude that what sets in motion the boom-bust cycle is the expansion of credit out of “thin air” regardless of the state of the general demand for money. Could a corresponding increase in the demand for money prevent the damage that the creation of money out of “thin air” inflicts on wealth generators?

Let us say that because of an increase in the production of goods the demand for money increases to the same extent as the supply of money out of “thin air.” Recall that people demand money in order to exchange it for goods. Hence, at some point the holders of money out of “thin air” will exchange it for goods and the exchange of nothing for something will still occur. Once money out of “thin air” is introduced into the process of exchange, it inevitably weakens wealth generators, undermining potential economic growth and also setting up the menace of the boom-bust cycle.

Clearly, then, the expansion of the money supply is always bad news for the economy. Hence, the view that an increase in money out of “thin air” that is fully backed by a corresponding increase in demand for money is harmless is questionable.

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How The Experts Are Measuring The Economic Recovery

In early June, the National Bureau of Economic Research made it official: The United States was in a full-blown recession. Joblessness had risen to historic levels, total production was down, and industrial activity slowed to a crawl. Just like that, the COVID-19 pandemic had extinguished the longest period of expansion in U.S. history.

Ever since, the signs of recovery have been confusingly mixed — unemployment has improved more quickly than expected and the stock market has shown surprising resilience, but other indicators have looked much worse. So how can we know when the economy is truly recovering? As part of our ongoing survey of economists, conducted in partnership with the Initiative on Global Markets at the University of Chicago Booth School of Business, we asked experts which metrics they have their eye on to judge the strength of the recovery now — and what they’re looking at to predict where the economy might be headed next.

[Related: Where The Latest COVID-19 Models Think We’re Headed — And Why They Disagree]

In terms of measuring the recovery, economists are looking most closely at gross domestic product. Given three options to describe the level of attention they paid to GDP, 81 percent of our respondents said they were watching it “very closely,” with another 16 percent saying they were looking at GDP “somewhat closely” and only 3 percent saying they weren’t following it closely at all.

How economists are evaluating the recovery

Share of surveyed economists who said they were closely watching certain metrics to evaluate the speed and strength of the economic recovery

Share Who Said They Watch…
Metric Not at all Somewhat Very closely
GDP 3% 16% 81%
Unemployment rate 3 26 71
Retail and food sales 10 29 61
Consumer confidence 23 48 29
Saving rate 23 55 23

The survey of 31 economists was conducted July 2-6.


The next-most watched statistic was the unemployment rate, which also shouldn’t be surprising; both GDP and unemployment are key lagging indicators, or important metrics that show how the economy has been doing. According to the survey, retail and food sales also belong in that category — particularly in this pandemic, since the hospitality and retail sectors are among the industries harmed most when virus-related shutdowns force businesses to close.

Based on the three main indicators economists said they’re using to judge the recovery, America has a long way to go before things are back to their pre-pandemic baseline.

After mostly cruising along at between 2 and 3.5 percent annualized quarter-over-quarter growth for years, real GDP dropped by an annualized rate of 5 percent from the fourth quarter of 2019 to the first quarter of 2020, which contained only about one month of coronavirus-related effects (although the National Bureau of Economic Research says the recession technically began in February 2020). The Federal Reserve Bank of Atlanta’s GDPNow model estimates that second-quarter real GDP will end up being down by an annualized rate of 35.5 percent — seven times worse than the first quarter — when the Bureau of Economic Analysis releases its official number later this month.

[Related: The Economy Is A Mess. So Why Isn’t The Stock Market?]

Similarly, the unemployment rate is currently 11.1 percent, an increase of 7.6 percentage points from February — and still higher than any level it had reached from 1948 through March 2020. When the Congressional Budget Office released an update to its long-term forecast for the decade earlier this month, it projected that the unemployment rate would remain above its pre-pandemic level for the rest of the decade.

Retail and food sales fell from just over $200 billion (in CPI-adjusted 1982-84 dollars) in February to $161 billion in April — a massive drop. But thanks to reopening stores, it rallied to just shy of $190 billion in May, and will likely be even higher in June if consumer spending data is any indication. Those gains are tenuous, though, endangered by rising case counts across the country that have already forced some types of businesses to close again. There figures to be a tight inverse relationship between the virus’s spread and retail/food businesses’ ability to stay open, which is a big reason to watch this indicator going forward.

FiveThirtyEight Politics Podcast: COVID-19 deaths are rising. What will the U.S. do?

That’s not to say these are the only metrics that might prove to be insightful. “Interestingly, consumer confidence and the savings rate are being followed less closely,” said Allan Timmermann, a professor of finance and economics at the University of California, San Diego, after he reviewed the survey’s findings. “I found the latter a bit surprising because we have seen from earlier crises that consumers can be scarred by large macroeconomic shocks, particularly when they occur in peoples’ formative years, and if precautionary savings go up by a lot – as we have seen in April and May already – then consumer spending will be lower and the recovery more sluggish.”

The big headline numbers are the ones economists seem to be focusing on most, meaning they are the metrics that should tell us where we are in the process of recovering from the recession. But as we mentioned above, they are fundamentally lagging indicators — and that is exacerbated by the fast-moving nature of the virus, a crisis for which our traditional economic indicators are almost uniquely ill-suited. Real GDP is only released quarterly; retail and food sales come out monthly, but give a snapshot of the month prior to when they are released. Even the unemployment rate only captures a glimpse of how things were in the middle of the preceding month. These days, things might have changed significantly by the time the numbers come out.

[Related: The Unemployment Rate Is Falling, But More People Are Losing Their Jobs Permanently]

That’s why we also asked our survey panel which of the faster-moving data sources might tell us where the major indicators above are headed. Of the options we presented, the only one economists were clearly watching was consumer spending, which was considered “very useful” by 65 percent of respondents, and at least “somewhat useful” by the remaining 35 percent of those surveyed.

What are economists using to predict recovery?

Share of surveyed economists who said certain high-frequency metrics were useful for predicting the economic recovery

Share Who Said Metric was…
Metric Not at all Somewhat Very useful
Consumer spending 0% 35% 65%
Initial unemployment claims 0 52 48
Job postings 0 55 45
Traffic 6 77 16
Mobility (from cellphones) 3 84 13

The survey of 31 economists was conducted July 2-6.


A clear second tier of usefulness formed around initial unemployment claims and job postings from various recruiting sites. The panel was split roughly 50-50 over whether each was “very” or “somewhat” useful, but no respondents thought they offered zero value.

(The economists were less impressed with mobility data such as traffic — i.e., miles driven — or trends in cellphone tracking data, though the majority acknowledged them as at least somewhat useful data points.)

[Related: The Industries Hit Hardest By The Unemployment Crisis]

It’s still early, but consumer spending seems to be on the rise. According to the extremely useful Opportunity Insights COVID data dashboard, overall consumer spending — based on credit and debit card usage data collected by Affinity Solutions — in early April was down about 33 percent (compared with January), but made consistent strides between then and mid-to-late June. By June 22, spending was down only around 6 percent relative to January levels. But the wave of June coronavirus cases across the country has clearly slowed spending: as of July 1, it was back to down 9 percent compared with January.

High-frequency employment data tells a similar story. According to Indeed, job postings have steadily improved from their low point on May 1 (down 39 percent relative to 2019), but they remain 23 percent below their level from a year ago. Initial claims have dropped every single week since March 28 — that’s 14 consecutive weeks — but only by an average of 4.3 percent per week over the past four weeks, compared with an average weekly decline of 13.6 percent over the 10 weeks before that.

Such real-time data is a welcome addition to the slower, monthly or quarterly pace of most official releases that make up the canon of important lagging indicators. In fact, the lack of reliable, quickly updating data has been a hallmark of this crisis, whether it be public health or economic data. So how will we know when things are better? According to our survey, we’ll get there when real GDP returns to form and unemployment is reduced. And the early clues might be hidden in people’s willingness to spend. But no matter what you look at, most economists agree: It might be a very long time before we reach a full recovery.

Subscribe to our coronavirus podcast, PODCAST-19

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NYT Argues Workers Should Get More, but Gets Some Important Facts Wrong

I hate to be nitpicky when the NYT writes a very strong editorial arguing that we need more money going to ordinary workers and less to the rich, but it is important to get the story right. Unfortunately, the editorial misses much of it.
First and foremost, there has not been a major shift from wages to profits during the period of wage stagnation. Most of the shift from wages to profits took place in the weak labor market following the Great Recession. It was being reversed in the last five years until the recession hit. If we use the data from 2019, the median wage would have been 4.2 percent higher than it actually was if the wage share was back at its 1979 level. This is a bit more than 10 percent of the gap between productivity growth and wage growth over the last four decades.
Rather than going to profits, the upward redistribution went to high end workers like CEOs and other top executives, Wall Street traders and other high flyers in the financial sector, and doctors and other highly paid professionals. If we want to reverse this upward redistribution, these should be the focus of efforts at redistribution.
The piece also implies that stock returns have been extraordinarily high through the last four decades. This is clearly wrong. While returns were very high in the 1980s and 1990s, they actually have been well below long-term averages for the last two decades.
In this vein, the piece also proposes banning share buybacks as a way to reduce returns to shareholders. It is not clear what it hopes this would accomplish. It is hardly better for workers or anyone else if companies pay out money to shareholders through dividends rather than share buybacks. (There are tax issues, that make buybacks preferable for shareholders, but since shares turn over frequently, the tax consequences are limited.) For some reason, share buybacks have become a big cause in some circles, but it is difficult to see why the form of payments to shareholders would be a big deal. 
The piece also is very modest in suggesting that the minimum wage should be raised to $15 an hour. While this is a good near-term target, if the minimum wage had kept pace with productivity growth since 1968, it would be over $24 an hour today. The country would look very different if the lowest paid worker was getting $24 an hour today. This comes to $48,000 a year for a full-time full-year workers. A couple with two full-time minimum wage earners would have an income of $96,000 a year.
In order to be able to raise the minimum wage back to its productivity-adjusted level from 1968, and not see excessive inflation, we would have to take steps reduce high end wages. This would mean things like fixing the corporate governance structures so CEOs could not ripoff the companies for which they work. This would mean they might get $2 million to $3 million a year, instead of $20 million. We would have to eliminate the waste in the financial sector, thereby ending the exorbitant pay in this sector. We would also have to weaken the importance of patent and copyright monopolies, making it less likely that Bill Gates types could get $100 billion. And, we would have to subject doctors and other highly paid professionals to competition, bringing their pay in line with their counterparts in other wealthy countries.
Anyhow, this is a big agenda, but if we want to bring about real change we have to understand the nature of the problem, and for the most part it is not high corporate profits. Yeah, this is the story in Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer (it’s free).

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Pentagon Porks Up as Covid-19 Bleeds Economy

Yves here. Official America is doubling down on what it has become, a country where redistribution of income to protected interests and industries is a top priority. Despite the fact that the US hasn’t won a war since World War II (and even then, Russia deserves more credit), we keep throwing money at the Pentagon. Exercising soft power is much more cost effective, but it’s way too obvious that national interests broadly defined don’t factor in this equation.
We’ve had so many national grotesqueries that it’s hard to get worked up about yet another….but the Pentagon getting even more dough when Covid-19 is on, particularly when the need to engage in social distancing makes running conventional military operations a health risk? If the extra funding were for Covid-19 related procedural changes, that would be a different matter, but this article by Mandy Smithberger says it’s business as usual, just more so.
If the US really were such a great military power, we wouldn’t be relying so heavily on economic sanctions, particularly denying access to dollar payment systems. As readers have discussed, that policy is leading the designated pariahs to get better at operating outside them (and China to help facilitate that development).
By Mandy Smithberger, the director of the Center for Defense Information at the Project On Government Oversight (POGO). Originally published at TomDispatch
In response to the Covid-19 pandemic, Washington has initiated its largest spending binge in history. In the process, you might assume that the unparalleled spread of the disease would have led to a little rethinking when it came to all the trillions of dollars Congress has given the Pentagon in these years that have in no way made us safer from, or prepared us better to respond to, this predictable threat to American national security. As it happens, though, even if the rest of us remain in danger from the coronavirus, Congress has done a remarkably good job of vaccinating the Department of Defense and the weapons makers that rely on it financially.
There is, of course, a striking history here. Washington’s reflexive prioritizing of the interests of defense contractors has meant paying remarkably little attention to, and significantly underfunding, public health. Now, Americans are paying the price. With these health and economic crises playing out before our eyes and the government’s response to it so visibly incompetent and inadequate, you would expect Congress to begin reconsidering its strategic approach to making Americans safer. No such luck, however. Washington continues to operate just as it always has, filling the coffers of the Pentagon as though “national security” were nothing but a matter of war and more war.
Month by month, the cost of wasting so much money on weaponry and other military expenses grows higher, as defense contractor salaries continue to be fattened at taxpayer expense, while public health resources are robbed of financial support. Meanwhile, in Congress, both parties generally continue to defend excessive Pentagon budgets in the midst of a Covid-19-caused economic disaster of the first order. Such a business-as-usual approach means that the giant weapons makers will continue to take funds from agencies far better prepared to take the lead in addressing this crisis.
There are a number of ways the Pentagon’s budget could be reduced to keep Americans safer and better protected against future pandemics. As the Center for International Policy’s Sustainable Defense Task Force has pointed out, the biggest challenges we now confront, globally speaking — including such pandemics — are not, in fact, military in nature. In truth, hundreds of billions of dollars could be cut with remarkable ease from U.S. military spending and Americans would be far safer.
Recently, some members of Congress have started to focus on this very point. Representative Ro Khanna (D-CA), for instance, proposed diverting money from unnecessary intercontinental ballistic missile “modernization” into coronavirus and vaccine research. Senator Bernie Sanders (I-VT) has gone further, suggesting a 10% reduction in the Pentagon’s budget, while Representative Barbara Lee (D-CA), the only member of Congress to vote against the post-9/11 war resolution that led to the invasion of Afghanistan, has gone further yet, calling for the cutting of $350 billion from that budget.
But count on one thing: they’ll meet a lot of resistance. There’s no way, in fact, to overstate just how powerfully the congressional committees overseeing such spending are indebted to and under the influence of the defense contractors that profit off the Pentagon budget. As Politico reported years ago (and little’s changed), members of the House Armed Services committee are the top recipients of defense industry campaign contributions. Even the chair of the House Foreign Affairs committee, which should be advocating for the strengthening of American diplomacy, has drawn criticism for the significant backing he receives from the defense industry.
Focusing on Weaponry That Can’t Fight a Virus
Defense contractors have consistently seen such investments pay off. As my colleague at the Project on Government Oversight, Dan Grazier, has pointed out, despite repeated warnings from independent watchdogs and medical professionals, even military healthcare has been significantly underfunded, while both the Pentagon and Congress continue to prioritize buying weapons over taking care of our men and women in uniform. Congress’s watchdog, the Government Accountability Office, warned in February 2018 that the health system of the Department of Defense (DOD) lacked the capacity to handle routine needs, no less the emergencies of wartime. As Pentagon spending has continued to escalate over the past 20 years, military healthcare funding has stayed largely flat.
Under the circumstances, I doubt you’ll be surprised to learn that Congress has also written additional arms contractor giveaways into its coronavirus relief bills. Though its CARES Act authorized trillions of dollars in spending, ProPublica unearthed a provision in it (nearly identical to one proposed by industry groups) that allows defense contractors to bill the government for a range of costs meant to keep them in a “ready” state. The head of acquisition for the Pentagon, Ellen Lord, estimated (modestly indeed) that the provision would cost taxpayers in the low “double-digit billions.” Additional language offered in the House’s next relief bill, likely to survive whatever the Senate finally passes, would increase such profiteering further by including fees that such companies claim are related to the present crisis, including for executive compensation, marketing, and sales.
In such a context, it was hardly surprising that, during a recent hearing at the House Armed Services Committee on how the DOD was responding to the Covid-19 crisis, the focus remained largely on ways that the global epidemic might diminish arms industry profits. Representatives Joe Courtney (D-CT) and Mac Thornberry (R-TX) both argued that the Pentagon would need yet more money to cover the costs of any number of charges that defense contractors claim are related to the pandemic.
Most ludicrous is the idea that an agency slated to receive significantly more than $700 billion in 2020 can’t afford to lose a few billion dollars to the actual health of Americans. Of course, the Pentagon remained strategically mum earlier this year when, in an arguably unconstitutional manner, the White House diverted $7.2 billion from its funds to the building of the president’s “great, great wall” on our southern border. In fact, General Mark Milley, chairman of the Joint Chiefs of Staff, even admitted that it wasn’t exactly a major blow for the government agency with the largest discretionary budget. “It was not a significant, immediate, strategic, negative impact to the overall defense of the United States of America,” he assured Congress. “It’s half of one percent of the overall budget, so I can’t in good conscience say that it’s significant, immediate, or the sky is falling.”
A Chicken Little Congress, however, doesn’t consider taking more funds from the Pentagon budget to shore up the Centers for Disease Control and Prevention (CDC) anywhere near as crucial as, for example, approving the Pacific Deterrence Initiative, a slush fund that will be part of this country’s new Cold War with China — starting with a modest $1.4 billion in seed money, while the homework is done to justify another $5.5 billion next year. Similarly, even in such an economically disastrous moment, who could resist buying yet more of Lockheed Martin’s eternally troubled and staggeringly expensive F-35 Joint Strike Fighters than the Pentagon requested? Comparable support exists, even among senators unwilling to fork over any more dollars to desperate out-of-work Americans, for the president’s Space Force, that new service now in the process of creating a separate set of rules for itself that should allow it free reign over future spending. That, of course, reveals its real mission: making it easier for contractors to profit off the taxpayer.
If anything, the main congressional criticism of the Pentagon is that it’s been too slow to push money out the door. And yet, in an institution that has never been successfully audited, there are red flags galore, as a recent Government Accountability Office assessment of major weapons programs suggests. The costs of such new weapons systems have cumulatively soared by 54%, or $628 billion, from earlier GAO assessments. That, by the way, is almost 90 times this year’s budget request for the CDC.
And that’s just the waste. The same report shows that any number of weapons systems continue to fail in other ways entirely. Of the 42 major programs examined, 35 had inadequate security to prevent cyber attacks. General Dynamics Electric Boat’s $126 billion nuclear submarine program has been plagued by faulty welding for two years. The new Ford class aircraft carrier, built by Huntington Ingalls for $13.2 billion, includes a General Atomics launch system that continues to fail to launch aircraft as designed. In addition, as Bloomberg first reported, the ship’s toilets clog frequently and can only be cleaned with specialized acids that cost about $400,000 a flush. As my colleague Mark Thompson has pointed out, “escalating costs, blown schedules, and weapons unable to perform as advertised” are the norm, not the exception for the Pentagon.
That track record is troubling indeed, given that Congress is now turning to the Pentagon to help lead the way when it comes to this country’s pandemic response. Its record in America’s “forever wars” over the last nearly two decades should make anyone wonder about the very idea of positioning it as a lead agency in solving domestic public health crises or promoting this country’s economic recovery.
Broken Oversight
As the first wave of the pandemic continues and case numbers spike in a range of states, oversight structures designed to prevent waste, fraud, and abuse when it comes to defense spending are quite literally crumbling before our eyes. Combine weakened oversight, skewed priorities, and a Pentagon budget still rising and you’re potentially creating the perfect storm for squandering the resources needed to respond to our current crisis.
The erosion of oversight of the Pentagon budget has been a slow-building disaster, administration by administration, particularly with the continual weakening of the authority of inspectors general. As independent federal watchdogs, IGs are supposed to oversee the executive branch and report their findings both to it and to Congress.
In the Obama administration, however, their power was undermined when the Office of Legal Counsel, the legal expert for the White House, began to argue that accessing the “all” in “all records, reports, audits, reviews, documents, papers, recommendations, or other material” didn’t actually mean “all” when it came to inspectors general. Under President Donald Trump, the same office typically claimed that then-Intelligence Community Inspector General Michael Atkinson did not have the authority to forward to the House and Senate Intelligence committees a concern that the president had improperly withheld aid to Ukraine.
In fact, in the Trump years, such watchdogs have been purged in significant numbers. Shortly after Department of Defense principal Deputy Inspector General Glenn Fine was named to lead the Pandemic Response Accountability Committee, for instance, the president removed him. Not only did that weaken the authority of the body overseeing trillions of dollars in spending across the federal government, but it jeopardized the independence and clout of the Pentagon’s watchdog when it came to billions already being spent by the DOD.
In a similar fashion, the Trump administration has worked hard to stymie Congress’s ability to exercise its constitutional role in conducting oversight. A few months after the president entered the Oval Office, the White House temporarily ordered executive branch agencies to ignore oversight requests from congressional Democrats. Since then, the stonewalling of Congress has only increased. Mark Meadows, the president’s latest chief of staff, has, for example, reportedly implemented a new rule ensuring that executive branch witnesses cannot appear before Congress without his permission. In recent weeks, it was invoked to stop Secretary of State Mike Pompeo from appearing to justify his latest budget request or to answer questions about why his department’s inspector general was removed. (He was, among other things, reportedly investigating Pompeo himself.) Meanwhile, Secretary of Defense Mark Esper and Chairman of the Joint Chiefs Mark Milley have both resisted calls from Congress to answer questions about the use of military force against peaceful protesters.
Congress has a number of tools at its disposal to demand answers from the Pentagon. Unfortunately, the committees overseeing that agency have seldom demonstrated the will to exercise them. Last year, however, Congressman Ruben Gallego (D-AZ) added an amendment to a defense bill limiting funds for the secretary of defense’s travel until his department produced a report on disciplinary actions taken after U.S. troops were abushed in Niger in 2018 and four of them died.
That tragic incident was also a reminder that Congress has taken little responsibility for the costs of the endless conflicts the U.S. military has engaged in across significant parts of the planet. Quite the opposite, it continues to leave untouched the 2001 authorization for use of military force, or AUMF, that has been abused by three administrations to justify waging wars ever since. The Congressional Research Service estimates that it has been used in that way at least 41 times in 19 countries. According to Brown University’s Costs of War project, that number should be 80 countries where the U.S. has been engaged in counterterror activities since 2001.
And there are significantly more warning signs in this Covid-19 moment that congressional oversight, long missing in action, is needed more than ever. (Trump’s response, classically enough, was “I’ll be the oversight.”) Typically, among the trillions of dollars Congress put up in responding to the pandemic-induced economic collapse, $10.5 billion was set aside for the Pentagon to take a leading role in addressing the crisis. As the Washington Post reported, among the first places those funds went were golf course staffing, submarine missile tubes, and space launch facilities, which is par for the course for the DOD.
Implementation of the Defense Production Act also betrayed a bizarre sense of priorities in these months. That law, passed in response to the Korean War, was designed to help fill shortfalls in goods in the midst of emergencies. In 2020, that should certainly have meant more masks and respirators. But as Defense One reported, that law was instead used to bail out defense contractors, some of whom weren’t even keeping their employees on staff. General Electric, which had laid off 25% of its workforce, received $20 million to expand its development of “advanced manufacturing techniques,” among things unrelated to the coronavirus. Spirit Aerosystems, which received $80 million to expand its domestic manufacturing, had similarly laid off or furloughed 900 workers.
While Americans are overwhelmed by the pandemic, the Pentagon and its boosters are exploiting the emergency to feather their own nests. Far stronger protections against such behavior are needed and, of course, Congress should take back what rightfully belongs to it under the Constitution, including its ability to stop illegal wars and reclaim its power of the purse. It’s long past time for that body to cancel the blank check it’s given both the Pentagon and the White House. But don’t hold your breath.
In the meantime, as Americans await a future Covid-19 vaccine, the military-industrial complex finds itself well vaccinated against this pandemic moment. Consider it a Pentagon miracle in terrible times.

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