"Government in a Box" Afghan Style

The Obama Administration’s clear-hold-build-leave strategy in Afghanistan is crucially dependent on the Afghan’s central government’s ability to displace the Taliban with clean local governance throughout a rugged country larger than Texas, with a population of 28+ million, where the vast majority of people live in small hamlets and villages.  To this end, the combined forces clearing operation in Marjah, a poppy growing area of home to about 80,000 in southern Helmand Province, was to be a model operation.  After clearing out the Taliban and setting up a “Hold” zone (a series of positions outside of town occupied by two battalions Marines and Afghan forces to secure the area), the operation was to be followed by the cookie-cutter installation of what the commander, General Stanley McChrystal, called a “government in a box” -- which to work, must be an honest government that will immediately go to work at improving the lot of the locals.  

As usual, the Taliban, like all competent guerrilla forces when faced with superior firepower, bugged out ahead of the combined Nato-Afghan sweep through Marjah.  Now, as Jeffrey Fleishman reports in the 7 Mar 2010 issue of the LA Times, it is beginning to look like McChrystal’s  “government in a box” will be led by a typical thuggish representative of the morally challenged Karzai clique, which has a history of plundering those they rule.  It turns out that the new leader, Abdul Zahir, a man who vowed “to bring back dignity and prosperity” to Marjah (a fertile opium growing area), stabbed his own son, was convicted of manslaughter, and served time in a German slammer.  Just the sort of man to win the hearts and minds of those he rules.

The Marjah operation is off the front pages, and recent reports indicate the next target in our new strategy is the much more formidable Pashtun city of Qandahar, with population of about a million.  But Marjah is not over.  The people of Marjah know the Taliban are lurking in the shadows, waiting to install a another shadow government, when the US inspired “government in a box” does not win their hearts and minds, and the US focus of effort is elsewhere. 

Eisenhower's Nightmare

Reprinted with permission of Counterpunch editors

March 3, 2010

The MICC Moves to Hose the Taxpayer One More Time

Eisenhower's Nightmare Arrives

By FRANKLIN C. SPINNEY

Counterpunch

http://www.counterpunch.org/spinney03032010.html

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

Dwight D. Eisenhower,
President of the United States
Farewell Address, 17 January 1961

As I indicated in CounterPunch on 3 February 2010, the Quadrennial Defense Review (QDR) just released by the Obama Pentagon is a bad joke. That bad joke is about to be given the good housekeeping seal of approval by a special panel appointed jointly by the Secretary of Defense and the defense barons of the Armed Services committees in Congress. When this happens, rest assured, any desire to get control of the out-of-control defense budget will plunge far below its already low level. Chalk up another victory in the Military - Industrial - Congressional Complex’s (MICC’s) war on the Constitution, the American taxpayer, and programs like Social Security and Medicare, which are hallmarks of civilized society.

To understand why this QDR review panel is gearing up to paint lipstick on the QDR pig, it is first necessary to describe what the QDR did not do.

Today, the Pentagon is now spending more in inflation-adjusted dollars than at any time since the end of WWII to support a military force structure that is much smaller and older than at any time since the end of World War II. But the QDR did not even acknowledge the three mutually reinforcing problems that are now combining to produce a catastrophic meltdown of the Pentagon’s budget plans, let alone the cynical modes of conduct that virtually guarantee even more force structure reductions, even if defense budgets will continue to increase:

First, with a few exceptions, the Obama QDR approved a defense budget and a long range program plan that will not buy enough new weapons to replace the weapons in the inventories of the military forces in a timely manner. Consequently, the average age of these weapons, already at a post WWII high, will continue to get older at an accelerating rate. Given this situation, the only way to reduce the growth in average age will be to retire the oldest weapons without replacement, thereby shrinking the size of the forces yet again, in effect continuing a devolution that began as early as 1957 (see Defense Death Spiral, especially pps. 21-25).

The economic roots of the force structure meltdown lie in the MICC’s obsession with modernizing with ever more costly and technically complex weapons. This obsession creates a political economy wherein unit costs (i.e., the cost of the “parts”) always rise faster than budgets (i.e., the cost of the “whole”). This creates a situation a little like cancer cells metastasizing in a body; something has to give.

The asymmetric economics of defense lead to the declining production rates and age growth described above which, in turn, create extortionary political pressure (caricatured by vacuous slogans such as the “hollow military” in the late 1970s or the so-called “procurement holiday” in the mid 1990s) to justify increases in the total defense budget. But increasing the budget, as we did after 1976 and after 1994, actually accelerates the rate of cost growth and thus restores the cancerous asymmetry between cost and budget growth, albeit at a higher budget level. This sets the stage for yet more political pressure to increase the defense budget even further, as the extortionary loop folds back on itself to amplify itself -- over and over. Over time, cynical gaming strategies, evolved though trial and error, create and/or exploit this pattern of economic behavior that benefits the “parts” at the expense of the “whole.” Whether these strategies, now known as front loading and political engineering, are the “chicken” or the “egg” is now immaterial, because today, they are ubiquitous and lie at the center of an organic, self-regulating devolution.

So, the asymmetric economics of cost growth greater than budget growth create continual political pressure to bail out a collapsing modernization program. There are essentially two short-term ways for responding to this pressure: (1) decision makers can reduce current readiness for combat in order to transfer money out of, or by slowing the future rate of money growth into, the operating budget (by reducing training tempos, purchases of spare parts, etc.) and then pump the “savings” into the modernization budget, or (2) they could simply increase the total defense budget. Generally, decision makers opt for a combination of both in the short term, but over the long term, the only option is to change their obsessions, which is unthinkable, or to increase the budget, which is the real name of the game.

Second, the Obama QDR also failed to address how the modernization problems described above (i.e., increasing technical complexity + increasing age of weapons) mutually reinforce each other to compound the DoD’s economic problems by creating a phenomenon known as the rising cost of low readiness. This makes it ever more difficult to rob the readiness budget to pump up the modernization budget. The subtle cause and effect relationships underpinning the rising cost of low readiness are explained in the Defense Death Spiral, especially pps. 24-45. For our purposes, it is sufficient to say that the net result is that unit operating costs (i.e., the cost of operating the “parts”) also grow faster than defense budgets (i.e., the cost of the “whole”) and the economic effect becomes a variation on the cancerous theme described above.

Third, and perhaps most importantly, the Obama QDR failed to even acknowledge, let alone address, the related problems posed by unauditable, corrupt, financial management systems -- by this I mean both the historical accounting systems and the program planning systems of the Planning, Programming, and Budgeting System or PPBS.

As I explained in both the Defense Death Spiral and my last statement to Congress, not to mention in a public hearing over nineteen years earlier, in March 1983, before the Armed Services and Budget committees of of the Senate -- a hearing that resulted in a cover story for Time Magazine (7 Mar 83 issue), cynical bureaucratic gaming strategies systematically corrupt the information flowing though the Pentagon’s central management information system (i.e., the PPBS), which in any event is logically flawed (see, for example, my statement to Congress, beginning on page 15). This makes it impossible to assemble the information needed to sort out the first two problems and to devise appropriate recovery strategies that are based on an understanding of those problems. In this sense, the corruption of the Pentagon’s PPBS can be thought of as bureaucratic grease lubricating the political-economic engine that is protecting the status quo. So, it should not be surprising that our political system is unable to shape rational defense policies and strategies in response to changing conditions, such as adapting our forces while providing a peace dividend to reflect the changes brought about by the end of the Cold War.

Put bluntly, the Pentagon’s corrupt bookkeeping system is the turd in the national security punchbowl. All the players in Versailles on the Potomac have known about it for years, but no one wants to do anything about it, because flushing it out would end their party.

It is not fair to blame President Obama’s political appointees in the Pentagon for this state of affairs, because as I have endeavored to show, it has very deep roots. On the other hand, it is eminently fair to blame Obama’s inept Office of the Secretary of Defense, particularly the spectacularly incompetent Office of the Under Secretary of Defense for Policy, for not even acknowledging these problems in a QDR it spent almost a year putting together.

It would be absurd for the Obama Pentagon to plead ignorance for its obscene omission.

After all, Obama’s QDR is only the most recent variation of a bad joke begun in the Clinton Administration with its publication of the fatally- flawed first QDR on 19 May 1997. Of course, the Clinton Administration was merely continuing the pathological planning practices of the Reagan Administration, which I described in excruciating detail during the March 1983 congressional hearing. And bear in mind, the Reagan Pentagon was merely continuing the bureaucratic pathologies the military reformers began to document in the 1970s -- behavioral pathologies that we now know reached back at least to the inception of the Planning, Programming, and Budgeting System by Defense Secretary Robert McNamara in 1961 and probably earlier.

Given the staying power of the defense power games, no one should be surprised that the end of the Cold War resulted only in temporary marginal reductions in the defense budget; nor should we be surprised that twenty years later, the United States is spending more on defense than it did at the height of the Cold War, when we stood toe to toe with the Soviet nuclear-armed superpower, yet had enough extra resources to fight very hot wars in Korea and Vietnam; nor should we be surprised that today we are spending as much on defense as the rest of the world combined. Bear in mind, as I showed in my 2002 statement to Congress, the so-called global war on terror has very little to do with this current budgetary state of affairs. It should be clear, therefore, that the Pentagon has deep systemic problems, and that the most recent QDR, like its predecessors, papered them over, to put it charitably.

Now, with this background in mind, let’s turn our attention to the QDR review panel that is about to “fix” this disastrous state of affairs. Congress created a special review board in 2006 to analyze the 2010 QDR in order -- don’t laugh -- to provide the Congress with what it called an independent alternative view of the QDR. The 20 members of this review board were to be appointed by the Defense Secretary (12) and the senior Republicans and Democrats of the Senate and House Armed Services committee’s (8).

On 1 March 2010, Ray Locker and Ken Dilanian of USA Today authored a front page report that described and analyzed the makeup of the 20 members of the QDR review committee. Locker and Dilanian showed that “eleven out of twenty members “work for defense contractors as employees, consultants or board directors,” raising obvious questions of conflict of interests. Foremost among these is the panel chairman, William Perry, a long time Democratic defense operative who served in the Carter and Clinton administrations and made a fortune in the defense industry when he moved back and forth through the revolving door. Perry has been one of the most vocal and slickest salesmen of high tech defense systems, especially robots. While Secretary of Defense, Perry did nothing to correct the three problems described above, and in fact, he made them far worse by promoting new cold-war inspired high complexity, high-cost weapons just as the Cold War was ending -- most significantly, the problem-plagued Joint Strike Fighter, which is on track to be the most expensive program in the Pentagon’s history. Today, the Obama administration’s Pentagon is well populated with Perry’s proteges.

Locker and Dilanian did an adequate job of identifying contractor connections for the eleven members of the panel; that is bad enough, but their report dropped the ball on highlighting the likely biases of the other members.

In addition to the eleven members who are affiliated with the defense industry, at least six other members work or have worked as defense “intellaaaaactuals” for pro-defense not-so-thinking thinktanks:

* Center for New American Security (CNAS): John Nagl, president. Nagl has been closely tied to the Obama administration’s advocacy of the AFPAK war and his organization serves as a mouthpiece for the Pentagon's war policies. There is no indication Nagl knows anything about the decision making pathologies discussed above. But his predecessor as president of CNAS, Michelle Flournoy, is now the Under Secretary for Policy in the Pentagon and can be regarded as the key architect of the QDR.

* The Center for American Progress (CAP): Senior vice president, Rudy De Leon, is a former Deputy Secretary of Defense in in Clinton Administration. De Leon did nothing to clean up the Pentagon’s bookkeeping mess as DEPSECDEF, even though he was well aware of these bookkeeping problems from the mid-1980s forward, when he worked for Congressman Nick Mavroules (who ended up in the slammer for racketeering).

* Center for Strategic and Budgetary Assessments (CSBA): Eric Edelman was the Under Secretary of Defense for Policy between 2005 and early 2009. In this role, he was responsible for the vapid, unmemorable 2006 QDR, which is perhaps why Congress demanded the establishment of an independent review panel to “analyze” subsequent QDRs. Now he serves as Distinguished Fellow at CSBA, an organization long associated with promoting the Pentagon’s equally flawed theory of a high-tech, high-cost Revolution in Military Affairs (RMA), whose contemporary incarnation in using robotic drones in a collateral-damage-prone strategy to assassinate Taliban and al Qaeda leaders is creating enemies faster than we can kill them.

* Heritage Foundation: James Talent, the former Senator from Missouri and long time porker for McDonnel-Douglas-Boeing (St Louis), one of our largest defense contractors. The Heritage Foundation has ceaselessly flogged the “benefits” of ever growing defense budgets, since it produced its only critical report, “Ending Defense Stagnation” in 1982. Since then, to the best of my knowledge, it has not produced a study that questioned the Pentagon’s inability to pass financial audits in accordance with the requirements of the Chief Financial Officers Act of 1990, not to mention the Constitution -- apparently setting aside the supposed conservative predilection of preserving the original intent of the Framers of the Constitution.

* Institute for Defense Analysis (IDA): General Larry Welch, former Chief of Staff of the AF, did nothing to fix the Air Force’s airplane aging problem when he had a chance to shape the Air Force’s future. As President of IDA, he headed up a not for profit organization whose main customer was the Office of the Secretary of Defense in the Pentagon. During his tenure, the IDA economic analysis office produced no recommendations that would have made the Pentagon’s books more auditable or dealt constructively with the power games causing the meltdown, particularly the cynical use of “learning curves” to support the Pentagon’s front loading operations.

* Center For Naval Analysis (CNA): A not for profit thinktank that is effectively a wholly-owned subsidiary of the US Navy.

So, there we have it: 17 out of 20 members of the QDR review panel have close ties to the status quo Military - Industrial - Congressional Complex. None of them, to the best of my knowledge, has ever discussed, much less analyzed, the three interconnected problems that have produced the Defense Death Spiral or the stunningly flawed QDRs. None of these people have ever tried to step up to the hard decisions needed to fix these problems. Of the remaining three members of the panel, the only one I have any familiarity with is Lt General Paul Van Riper, a former reformer and I believe a truth teller (even reformers occasionally make general). But even if he tries to fix things and the other two members side with him, my guess is that the three of them will be voices in the wilderness and have little or no impact on the outcome -- too much money is at stake, and the 17 other members of the panel are card carrying protectors of the status quo.

A QDR review panel where at least 17 out of 20 members have a vested interest in protecting the status quo certainly will not ask the question: Is there an alternative to protecting the status quo?

For what it is worth, here is my answer.

Probably the only way to incentivize the Pentagon to really clean up its act will be to take the money away and force it to think.

Setting aside the question of ending our misbegotten wars (an issue I have discussed in several Counterpunch articles), we should freeze the core, i.e., the non-war related, defense budget in current dollars, or better, reduce that level by two percent a year. Keep this policy in place at least until the Pentagon can pass an audit in compliance with the Chief Financial Officers Act of 1990 and the Constitution. (This is only a starter; we could do much more: Readers interested in one way the Pentagon could go about producing the information needed to fix the mess can read the last section of my statement to Congress at the aforementioned link. No doubt, there are other ways.)

Some naysayers might argue that we can not freeze the defense budget, because we are at war, and we must support the troops. This is an emotional red herring. It is a suicidal logic that implies we should continue a dysfunctional status quo that will make us ever weaker, because we are at war. If deemed necessary, we could always continue a variation of Mad King George’s practice of paying for these wars on a pay as you go basis through supplemental appropriations (which in contrast to my proposal, he used to protect the self-destructive status quo by pumping up the core budget).

Other naysayers might argue that reducing the budget by two percent per year will gut the Pentagon, because the Pentagon is not required to pass an audit until 2018, and the compound effect of -2% per a year for eight years would be devastating. This kind of claptrap is precisely the kind of non-thinking that works to perpetuate the status quo.

With deadlines like 2018, the Pentagon has no incentive to clean up its act.

Moreover, the MICC has a habit of pushing inconvenient deadlines ever further into the future. Consider the track record of how the Pentagon routinely “bow waved” its auditing problems into the future: John Hamre was Chief Financial Officer (i.e. Comptroller) of the Pentagon in the early 1990s during the Clinton Administration; in that capacity, he promised Congress he would fix the books by 1997, a promise that was conveniently forgotten when 1997 arrived. When Dov Zakheim became the first DoD Chief Financial Officer in Bush administration in 2001, he promised to fix the books by 2007. Zakheim’s successor in the Bush Administration, the inept and eminently forgettable Tina Jonas, extended Zakheim’s promise to fix the books by 2016. Congress has now told Obama’s Comptroller, Robert Hale, to fix the books by 2018.

So, given the Pentagon’s behavior and the makeup of the panel, how much do you want to bet that the QDR review panel even mentions, let alone tackles a bookkeeping issue that is widely acknowledged but has been treated with contempt by decision makers in the Pentagon and Congress for at least fifteen years? This behavior is nothing less than a systematic assault on the Appropriations and Accountability Clauses of the Constitution (see Article I, Section 9, Clause 7), which each member of the Defense Department has taken a sacred oath to defend and uphold.

That is why the MICC’s desire to feed its voracious appetite by continuing its assault on the Constitution reflects exactly the kind of misplaced power that President Eisenhower warned America about in his farewell address.

Franklin “Chuck” Spinney is a former military analyst for the Pentagon. He currently lives on a sailboat in the Mediterranean and can be reached at chuck_spinney@mac.com

Hillary Wow's the Arabs

Obsessions are dangerous, because in any conflict, be it political, economic, or military, they create vulnerabilities that can be exploited by one's adversaries -- not to mention one's purported allies.  That is because obsessions shape the Orientation of one's Observation - Orientation - Decision - Action (OODA) loop in a way that induces one to see and act on what one "wants" to see rather than what "is."  When this happens, one's decision cycle looks inward and becomes disconnected from its environment, and as a result, the actions decided on will not have the desired outcome.  The mismatch between desires and reality will then feed back into subsequent decision cycle, and if the obsession is not corrected inside the decision-maker's orientation , the mismatches will amplify themselves in subsequent actions.  Left unaddressed only one outcome is possible: what the American strategist Colonel John Boyd, the inventor of the OODA Loop, used to call "incestuous amplification," or an increasingly self-referencing decision making spiral, that by "talking to itself, succumbs to an inevitable evolution into chaos.  

America's amplifying obsessions with Israel are creating just this kind of evolution, and there is no better example than in our increasingly dangerous self-referencing  policy towards Iran, which itself is now turning into an obsession.

 The downward spiral becomes apparent when one tries to examine the results of Secretary of State Hillary Clinton's recent visit to the Middle East through the eyes of those she was trying to win over.  Her aim was to shore up our Arab "allies" in a unified anti-Iran policy.  But as Rami Khouri, a highly-regarded observer of politics in the Middle East (bio), explains in this commentary in Lebanon's Daily Star, Clinton's pathetically transparent efforts devolved into yet another version of our old self-referencing efforts to shore up a pro- Israeli, neo-colonialist, foreign policy that is doomed to fail again.    

GOP Strategy: Exploit Palinism to Delegitimize Obama

I asked a friend -- a seasoned Republican political operative who must remain anonymous -- to comment on New York Times columnist Frank Rich's recent analysis of the Tea Party phenomenon, Republican faux populism, and its chief spokesperson du jour, Sara Palin (see Rich's Palin's Cunning Sleight of Hand also introduced below).  My friend, call him Republican Operative X, has been very critical of the witty albeit accurate criticisms Rich has used to poke fun at both these subjects as well as their Republican adherents.  Operative X has warned me repeatedly that Rich was being too light hearted about what was a very dangerous movement toward a demagogic strand of populist authoritarianism that could move this country toward the darkness of an "inverted totalitarian" dictatorship.  But this op-ed by Rich is different.  Attached are my friend's reactions to Mr. Rich's latest handiwork and some political prognostications.


A Political Analysis of Inverted Totalitarianism 

by Republican Operative X

February 14, 2010

I suppose Rich gets it now.

1. As I said about 6 months ago, the GOP strategy is to delegitimize Obama and make it impossible to govern -- then sweep into power amid the chaos they they themselves partly created. A "chaos" strategy is the only thing they've got (rather than rational alternative policies), but it's an effective strategy given the intellectual qualities of the American people, effective GOP control of large segments of the media, and the Democrats' propensity to play into their hands.

2. Psychological testing has shown that for people with deeply held but false beliefs, empirical demonstration that their beliefs are false does not cause them to renounce those beliefs; on the contrary, they dig in and believe them more firmly, and invent conspiratorial rationalizations as to why the empirically demonstrated facts are wrong. That's a good profile of the Palinistas.

3. I am already making odds that the GOP will sweep into power, at least in one house of Congress in 2010, and the whole shooting match in 2012. It probably won't be Palin, but the party will be in her image. The Palin GOP will make the Bush GOP look like the Mensa Society.

4. I go back and forth on how radically authoritarian the Bush presidency was: was it sui generis in American history, or did it just incrementally intensify already-evident aspects of cold war and post-cold war America? Conceivably, under the shock of 9/11, a Gore presidency might have adopted similar unilateral and authoritarian measures. And Obama has shown little propensity to roll back the main thrust of Bush's policies. Some people called the Bush administration fascist, but Sheldon Wollin's term "inverted totalitarianism" might be more applicable: intensifying authoritarianism under a façade of normal life. Much of the propaganda function of authoritarian government was done not directly but through corporate intermediaries: advertising, corporate-owned cable "news," etc.  Rather than mobilizing the population a la classic fascism, inverted totalitarianism seeks to make them distracted and politically apathetic: e.g., Bush telling Americans to go out and shop after 9/11.

5. While Bush represented the classically corporate model, the Palin Party will blend in a (faux) populism and a leather-lunged lower middle class white male resentment. A GOP in power in 2018 is going to have more of the trappings of what we think of as traditionally fascist: political witch trials; xenophobia and racism (for reasons having to do with free trade ideology and Eastern elite upbringing, Bush was not xenophobic or racist); political mobilization via the tea parties (or whatever their successors are); and God knows what else.

6. It will finish us off as a great power, for whatever damage the populist side of Palin's GOP does to civil liberties, the social fabric of the country, and foreign relations, the corporate side of the party will be back at their old tricks: they will thoroughly and irrevocably wreck the government's finances, destroy social security, and drain even more of the nation's wealth into the hands of an even more entrenched oligarchy.

Anyway, that's how I think it could happen.

Counterpunch: Mark to Market Pentagon Style

Reprinted with permission of editors of Counterpunch

February 8, 2010

Buy-to-Budget and the F-35 Joint Strike Fighter

Mark-to-Market Pentagon Style

By FRANKLIN C. SPINNEY

Counterpunch

http://www.counterpunch.org/spinney02082010.html

"Mark to Market" is (or was?) an accounting standard that required financial institutions to value their assets at their current market value. Thus a stock portfolio would be valued at an amount determined by the stock market, if the stock holder sold all his assets in that market. Last Spring, when the government was contemplating its plan to rescue the big banks, it settled on the idea of using taxpayer money to purchase or guarantee the so-called toxic assets of the large "investment" banks and their insurers (e.g., collateralized debt obligations and credit default swaps). The banks lobbied furiously against the mark to market rule, because the toxic assets could not be sold in a market that was frozen, and under the rule, they would be valued a fraction (somewhere between 0% and 60%) of their original purchase prices. Under mark to market, the banks would take a bath or even become insolvent. So, they concocted a new concept of "fair value," which came close to reimbursing them at cost, thus implying the capitalist market was inherently unfair. The Federal Government ended up guaranteeing the debt at taxpayer expense, thus securing an American economic system that guarantees private profits at the expense of public losses for the privileged entities on Wall Street.

But don't blame the banks for this kind of system. They are only doing what is natural when one is working with the best government money can buy. In fact, the American political economy has many ways of guaranteeing private profits with public subsidies of what should be private losses.

For example, the latest scam in the Military - Industrial - Congressional Complex (MICC) is the so-called "Buy to Budget" formula for the hugely expensive and deeply troubled F-35 Joint Strike Fighter.

This formula was just gleefully endorsed in an email recently sent to the F-35's Stakeholders. The author, Charles T. Burbage, is the executive vice president of Lockheed Martin Aeronautics Company and general manager of the F-35 Joint Strike Fighter (JSF) Program Integration. Burbage is responsible for ensuring that all of the F-35's requirements are fulfilled for both the program’s U.S. and its international customers, as well as its industrial partners around the world. And the email makes clear Burbage is licking his chops at the MICC's latest coup.

It is pretty easy to understand why Burbage is so gleeful. Defense contractors operate in a "cost-plus" economy, where profits are a negotiated percentage of costs. If costs rise, profits rise. The Pentagon just approved another higher cost estimate for the F-35 and a reduced production quantity. That is clearly good, but Burbage is confident the future looks even rosier. The reasons for his confidence in Lockheed's rosy scenario becomes clear when "Buy to Budget" is viewed in this context of the MICC's political economy.

"Buy to Budget" increases the incentive to grow costs even faster and thereby increase profits even more over the long term. The rosy scenario results when costs continue to grow, and smaller numbers of F-35s will be purchased each future year, all financed within a given budget level. The lower F-35 production rates will exacerbate the aging crisis of the F-16s, A-10s, F-18s, and AV-8s that the F-35 is supposed to replace. But the average age of these airplanes is already far greater that they were designed for, so the political/bureaucratic pressure to increase the production rate of the F-35 will be enormous. Moreover, Burbage knows the Pentagon does not want any alternatives to the F-35. This rising political/bureaucratic pressure caused by the aging inventories will therefore lead to loud calls for higher F-35 budgets, and larger budgets will provide a larger space in which to "Buy to Budget" by jacking up costs further. Thus, the deadly cycle of cost growth, decreasing production rates, aging inventories, and higher profitability will reinforce itself again, in what is the political-economic equivalent of a perpetual motion machine.

At a program acquisition cost already exceeding $300 billion, and a total life cycle cost approaching one trillion dollars (which no doubt will include lots of follow-on maintenance contracts for Lockheed), the F-35 is solidly on track to be the all time record breaker in high cost programs, in which continual production cutbacks will finance a never ending honey pot for Lockheed. Moreover, the Pentagon just signaled its increased commitment to the importance of the program by elevating its government program manager (Burbage's uniformed equivalent) to a two star to a three star general officer, in this case a vice admiral in the Navy -- which means more high level meetings in bigger offices, more cocktail parties, and more of the pomp and circumstance that are the perks of working in the MICC, not to mention even greater high-powered efforts in the Pentagon to save face by continuing business as usual. That the F-35's foreign partners like Great Britain and the Netherlands will help to foot the ever increasing bill is merely icing on the cake.

In the context of MICCs long-term survival, Burbage's gleeful endorsement of "Buy to Budget" reaches back to the end of the Cold War confirms the farsighted wisdom displayed William Anders, former CEO of General Dynamics (note: GD at that time owned the Fort Worth factory where Burbage now works and the F-35 is produced). "Buy to Budget" is validation of the MICC business strategy that Anders spelled out in 1991. Anders decided that General Dynamics (and by extension the Fort Worth factory, which he subsequently sold to Lockheed) was not going to diversify business operations into the non-defense commercial manufacturing sector, even though the Cold War had just ended. Anders said his decision was to increase his concentration in defense activities (a view widely shared and resulted in increased oligopolization of the industry, in an orgy of Pac Man gobbling up of defense companies by other defense companies during the early 1990s. He said this decision to increase concentration was "not surprising," because 80% of defense acquisitions in the non-defense sector failed. He then explained succinctly why these acquisitions are always so unsuccessful: "Defense industry management teams generally have little commercial experience and market savvy," and "Most have been cost-plus and mil spec trained." He concluded by saying, "In short, most don't bring a competitive advantage to non-defense business," and "Frankly, sword makers don't make good and affordable plowshares."[1]

Of course, what Anders did not say is that sword makers also do not make good affordable swords. But who cares when you live in a posh, post-cold-war marketplace like Burbage's, where ever rising costs and profits are fueled by a user friendly Pentagon policy of "Buy to Budgets."

Franklin “Chuck” Spinney is a former military analyst for the Pentagon. He currently lives on a sailboat in the Mediterranean and can be reached at chuck_spinney@mac.com

Notes.

[1] "Rationalizing America's Defense Industry: Renewing Investor Support for the Defense Industrial Base and Safeguarding National Security," Keynote Address, Defense Week 12th Annual Congress, 30 October 1991, page 13.

Counterpunch: The Pentagon Goes Intellectually AWOL

Reprinted with permission of editors of Counterpunch

February 3, 2010

The New QDR

The Pentagon Goes Intellectually AWOL

By FRANKLIN C. SPINNEY

Counterpunch

http://www.counterpunch.org/spinney02032010.html

Monday, February 1, 2010, was a day that should live in budgetary infamy. The Defense Department released its Quadrennial Defense Review (QDR) and its accompanying Fiscal Year 2011 budget request, which is the first year of the Fiscal Year 2011-2015 five year plan (2011-2015 FYDP). These documents are available on the internet and can be downloaded in PDF format here: QDR and the FY 2011 budget.

Even by the dismal intellectual standards of Pentagon bureaucracy, the QDR and the FY 2011 budget, taken together, establish a new standard of analytical vacuity, psychological denial, and just plane meaningless drivel. I will keep this short by using just one important case to prove my allegation. Judge for yourself if it is necessary and sufficient to make the point.

First, I must bore you with a little background: The Pentagon has been producing FYDPs since 1962. But these FYDPs have been repeatedly criticized for producing defense budgets that were disconnected from the national military strategy -- and because the dollar allocations made in any budget determine what any government's policy really is, the critique was logically equivalent to saying there was no strategy. The congressional legislation in the mid 1990s that established the QDR was only the most recent attempt to deal with this long standing criticism. The aim of that legislation was to require the Pentagon to lay out an intellectual framework for matching its military strategy and ambitions to the resource constraints shaping those ambitions, especially budgetary constraints, but also constraints relating to people, the limitations imposed by available technologies, etc.

The new FY 2011 budget and its accompanying FYDP, therefore, are supposed to attach budgetary and programmatic meat to the strategic skeleton that is the QDR, both of which were completed at the same time and made public on 1 February -- itself a somewhat illogical sequence, given that one is supposed to precede the other. In theory, these documents should permit an analysis of the strengths and weaknesses implicit in the matchup between resources and strategy. Therefore, these documents should enable the Secretary of Defense to send the President and the Congress a comprehensive set of priorities, opportunity costs, and risks associated with his strategic plan. This information would then become the grist for a rational national debate by linking strategic considerations to the inevitable compromises made in the sausage making factory that is Congress. Moreover, as this is President Obama's first budget, and because it represents $700+ billion that Mr. Obama just put off limits in the coming national debate over whether or how to shrink the federal deficit, it was crucially important for the Pentagon to get the QDR and the accompanying FY 2011-2015 FYDP right in a logically consistent and transparent manner.

If we apply this standard to the Pentagon's recently completed handiwork, only one conclusion is possible: the Pentagon flunked the test by being intellectually absent without leave.

One example is sufficient to prove this point. For the past 20 years or so, mainstream and defense related press outlets have inundated the American public with horror stories about the Pentagon's aging force structure and with stories about the Pentagon's unauditable budget shambles -- the two are intertwined. And over the last 10 years or so the public has been inundated by stories describing how that force structure is being being worn out by the high operating tempos of our never ending wars and interventions, yet another dimension of the same problem. In fact, I first started documenting this aging trend in the early 1980s in a series of analytical studies, some classified, but most unclassified, and it has gotten worse and more intractable each year.

There is simply no question that the weapons in our force structure inventories have been getting older on average at an alarming rate. The fundamental reason for the aging trend is that the unit costs of buying and operating new weapons grow faster than defense budgets grow, even when budgets grow at unprecedented rates, as they have since the mid-1990s, and consequently, as weapons grow older over time, they become more expensive to operate, which exacerbates the growth in operating costs even further, and the rising costs eventually forces decision makers to retire the oldest weapons without replacement, thereby shrinking the size of the force structure. It is beyond dispute that today the Pentagon is fielding the smallest and, on average, the oldest force structure since the end of WWII, yet it is paying more for that force structure, even after adjusting for the effects of inflation, than at any time since the end of WWII.

Central to this pathological death spiral is the unquestionable fact that the Pentagon's financial management system can not keep track of its actual expenditures or how the predicted expenditures in its FYDP will unfold over over time. The chaos in the accounting system provides the intellectual "grease" to lubricate the engine driving narrow bureaucratic agendas that are causing the force structure meltdown. Senior decision makers can not possibly understand the trade offs they are really making when they put together a budget, assuming they wanted to, which is also in doubt. The accounting problem has been identified in tens, if not hundreds, of reports produced by the General Accounting Office (the auditing arm of Congress) and the Defense Department's own Inspector General. I described how the budget shambles impacted the strategic decision making problem in my last testimony to Congress in June 2002.

The problem of unilateral disarmament at ever higher cost (i.e., the interaction of weapons cost growth greater than budget growth, aging and shrinking forces, and corrupt accounting system that makes it impossible to sort our corrective strategies) is well established, and thanks to the largess of Mad King George, should now be beyond dispute.

So, I have a test for you, dear reader: Download the QDR and the FY2011 budget from the links in the first paragraph. The are formated in searchable PDF file format. Do word and phrase searches on words like aging, age, "weapons aging," accounting, audit, bookkeeping, or anything else you can think of that might related to the problems described above, and determine for yourself the extent to which these problems are addressed. (eg., a search in the budget of "audit" will take you to page 7-34, among others, where you will find that DoD set a goal of reaching 100% auditability for its assets and liabilities in the year 2017, but the last column shows that the indicator of progress made toward that goal in FY 2010 was deleted at the request of the Comptroller, who happens to be the chief financial officer of DoD!)

Alternatively, you could make the same kind of determination by reading the entire text of each, but before you do so, I recommend you buy a couple of boxes of No Doz, so you can keep awake. Either way, you will end up with the same self evident conclusion.

Some farm defenders might say, we must go forward with this protected monstrosity, because we are at war.

That is a false choice -- President Obama could freeze the core budget at this year's level, just like he is doing for the rest of the government. He could tell the Pentagon to go back to the drawing board and come up with something more reasonable. If he chooses to do this, he should task the Pentagon with a massive crash program to clean up the bookkeeping shambles as job 1, rather than waiting until 2017. At the same time, Obama could then ask Congress to pay for his wars on a "pay as you go" basis, which Congress and the Pentagon have been doing for years, in any case, via supplemental appropriations.

Readers interested in a more details on one way we might go about cleaning out the Pentagon's Augean Stables can read my statement to Congress from the aforementioned link.

Franklin “Chuck” Spinney is a former military analyst for the Pentagon. He currently lives on a sailboat in the Mediterranean and can be reached at chuck_spinney@mac.com

Counterpunch: Turning Sun Tzu on His Head

Reprinted with permission of editors of Counterpunch

Weekend Edition
January 29 - 31, 2010

The Eikenberry Cables and the Escalation in Afghanistan

Turning Sun Tzu on His Head

By FRANKLIN C. SPINNEY

Counterpunch

http://www.counterpunch.org/spinney01292010.html

In the opening line of Book 1 of Sun Tzu's classic, The Art of War (circa 400 BC), the first treatise ever written on the subject, the Chinese master said,"War is a matter of vital importance to the State; the province of life and death; the road to survival or ruin. It is mandatory that it be thoroughly studied." He then goes on to describe a systematic method for assembling the information needed to make a rational decision to go to war.

Today, in Pentagonese, we would call his method a "net assessment," that is to say Sun Tzu described a very thoughtful way to perform a comparative analysis of one's own strengths and weaknesses with those of the adversary. Sun Tzu's strategic outlook is amazingly relevant to contemporary circumstances; indeed, it is timeless, and I submit it provides the gold standard for for evaluating our own efforts to grapple with the question of going to war or to escalate a war -- basically, his advice was simple: know your enemy and know yourself before plunging into war.

When the wisdom of Sun Tzu's gold standard is compared to the crude domestic political machinations used to steamroller President Obama into escalating the war in Afghanistan, a horrifying picture emerges at the most basic of level decision making. The public debate concentrated on only one side of that net assessment -- the side advocating escalation, and even the argument for that side was conceptually flawed in that it did not examine its own strengths and weaknesses.

The recently leaked cables by Ambassador Karl Eikenberry bring this imbalance into sharp relief. Eikenberry raised some thoughtful objections to the McChrystal/Petraeus/Gates/Clinton escalation plan from the perspective of its limitations on "knowing ourselves" (US, Karzai government, and the Afghan security forces). He did not really address the strengths and weaknesses on other side of the net assessment--i.e., those of our adversaries. But his analysis is damning enough. Eikenberry's objections were sent to Secretary of State Hillary Clinton in secret cables. Presumably President Obama studied them prior to his decision to accede to the escalation pressures. Eikenberry's analyses are both an interesting and important counterpoints to what I still believe was an ill advised decision.

Bear in mind, as far as public awareness is concerned, the McChrystal plan, which was also secret, was leaked in redacted form to the Washington Post well before Mr. Obama caved into the domestic political pressures for escalation -- in fact, that leak was part of a carefully orchestrated public political steamroller to pressure Mr. Obama to accede to the escalation. Yet McChrystal's escalation plan was by no means a self evident winner. In fact, it was conceptually flawed in its own terms -- -- namely that McChrystal failed to analyze the strengths and weaknesses of the Afghan National Security Forces, yet his whole strategy depended depended on a rapid increase in the effectiveness of those forces. My discussion of this flaw, as well as the raw political character of the escalation steamroller, can found here, here, and here. In short, there is very little evidence that the proponents of escalation on our side did the kind of systematic analysis advocated by Sun Tzu to really "know ourselves," let alone know the enemy.

On the other hand, Amb. Eikenberry's thoughtful objections to that escalation plan at least provided some first order information to redress one side of this conceptual disaster. While his objections were reported in very general terms prior to the escalation decision, they were not leaked to the press (NYT) until well after Mr. Obama's decision. So, given the asymmetric leaking tactics in the bureaucratic war, the net result was that the public and the Congress were presented with a one-sided picture of the debate over a vital question of state -- and this lopsided picture was then pounded into the people, the Congress, and the President by the thumping echo chamber of hysterical warmongers in the mainstream electronic media and talk radio.

So, I pose a question: Read the Eikenberry cables and then ask yourself whether we the people and our representatives in Congress would have had a more constructive political debate over this most vital of questions if the details of Ambassador Eikenberry's objections were known and understood to the same extent as the details of the escalation plan were understood prior to Mr. Obama's decision.

Franklin “Chuck” Spinney is a former military analyst for the Pentagon. He currently lives on a sailboat in the Mediterranean and can be reached at chuck_spinney@mac.com