Tag: foreign policy

Unintended Consequences of Money-Laundering Laws, Cont’d

As Dan Mitchell pointed out this morning, proposals to abolish the $100 bill, on the grounds that it’s too easily used in underground-economy activities such as tax evasion and drug dealing, are another instance in which ordinary citizens are called on to sacrifice convenience and privacy to help in the ever-expanding federal fight against “money laundering.” I’ve long been fascinated by the unintended consequences that arise from these laws, especially from the federal “know your customer” rules under which banks (and increasingly other businesses) are required to pry into their customers’ earnings sources, family relationships, overseas ties and other sensitive matters. Those who cannot furnish satisfactory answers – such as Americans who lack a suitable recent domestic credit record because they have long lived as dependents, overseas, or even as nuns in convents – may find that banks turn them away as customers or even freeze their existing accounts. The same is true of established customers who cannot explain a large or irregular series of cash deposits or remittances from abroad to a bank officer’s satisfaction.

A new example of this has emerged this fall, and it’s embarrassing even by the standards of federal government foul-ups. According to a Foreign Policy report last month, no fewer than 37 foreign governments with embassies in the United States are on the brink of losing, or have already lost, access to the routine banking services they need to pay their staff salaries and keep the lights and heat on in their consulates. The reason? These governments cannot prove to the satisfaction of U.S. banks that their accounts are not potentially open to use for illicit money transfers. From the banks’ point of view, there is no particular benefit to be had from an account which is relatively small in the first place – the countries involved are mostly poorer nations, many in Africa, with small embassy staffs – when these are dwarfed by the paperwork costs and potential legal exposures from a misstep.

The consequences for American foreign interests have already been unpleasant, and will become more so if the problem isn’t fixed. Angola, which saw its accounts closed down by Bank of America, has already had to cancel planned national independence day celebrations and has hinted at retaliation against unrelated U.S. companies that happen to do business in Angola. Extend that sort of anger to 37 countries, and some significant international frictions could result.

Now, I have no doubt that some embassy bank accounts, of smaller and bigger countries alike, are pressed into service for improper or even criminal money transfers. (I always assumed the whole point of “diplomatic pouches” was to transfer things back and forth that the host country would have preferred to stop and inspect). But the odds are near zero, I think, that the latest wave of bank refusals-to-deal was somehow a planned or intended consequence of the original federal calls for wide-ranging bank regulation in the name of money-laundering prevention. How many such unintended consequences will the new Dodd-Frank law turn out to have?

Five Ways to Cut Military Spending Today

The U.S. military has an important purpose, protecting Americans, but that purpose has been distorted over the years. Here are five military spending cuts Congress and the President can make today while they undertake the harder task of rethinking the true purpose of the military and then restraining its use. These recommendations are derived from the report, “Budgetary Savings from Military Restraint.”


Conservative Rift Widening over Military Spending

More and more figures on the right – especially some darlings of the all-important tea party movement – are coming forward to utter a conservative heresy: that the Pentagon budget cow perhaps should not be so sacred after all.

Senator-elect Rand Paul of Kentucky was the latest, declaring on ABC’s “This Week” on Sunday that military spending should not be exempt from the electorate’s clear
desire to reduce the massive federal deficit.

His comments follow similar musings by leading fiscal hawks Sen. Tom Coburn of Oklahoma and Gov. Mitch Daniels of Indiana, a presumptive contender for the GOP nomination in 2012.  Others who agree that military spending shouldn’t get a free pass as we search for savings include Sen. Johnny Isakson, Sen. Bob Corker, Sen.-elect Pat Toomey—the list goes on.

Will tea partiers extend their limited government principles to foreign policyI certainly hope so, although I caution that any move to bring down Pentagon spending must include a change in our foreign policy that currently commits our military to far too many missions abroad.  To cut spending without reducing overseas commitments merely places additional strains on the men and women serving in our military, which is no one’s desired outcome.

If tea partiers need the specifics they have been criticized for lacking in their drive for fiscal discipline, they need look no further than the Cato Institute’s DownSizingGovernment.org project.  As of today, that web site includes recommendations for over a trillion dollars in targeted cuts to the Pentagon budget over ten years.

Meanwhile, the hawkish elements of the right have been at pains to declare military spending off-limits in any moves toward fiscal austerity.  That perspective is best epitomized in a Wall Street Journal op-ed by Ed Feulner of the Heritage Foundation, Arthur Brooks of AEI and Bill Kristol of the Weekly Standard published on Oct. 4—a month before the tea party fueled a GOP landslide.  (Ed Crane and I penned a letter responding to that piece.)  Thankfully, it looks like neoconservative attempts to forestall a debate over military spending have failed. That debate is already well along.

The Tea Party and Foreign Policy

There has been an on-going discussion recently about the Tea Party’s foreign policy views and how this might influence the upcoming election and new members of Congress.  In an essay at the Daily Caller last week, the Heritage Foundation’s Jim Carafano addressed this question and the claim that the new “Defending Defense” initiative— led by Heritiage, AEI, and the Foreign Policy Initiative—is aimed at co-opting the Tea Party movement (for more on the substance, or lack thereof, of “Defending Defense,” see Justin Logan’s response here).

Over at The Skeptics blog, I take issue with Carafano’s assessment of the Tea Party’s foreign policy views:

With respect to Carafano’s assessment of the Tea Partiers’s views on foreign policy and military spending, most of what he puts forward is pure speculation. Little is actually known about the foreign policy views of a movement that is organized primarily around the idea of getting the government off the people’s backs. It seems unlikely, however, that a majority within the movement like the idea of our government building other people’s countries, and our troops fighting other people’s wars.

Equally dubious is Carafano’s claim that the Tea Party ranks include “many libertarians who don’t think much of the Reagan mantra ‘peace through strength’ ” but an equal or larger number who are enamored of the idea that the military should get as much money as it wants, and then some. Carafano avoids a discussion of what this military has actually been asked to do, much less what it should do. By default, he endorses the tired status quo, which holds that the purpose of the U.S. military is to defend other countries so that their governments can spend money on social welfare programs and six-week vacations.

Tea Partiers are many things, but defenders of the status quo isn’t one of them. This movement is populated by individuals who are incensed by politicians reaching into their pockets and funneling money for goo-goo projects to Washington. It beggars the imagination that they’d be anxious to send money for similar schemes to Brussels, Paris, Berlin and Tokyo, and yet that is precisely what our foreign policies have done – and will do – so long as the United States maintains a military geared more for defending others than for defending us.

Click here to read the entire post.

Cut (Really Cut) Military Spending

Today ForeignPolicy.com has a feature article examining possible “Plan B’s for Obama,” with contributions coming from numerous experts. My contribution to the feature is titled “Cut (Really Cut) Military Spending.”

It is time for President Obama and the administration to finally notice the increasing calls—from across the political spectrum—that the Pentagon’s budget should not be off limits when reducing the deficit.  From the Foreign Policy article:

Despite all the hype about Defense Secretary Robert Gates and his cuts of big-ticket military projects, the Pentagon’s $680 billion budget is actually slated to increase in coming years. This is unconscionable at a time when taxpayers are under enormous stress and when the U.S. government must reduce spending across the board. Barack Obama can save big bucks without undermining U.S. security – but only if he refocuses the military on a few, core missions.

The hawks will scream, but America will be just fine. Obama can capitalize on the country’s unique advantages – wide oceans to the east and west, friendly neighbors to the north and south, a dearth of powerful enemies globally, and the wealth to adapt to dangers as they arise – by adopting a grand strategy of restraint. The United States could shed the burden of defending other countries that are able to defend themselves, abandon futile efforts to fix failed states, and focus on those security challenges that pose the greatest threat to America. A strategic shift of this magnitude will not only reduce conflict and make the United States safer, but it will enable Obama to reshape the military to suit this more modest set of objectives, at a price that’s far easier for taxpayers to swallow.

Click here to read the full article

Iraq Drawdown: What Took So Long?

President Obama’s announcement that the U.S. will meet the August 31 deadline for removing combat troops from Iraq is welcome news. It is encouraging that the president remains on track to end the war in Iraq as he promised to do.

The president should continue this progress and adhere to the Status of Forces Agreement (SOFA) and remove the 50,000 troops that will remain in Iraq by the end of 2011. Although political and security uncertainties remain, these concerns should not delay the withdrawal. There will always be excuses, especially from those who favored the war at the outset, for an open-ended presence.

Such a policy reversal would be neither warranted nor wise. An expeditious military withdrawal from Iraq, and a handover of security responsibilities to the Iraqi people is in America’s strategic interest. The war in Iraq has already consumed far too much blood and treasure, and our troops are straining under the burdens of repeated foreign deployments.

It appears that President Obama will keep his promise to end the war in Iraq, and bring all the troops home from that shattered land. His decision to dramatically expand the war in Afghanistan, however, signals an unwillingness to truly change the course of U.S. foreign policy in a direction that advances U.S. security, and at far less cost than our current strategy. The war in Iraq was, and still is, a great tragedy. It would be more tragic still if the President and his senior advisers fail to heed the lesson that attempts at nation-building are costly and counterproductive.

Ed Morrissey on The Struggle to Limit Government

Ed Morrissey kindly mentioned The Struggle to Limit Government and responds to the advice for Tea Partiers in my video.

Morrissey says:

I don’t think it’s accurate to say that some Tea Partiers “like” big government; it’s more like some aren’t enthusiastic about dismantling as much of the federal government as others, especially the more doctrinaire libertarians.

In the video I noted that polls showed a majority of the people who identify with the Tea Party movement also thought the entitlement programs were worth their cost. My colleague, Jagadeesh Gokhale, has estimated that paying for current entitlements would require 9 percent of GNP in perpetuity. This is unlikely. Entitlements will have to be changed since too much has been promised. People who think the programs have been worth their cost are not likely initially to support reining in the entitlements. In saying that, I expressed a concern, not a prediction. It may be that Tea Party people will also come to recognize, as Ed Morrissey does, that the entitlement state cannot continue.

I said in the video that Tea Party people should recognize that “Democrats are not always the enemy.” Morrissey rightly says I should not talk about enemies in domestic politics. He adds that the current House Democratic caucus does not deserve support because its leaders favor expanding government. He’s right. Divided government is what we need now. However, I had in mind the more centrist Democrats that supported the tax and spending cuts of 1981 and the tax reform of 1986. I am urging Tea Party people to avoid becoming too partisan. Perhaps some of them will still be in Congress in 2011.

Then there’s the question of foreign policy and defense spending. In the video I said that a limited government movement like the Tea Party should start thinking outside the box on spending. I suggested rethinking America’s expansive commitments in foreign affairs as a way to reduce our military spending.  I did not deny – who could deny it? – that the Constitution entrusts the common defense to the federal government. I also recognize that the United States continues to have enemies. The question is: what should the government do to provide the common defense consistent with limited government?

In the past decade, we have spent enormous sums trying to transform two nations and the entire Middle East into liberal democracies. This was our “forward strategy” for dealing with terrorism. It reminded me of past Progressive crusades at home and abroad.   The strategy was a domestic political disaster, and we shall see whether our massive outlays eventually produce stability in Iraq or Afghanistan. For my part, I remain partial to the conservative virtues of realism, restraint, and prudence in dealing with other nations.

The United States is currently spending about half of all military spending in the world. We have some room for restraint without endangering American lives. We will still have a Navy that protects trade routes to the extent they are threatened. As I said in the video, we need to rethink our overall place in the world if we are to corral the big government beast. The Tea Party folks can lead the way here.

The Pentagon is not most of the federal budget. It is the only part historically, however, that can vary downward as well as upward. Sometime soon, the non-defense parts of the budget are going to have to vary downward rather than just upward.  Being serious about limiting government, however, requires that all spending be considered. Since I think the Tea Party movement is serious about cutting government, it would be better if they had a look at all spending from the start.