(a panoramic survey in March 2013)



The following consolidates “a sobering review of recent developments,” which the SAFE blog covered in two installments (3/11/13 & 3/18/13).


Part I: The “good news” is not so hot


We considered a good news/bad news essay on the current situation, but could not find enough genuinely good news to make it work.  A “cheer up, things could be worse” theme might be more suitable.


So on reflection, we will cover “somewhat favorable” developments in today’s entry, grouped under economic and political headings, and save the “bad” and “downright ugly” stuff for next week.


Economic – Recent reports suggest the economic recovery may finally be gathering strength, but the seeds for a new crisis have already been sown.  A solid and sustained recovery does not seem to be in the cards.


1. Dow Jones Industrials soar, completing a recovery from much lower levels during the recession. Dow hits record, erasing great recession losses, Bernard Condon, ABC News, 3/6/13.


Five and a half years after the start of a frightening drop that erased $11 trillion from stock portfolios and made investors despair of ever getting their money back, the Dow Jones industrial average has regained all the losses suffered during the Great Recession and reached a new high. The blue-chip index rose 125.95 points Tuesday and closed at 14,253.77, topping the previous record of 14,164.53 on Oct. 9, 2007, by 89.24 points.

[The DJIA stood at 14,397 at the close of trading on Friday, March 8.]


This is not a record high for the Dow Jones on an inflation-adjusted basis, however, nor does the upsurge in stock prices reflect a robust economic recovery.  It is largely a result of Federal Reserve asset purchases (aka “quantitative easing), which have depressed yields on high quality debt securities and steered yield-hungry investors into more risky investments, e.g., stocks. Federal Reserve launches another monetary policy experiment, (9/17/12)


The economy could boom in time, as stock prices (generally considered a leading economic indicator) are doing now.  Wouldn’t that be nice!  Well, perhaps not, as the extraordinary policies of the Fed would then fuel a nasty inflationary spiral.


That would be bad news for seniors living on fixed incomes (sound familiar?), the housing market, and the federal government with its huge and rapidly growing debt.  Peter Schiff and the coming housing collapse: the Fed, instead of Lehman, owns the mortgage market, Agustino Fontevecchia, Forbes, 3/5/13.


The day of reckoning will come when the Fed starts to tighten, according to Schiff. “It is amazing Bernanke can admit he has no exit strategy,” he explained, noting the Fed will monetize some of its Treasury and mortgage holdings, but will have to sell a lot of both to normalize its monetary stance. Bernanke has made it clear they will telegraph the move to the market, but Schiff believes telling others they will sell “is the worst thing they can do [as] everyone will try to front-run the Fed.”


2. Higher tax revenue in 2013 will contribute to narrowing the deficit.  According to Congressional Budget Office estimates, tax collections may hit $2.7T this year.  That would beat the previous peak of $2.6T in fiscal year 2007 before the recession began. Tax revenue to hit record this year.  So is spending “the problem”? Mark Turnbull,, 3/4/13.


Conservatives are spinning the revenue rebound as evidence that the government’s deficits have not been caused by taxing too little, according to the CSM article, but rather by spending too much.  We share this conviction, but agree that the logic is simplistic.


For one thing, revenue numbers for the two years are not comparable. The value of money has declined (due to inflation) since 2007, while the size of the economy has grown considerably in nominal dollar terms.


Tax revenue will total 16.9 percent of gross domestic product this year, the CBO predicts, compared with 18.5 percent of GDP in 2007. It looks as if it will take another year, until 2014, for tax revenue to get back to 18 percent of GDP, which has been the average level since 1973.


There is also fundamental disagreement as to whether government expenditures should be limited to some specified share of the GDP or allowed to grow faster than the total economy in order to support burgeoning social welfare programs, military preeminence, and all the other things the US government does.  Even if revenues reached 20% of GDP, say, we would anticipate continuing pressure from the Left to raise them further.


Finally, at the risk of stating the obvious, the reported revenue gain is not “free money.” Like all taxes, it is an exaction from the private sector that will detract from private spending and investment.  Tax growth needs to be limited, lest it undermine the vitality of the US economy much as has already happened in many European countries.


3. Job growth accelerated in February and the unemployment rate dropped to a 4-year low.  In particular, a 48,000 gain in construction jobs was “the most in six years and showed that the reviving housing sector is starting to produce the much-sought benefit of increased employment for long-idled workers in home-building, many of whom have been out of permanent work for five years or more.”  US adds 236K jobs, unemployment rate falls to 7.7 percent, Patrice Hill, Washington Times, 3/8/13.


But 7.7% unemployment – four years after the recession - is nothing to brag about.  And the reported improvement in the jobless rate is due in part to Americans applying for disability or otherwise dropping out of the workforce. Record 89,304,000 Americans “not in labor force” – 296,000 fewer employed since January, Elizabeth Harrington,, 3/8/13.


Still, the economy does seem to be perking up, in large part because many Americans (especially at the upper end of the economic spectrum) are feeling more affluent and therefore disposed to spend.  Not only is the stock market rebounding (point 2), but housing values are starting to recover too.  US household wealth regains pre-recession peak, CNBC, 3/7/13.


 . . . increases in stock and home prices this year mean that Americans' net worth has [now] topped the pre-recession peak of $67.4 trillion, private economists say. Wealth had bottomed at $51.2 trillion in early 2009.  "It's all but certain that we surpassed that peak in the first quarter," said Aaron Smith, senior economist at Moody's Analytics.


As already discussed (point 1), however, a robust economic recovery – assuming one gets started – could be aborted if current easy monetary policies fueled an inflationary spiral and the Fed was forced to slam on the brakes.  And there is no indication that improving economic and market data will prompt a monetary policy reset any time soon. To the contrary, the Federal Reserve seems determined to follow the course that has been set and its leader is being hailed as a hero.  Bernanke drives bull market to 4th birthday, 130 percent gain, John Melloy, CNBC, 3/6/13.


. . . the Fed chief said last week that the central bank wouldn't stop QE until unemployment reaches 6 percent, an occasion Bernanke doesn't see happening until 2016. [His current term in office expires in 2014.]


Political – Many observers have suggested that the nation’s biggest problem is political gridlock.  If only the two parties had not grown so ideological; if only US political leaders were talking to each other as they used to; if only everyone was working for the good of the country rather than their own parochial interests – what a wonderful world this could be.  And certain recent developments are pointed to as a sign that bipartisan cooperation may finally be on the way.



This view romanticizes the past, however, for the nation’s founders often disagreed about things just as political leaders do today.  Also, there are lots of indications that the partisan divide will not be bridged any time soon.


4.  Purportedly reaching out to the other side, the president dined with a group of GOP senators at the Jefferson Hotel and picked up the tab personally.  Who says the spirit of bipartisan cooperation is dead!  Breaking bread: Obama dines with Republican senators over sequester gridlock, Susan Crabtree, Washington Times, 3/6/13.


 But as the article notes, this gesture – and others in the works – came after a long period in which Republicans had been treated like pariahs with nothing of value to contribute.  Cynical interpretations of the president’s “charm offensive” abound, e.g., he is responding to a dip in his poll numbers or trying to peel off a few Republican votes, and no one seems to be expecting big changes to result from it.


Even as Mr. Obama was inviting Republicans to dinner, Organizing for America, the campaign committee that has transformed itself into an outside group supporting the administration’s agenda, was sending out emails to supporters blaming Republicans for letting the sequester cuts go into effect “because they simply wouldn’t support closing tax loopholes for millionaires and billionaires — for things like yachts and corporate jets.”


So, yes, civility is worthwhile and it’s encouraging when the two sides are talking with each other.  But such efforts can do just so much; they can hardly be expected to resolve deep-rooted ideological differences.


5.  The president is offering a plan to replace the “meat axe” budget cuts already being forced by the sequester with a larger, balanced deficit reduction plan that will keep the economy growing.  What could be more reasonable than that?  Weekly address, 3/9/13.


. . . at a time when our businesses are gaining a little more traction, the last thing we should do is allow Washington politics to get in the way.  You deserve better than the same political gridlock and refusal to compromise that has too often passed for serious debate over the last few years.


More than half of the proposed deficit reduction ($1.6T over 10 years, exclusive of imputed interest savings) in the president’s plan would be achieved through revenue increases, however, on top of a $620B tax increase just enacted in the “fiscal cliff” deal (aka ATRA).  Also, there is no rhyme or reason to the indicated spending cuts.   See our analysis in last week’s entry: We can’t keep spending like this, 3/4/13.


The Wall Street Journal has offered similar conclusions about the president’s package of tax increases, “notional entitlement reforms and a grab bag of things his Administration should be doing anyway.” Obama’s not so grand offer, 3/8/13 (link not available). 


. . . what his grand bargain would really do is to endorse the status quo – maybe stave off a crisis for a year or three, but nothing tangible that would put the fisc on a more sustainable path.  His tax demands would damage economic growth even as they ensured revenue would continue to finance an explosion of federal spending.


6. The GOP finally got its act together by upholding the sequester, and progress can now be expected on reducing the deficit (maybe even balancing the budget). Moving quickly after the sequester went into effect, House Republicans (plus a fair number of House Democrats, including Representative John Carney of Delaware) passed a continuing resolution that would keep the government going through the rest of the fiscal year at the sequester-reduced spending levels.  House OKs funding bill as President Obama, GOP seek to avoid government shutdown, Susan Ferrechio, Washington Examiner, 3/6/13.


Some conservatives have criticized the House continuing resolution for failing to either (A) add more spending cuts, or (B) rationalize the sequester cuts that have already been made. 2 problems with House spending plan, Patrick Knudsen, Heritage, 3/5/13.


And we share concerns that the sequester cuts risk real damage to the nation’s military establishment – in terms of postponed maintenance, force reductions, and impaired combat readiness – that others will interpret as a sign of weakness.  Cutting into bone is no way to trim defense, J.D. Gordon, Washington Times, 2/27/13.


As America pulls back its military might, signaling that we’re on the decline like Britain 100 years ago and leaving a power vacuum, which will be the next power to rise? We’re already being tested by Iran and North Korea over their nuclear programs, by Russia with its strategic bombers and submarines off our coasts, by China with its relentless cyberattacks and growing military — not to mention al Qaeda and affiliates still committed to destroying America.


But politics is the art of the possible, and even the continuing resolution passed by the House (which does provide added flexibility to move money around within the defense budget, albeit without restoring the dollars cut) may face challenges in the Senate.  Not for nothing has House Speaker John Boehner made clear that a substitution of tax increases for spending cuts or the like could derail the proposed measure.  Boehner warns Senate against loading up CR, Daniel Newhauser, Roll Call, 3/9/13.


“After being in office now for over four years, he’s actually going to sit down and talk to members. [The president will meet separately, next week, with the GOP and Democrat caucuses in the House.] I think it’s a ... hopeful sign, and I’m hopeful something will come out of it,” Boehner said. “But if the president continues to insist on tax hikes, I don’t think we’re going to get very far.”


As for the longer term, notably facing up to the need to trim entitlement programs, the House Budget Committee is working on a proposal that would balance the budget within ten years.  Projecting budget balance within this time frame, an improvement over the House budget of last year, would reportedly be facilitated by the ATRA tax increases and a generally improving tax revenue outlook – but no further tax increases would be called for.  Paul Ryan floats change to Medicare plan, Jake Sherman & Jonathan Allen, Politico, 3/4/13.


As the Politico report indicates, proposed changes such as block granting Medicaid and converting Medicare to a “voucher plan” for future retirees are not likely to attract Democratic votes in the House let alone gain traction in the Democrat-controlled Senate.  The only hope for progress will therefore lie in forcing a compromise with the Senate budget resolution (assuming there will be one this year).


The Wisconsin Republican plans to roll out the outlines of his budget Wednesday in a pen-and-pad session with reporters, and the age issue is one of only a handful of unresolved questions remaining. Also in the Ryan budget: a filibuster-proof pathway toward tax and entitlement reform — a process known as budget reconciliation. It’s the way Republicans think they’ll be able to jump-start a grand deficit compromise with Senate Democrats and Obama.

Just a hunch, but we suspect the president’s budget proposal – which was due by law in early February but at last report ( won’t be released until April 8 – is being withheld until after the House budget plan surfaces for tactical reasons and will be embraced by the Senate in lieu of preparing its own budget proposal.


 In any case, Side A’s push for tax increases versus spending cuts will continue.  Bad ideas may be defeated from time to time, but they never really go away.


 7.  Conservatives are waking up to the need to update the Republican platform for the 21st Century.  Who says so?  For one, Arthur Brooks of the American Enterprise Institute made this case in a recent column.  “Taking care of those in need and avoiding harm to the weak” have almost universal appeal, he says, while moral values resonate with a minority of the population and “raw money arguments, e.g., about the dire effects of the country’s growing entitlement spending,” are a big yawn. Republicans and their faulty moral arithmetic, Wall Street Journal, 3/3/13.


[Accordingly,] the answer [for conservatives] is to make improving the lives of vulnerable people the primary focus of authentically conservative policies. For example, the core problem with out-of-control entitlements is not that they are costly—it is that the impending insolvency of Social Security and Medicare imperils the social safety net for the neediest citizens.


This is a clever argument, but it’s not one we are prepared to accept.  Party A has already embraced “improving the lives of vulnerable people” as their credo, whether or not their policies achieve this result in practice, and if Party B follows suit who will be left to speak for freedom, opportunity, and property rights? 


Better for conservatives to stick up for these values and lose, we should think, than to abandon them in hope of political gains.  And the hoped-for gains might not be achieved anyway, as Side B would never be able to supplant Side A as “champion of the oppressed.”   Witness the poor results for Republicans of embracing “compassionate conservatism” as a cause to be promoted by the government. Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution, Michael D. Tanner, Cato Institute (2007).


Other readers must have had similar reactions, because the Wall Street Journal published five letters on March 7 in response to Brook’s column.  Some excerpts follow:


•You can have “Atlas Shrugged” or the Sermon on the Mount.  You can’t have both.


 •It’s employment versus handouts.  The former is challenging and energizing, the latter is pride-shattering.


•There is nothing startling in the idea that the free market is a great antipoverty program.  Adam Smith said the same thing years ago.  The problem is that the free market isn’t the basis for a successful political campaign. *** [Republicans] have a tough row to hoe battling populism’s emphasis on direct consequences and a Democratic educational and media establishment.


•Conservatives should remind people of pre-welfare-state American history when the most vulnerable were helped by a rich mosaic of family, community and charitable organizations.


•All efforts should focus on the core danger, which is society’s deteriorating capacity to act and think with valid logic, a step necessary to achieve and sustain a valid moral order.


Part II: And it gets worse


If you thought part one (questioning whether a stock market run-up, somewhat encouraging jobs report, etc. truly herald an economy on the mend) was a bit of a downer, our thoughts on “bad” and “downright ugly” developments may seem truly dreary. But “forewarned is forearmed,” as the adage goes, so the following information is being reported as a public service.


Bad stuff– For reasons already discussed, we envision two likely scenarios for the US economy:


Crisis now: Whether due to or in spite of the extraordinary fiscal and monetary stimulus being provided, the economy starts to perk up.  There is an inflationary surge, forcing the Federal Reserve to slam on the monetary brakes.  Interest rates jump and the government’s deficit (including interest expense on a $17T and rising national debt) soars. Look for a bigger financial crisis and recession than in 2008-09


Crisis later:  The economy continues to sputter along. Anemic economic growth makes it practically impossible to solve the fiscal problem so unsustainable deficits continue.  Look for “tough times” near term, with an epic financial crisis and recession to follow when lenders lose faith in the government’s ability to meet its financial obligations.


One might think the nation’s political leaders would be intently focused on phasing out fiscal and monetary stimulus while helping the private sector stand on its own.  Yet many of them seem more interested in keeping the stimulus party going, as shown in the following discussion:


1. Blocking tax reform - A revenue neutral tax overhaul could promote economic growth by making the tax system simpler, fairer, and more efficient.  And government revenue would be enhanced by the economic rebound, which should be well received on both sides of the aisle.  A tax overhaul is way overdue, (1/14/13).


Side A wants to close tax “loopholes” without reducing rates, however, despite the resultant increase in economic drag. Accordingly, a constructive deal on taxes seems unlikely.   Congress begins meetings on tax reform, Zachary Goldfarb & Lori Montgomery, Washington Post, 3/14/13.


Democrats see the tax code . . . as riddled with giveaways to the rich and want to scale back deductions and loopholes to raise taxes on the wealthy by $1 trillion. They see those tax breaks as spending programs that subsidize the lives of wealthy Americans at a time of spending cutbacks on programs that help the poor and middle class.


2. Perpetuating government bloat – We have discussed the potential gains from rolling back poorly conceived or unnecessary regulations before. Regulatory common sense requires eternal vigilance, (11/22/10); Dear EPA: Shape up or ship out,  (11/29/10).

But apparently no one in a position of authority was paying attention.  Far from culling existing regulations, a tidal wave of new regulations has been launched affecting almost every sector of the economy.  The current cost of government regulations is well over $1T per year; no telling what it might be when the dust settles.  Consider these examples.


A. Energy - We believe the Keystone Pipeline will be approved, but only with environmental conditions, e.g., a carbon tax, sufficiently onerous to kill it. An update on the Keystone Pipeline, (2/25/13).


A recent State Department report notes that oil from the Alberta tar sands will come to market whether the pipeline is built or not.  But a decision on this oft-studied project – first by the secretary of state and then by the president – is not expected for months.  Republicans aim to take Keystone decision out of Obama’s hands, Michael  Bastasch, Daily Caller, 3/8/13.


Pipeline critics will fight to the bitter end, encouraging the president to block the project or exact a stiff price for approving it.  When to say no, New York Times, 3/10/13.


Saying no to the pipeline will not stop Canada from developing the tar sands, but it will force the construction of new pipelines through Canada itself. And that will require Canadians to play a larger role in deciding whether a massive expansion of tar sands development is prudent. At the very least, saying no to the Keystone XL will slow down plans to triple tar sands production from just under two million barrels a day now to six million barrels a day by 2030.


If the president and his supporters were serious about boosting the economy, they would be taking a different tack on this project and a slew of other energy-related matters. 


Coal power will be replaced anyway due to cheap natural gas from the fracking boom, so why is the EPA working so hard to kill it?  Issuing more permits for oil and gas exploration could reduce oil imports, create jobs, and generate government revenue as well.  If Congress could somehow be pressured into approving a carbon tax, it would be paid primarily by the middle class that both parties claim to support. Obama’s misguided carbon tax plans, Paul Driessen, Washington Times, 3/12/13.


Instead of real energy for real jobs and revenue, Mr. Obama wants to redouble spending on “green” energy — extracting billions of dollars from still-productive sectors of our economy and transferring the money to crony corporatists and campaign contributors, whose operations are exempted from endangered species and other environmental laws that routinely punish oil, mining and other companies.


B. Healthcare - A deluge of regulations (20K pages already) is being generated in preparation for GovCare (aka Obamacare) implementation next year.  Compliance costs plus GovCare tax increases will inflate healthcare insurance (HCI) premiums dramatically.  If the alternatives are an annual premium of $20K (let’s say paid 2/3 by the employer and 1/3 by the employee) or an annual penalty of $2K, a good many employees will not sign up for coverage.  IRS: Cheapest Obamacare plan will be $20,000 per family, Matt Cover,,


Similarly, many employers will adjust hiring practices to minimize their HCI requirements and/or obligations to pay fines for not providing coverage. The GovCare muddle,  (12/3/12).


Practically no one believes GovCare will work as the president promised in 2009, e.g., allow people who like their current healthcare insurance coverage to keep it and pay less.  Some critics predict a disaster, which would leave no apparent alternative to implementing a “single payer” healthcare system.  Connecting the dots on healthcare, Hal Scherz,, 3/12/13.


To make the leap from where we are today to a single payer system, things have to get so bad that the federal government will be left with no “viable alternative”  other than stepping in to rescue the American health care “system”. The myriad and still not fully understood regulations in the ACA makes this outcome inevitable.


C. Financial services – Remedial legislation was inevitable after the 2008 financial crisis, if only so politicians could claim to have taken action to ensure that no such crisis would ever happen again. But the GovFinance (aka Dodd-Frank) bill enacted in 2010 was deeply flawed even by Washington standards.


The bill did not effectively address “too big to fail,” the unwritten rule that major financial firms won’t be allowed to go under if their managers take big risks that go sour.


Most of the key decisions were left for future determination instead of being made by Congress.  For example, what would be done with Fannie Mae and Freddie Mac (two huge government-sponsored entities that the government was forced to take over when they became insolvent).


And some GovFinance provisions had little to do with the 2008 crisis, notably creation of a Consumer Financial Protection Bureau (CFPB) that was insulated from congressional control by funding it from Federal Reserve revenues.


SAFE blasted GovFinance at the time, both in this blog and in a letter to the Delaware members of Congress.


The latest project, taking over the financial sector, seems to have little purpose beyond growing the government.  See our 5/3/10 and 5/10/10 blog entries for a detailed critique of the Restoring American Financial Stability Act. [“Reforming” the financial system: a play in three acts, (5/3/10); GovFinance: too bad to fix, (5/10/10).]


Now it seems our thoughts about GovFinance are being vindicated by events. 

According to the Wall Street Journal, “even Senate Democrats don’t believe the Dodd-Frank law ended too-big-to-fail banks.” The Washington Whale, 3/15/13, no link available.


Most of the GovFinance regulations are still in the development stage, an unsurprising consequence of the complexity of the issues and the multiplicity of regulatory agencies and financial interests involved, so the new ground rules for financial firms will remain uncertain for another year or two.


Far from being wound down, Fannie Mae & Freddie Mac are playing a bigger role in the mortgage market than ever.  US has “effectively nationalized” home mortgage industry, Glenn Kalinoski, Newsmax (citing Wall Street Journal), 3/14/13.


Government agencies — primarily Fannie Mae and Freddie Mac, but also the Federal Housing Administration — insured or purchased more than 90 percent of home mortgages originated in 2012, a $1.3 trillion business, compared with 30 percent in 2006, according to ProPublica data.


Relaxed home loan lending standards are being advocated as though nothing was learned from the subprime mortgage bust that led to a housing market downturn and the 2008 financial crisis.  Housing industry hopes Obama line will soften mortgage rule, Clea Benson & Cheyenne Hopkins,, 2/14/13.


At issue is the so-called qualified residential mortgage rule, which six banking regulators including the Federal Deposit Insurance Corp. and the Federal Reserve are aiming to complete this year. The regulators drew protests in 2011 when they released a preliminary draft requiring lenders to keep a stake in mortgages with down payments of less than 20 percent and those issued to borrowers spending more than 36 percent of their income on debt.

A legal battle is in process over the recess appointment of Richard Cordray as the first CFPB director.  The issue is not Cordray’s qualifications, but rather Republican demands – which the president et al. have refused to entertain – that the CFPB be (a) reconstituted as a commission (headed by five members) versus an agency (headed by a single director), and (b) funded by Congress (instead of the Federal Reserve).  The dispute will likely be decided by the nation’s highest court.   Obama to appeal recess appointment ruling [re three NLRB directors, but the outcome should also determine the legality of Cordray’s appointment] to Supreme Court, Stephen Dinan, Washington Times, 3/12/13.


One might think GovFinance supporters in 2010 would be apologizing for this defective legislation, but that’s not how things roll in the world of politics.  Instead, they are apparently seeking to blame – and even “punish” - the big financial firms for seeking to delay and/or influence the associated regulations.   “Too big to fail” now is “too big to jail,” (the Wilmington, DE) News Journal, (3/11/13).


Downright ugly stuff  – We cannot fully substantiate all of the issues discussed under this heading, and SAFE is not into rumors or conspiracy theories.  But the known facts are disturbing, and we think Americans should be on their guard.


1. External threats - While the US defense budget is under serious pressure, as discussed last week, the challenges facing our armed forces seem to be growing. 


The president has repeatedly said the US will not allow Iran to develop nuclear weapons, which would destabilize the volatile and strategically vital Middle East.   Judging from his most recent pronouncement (before a visit to Israel) the “drop dead” date for military action may arrive pretty soon.  Obama says Iran a year away from nuclear weapons,, 3/14/13.


Iran is about a year away from developing a nuclear weapon and the United States remains committed to doing everything in its power to prevent that from happening, President Barack Obama said in an exclusive interview aired Thursday on Israeli TV.


The bellicose North Korean regime has talked of a nuclear strike on the United States.  They have crude nuclear weapons and have made some progress in developing long-range missiles to deliver them.  The nuclear threat from North Korea – and potentially from Iran in the future - is apparently being taken seriously.  US to increase missile defenses, Kristina Wong, Washington Times, 3/15/13.


Defense Secretary Chuck Hagel announced that the U.S. is deploying 14 additional ground-based missile interceptors at Fort Greely, Alaska; deploying a second “TPY-2” radar in Japan; studying the environmental impact of an additional ground-based interceptor site on the East Coast; and restructuring a European-based missile defense program to guard against threats from the Middle East to make it more cost-effective.

Growing military capabilities of China could be of great concern longer term unless the US is prepared to withdraw its forces from the western Pacific area and allow China to establish regional hegemony.  And it is always possible that some current controversy, such as conflicting Japanese and Chinese claims to islands (and undersea petroleum deposits nearby), could spark a confrontation that spiraled out of control.  Beijing war

prep; China moves mobile missiles near coast amid tension with Japan over islands, Bill Gertz,, 2/27/13.


United States intelligence agencies recently detected China’s military shifting road-mobile ballistic missiles closer to its southern coast near the disputed Senkaku Islands amid growing tensions between Beijing and Japan over the islands dispute. U.S. defense officials said the movements are being watched closely as China’s military is also holding large-scale military exercises that some fear could be a trigger for a conflict with Japan that could involve U.S. forces.


Whatever the intent, there have been provocative Russian military exercises of late including “circling of the U.S. Pacific island of Guam by two Tu-95 Bear bombers and simulated bombing runs by Tu-95s against Alaska and California in June and July.”  Russia conducts largest nuclear drill in 20 years, Bill Gertz,, 3/5/13.


Meanwhile, the US nuclear deterrent is being allowed to deteriorate and according to the president should be eliminated in time.  Critics view this idea as delusional.  The antiquation of America’s nuclear weapons; disarming while the world gears up is a dangerous strategy, Robert Monroe, Washington Times, 3/4/13.


Our U.S. stockpile is composed of weapons well past the end of their design life and irrelevant to most of today’s principal threats. Their condition ranges somewhere between deteriorated and unknown. Our two-decade nuclear freeze, our deplorable no-testing policy and our prohibition on design and production of new nuclear weapons have brought the technical expertise of our scientists, engineers and designers (and of our production and testing teams) into extreme circumstances. Key facilities in our nuclear research and production infrastructure are either seriously antiquated or non-existent, and their agreed-to modernization funding is being slashed.  *** [Meanwhile,] every other nuclear weapons state is modernizing (and in many cases expanding) its nuclear arsenal.


In short, there are very real risks in failing to maintain US military preeminence – as some of the nation’s leaders apparently intend.


2. Homeland security – Major purchases of military gear have been reported recently by the Department of Homeland Security et al., notably 1.6 billion bullets and 2,700 light tanks. There are also plans for the use of drone aircraft inside the US.


Some observers claim that an armed takeover of this country is being planned. Even more warning signs, Godfather Politics, 3/13/13. Without endorsing this claim, it does seem reasonable to ask why the military gear is being acquired – and the answers that have been offered don’t make much sense.


Thus, it has been estimated that 1.6 billion bullets would be enough to fight a 20-year war or cover training requirements for a century.  Why would so much ammunition be bought at a time when federal funds are said to be rather tight?  Feds buy 100 years of ammo,, 3/11/13.


The Department of Homeland Security argues it is buying in bulk to save money, explaining it uses as many as 15 million rounds a year for training law enforcement agents. Forbes columnist [Ralph] Benko, who worked for two years in the U.S. Department of Energy’s general counsel’s office in its procurement and finance division, doubts the government’s explanation. “To claim that it’s to “get a low price” for a ridiculously wasteful amount is an argument that could only fool a career civil servant,” he writes.


 In addition to its magnitude, note that some of the purchase order is for “[hollow point] rounds forbidden by international law for use in war plus a frightening amount specialized for snipers.”  And are heavily armored personnel carriers, repatriated from Iraq and Afghanistan, really needed on the streets of America?  Presumably not, who would the enemy be, but the vehicles are a “cool toy” that can be “recycled without much of an impact on the DHS budget.”  Feds buy 1.6 billion rounds of ammo, homeland security?  Time for a national conversation, Ralph Benko,, 3/16/13.


3. Gun controls – While DHS is on a weaponry shopping spree, federal and state gun control measures are being pushed that could – depending on how far they were taken – effectively disarm the civilian population.


Notably, an “assault weapons” ban sponsored by Senator Dianne Feinstein (D-CA) was approved by a Senate committee last week on a straight party-line vote.  One interesting feature of the bill was the exemption of retired as well as current members of law enforcement, while retired military personnel would not be allowed to own the weapons in question (they could be suffering from post-traumatic stress disorder, said Feinstein, never mind that people with PTSD are not allowed to own guns under current law).  The illogic of Dianne Feinstein’s “assault weapons” ban, Emily Miller, Washington Times, 3/14/13.


All things considered, we think an assault weapons ban is being proposed for primarily political purposes – it would do precious little to prevent future mass shootings, such as the Sandy Hook massacre. 


 An assault weapons ban will probably be blocked, perhaps in the full Senate, but there are other ways to make private gun ownership difficult and/or prohibitively expensive.  One of them would be to authorize class action lawsuits against gun manufacturers for harm resulting from the misuse of their products.  Another idea is to impose mandatory insurance requirements on gun owners. Insurance Move Aimed at Pricing Guns Out of Existence, Tad Cronn, Political Outcast, 2/6/13.


We are not active gun rights advocates, witness a recent letter to the editor by SAFE member Harry Kenton. 


But neither do we believe that “civilians” can contribute nothing in an “active shooter situation” except to act like a bunch of helpless sheep - hiding under desks, calling 911 if it is safe to do so, and running out with their hands up when law enforcement arrives to “take command.”   Department of Homeland Security video (3:41),


If some civilians have guns and know how to use them, especially in high crime or isolated areas, that may give armed criminals something to think about.  Long live the Second Amendment!