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Author: TriSec    Date: 05/13/2014 10:24:39

Good Morning.

Today is our 4,601st day in Afghanistan.

We'll start this morning as we always do; with the latest casualty figures from our ongoing war, courtesy of Antiwar.com:

US Military Deaths - Afghanistan: 2,317
Other Military Deaths - Afghanistan: 1,119

We find this morning's cost of war passing through:
$ 1, 533, 555, 075, 000 .00

We'll talk economics of war a bit today. If you spend some time at the National Priorities Link referenced above, you'll sadly shake your head at all the things we could have had. While we're well into "wind-down" phase now, think about where we were in 2008, 2009, 2010, etc. As you may know, I've spent more than a year plowing through Winston Churchill's six-volume WWII book. The end is near; Germany has surrendered and I'm reading about the behind-the-scenes machinations for the Potsdam conference, but I digress.

WWII was a cataclysmic global event; everything that happened affected everything else, and our economy was no exception. While the wars in Afghanistan and Iraq were puny in comparison, had America responded economically the same way we did 75 years ago, perhaps we might not be in as bad shape as we still are.

Nevertheless, a small step in the right direction happened recently. There are very few shoe manufacturers left in the United States, but Uncle Sam recently changed the rules and required that athletic shoes supplied to our troops be made in the USA. One of the biggest beneficiaries of the new policy is going to be Brighton (MA) based New Balance.

The Pentagon will begin requiring the athletic shoes that new recruits purchase with military allowances be American made, a change supporters hope will ensure about $180 million in sneaker allowances are spent on domestic products.

The Department of Defense has long required that many of the goods it purchases be American made as much as possible, though the new recruit athletic shoe allowance has been exempted.

The change, announced on Friday, could be a boon to Boston-based New Balance, which operates its largest plant in Lawrence, and another Michigan-based footwear company that already produce a line of sneakers that meet military specifications.

Matt LeBretton, director of public affairs for New Balance, has said the change could create up to 200 jobs, many of which would be in Lawrence.

“Innovative companies, such as New Balance right here in Massachusetts are able to provide our service members with quality products and keep business here on American soil,” Congresswoman Niki Tsongas, D-Lowell, said in a statement. “This policy change will boost job growth, spur economic development and innovation and give the brave men and women of our armed forces better gear.”

Tsongas filed legislation last year with Maine Congressman Mike Michaud to require the allowances be used on American-made shoes, but the Pentagon decided to change the policy without an act of Congress.

“DoD has an interest in having our recruits purchase domestically manufactured athletic shoes to the maximum extent practicable in order to abide by the spirit of the Berry Amendment,” Acting Deputy Secretary of Defense Christine Fox said in a statement.

The Berry Amendment refers to the 1941 policy that military equipment made of textiles be completely American made.

But alas, for every step in the right direction, we always take two steps back. The excesses and abuse of the Pentagon budget are legendary, and have been since the $600 toilet seat fiasco of the Reagan era. It's never gone away; and looking over both the wreckage of war and the patronage of war manufacturing, it doesn't look like anything is going to change anytime soon. Go back and look at the National Priorities Project after reading this one, too.

WASHINGTON — The costs of the Pentagon's major weapons systems have ballooned nearly half a trillion dollars over their initial price tags, and the 80 programs have average schedule delays of more than two years, according to a report released Wednesday.

The report by the Government Accountability Office came during a congressional hearing in which senators from both parties vented about continued cost overruns, billions of dollars wasted when contracts are canceled and a system that is plagued by a high level of turnover that prevents anyone from being held accountable.

Sen. John McCain, R-Ariz., listed a series of failed programs, including the attempt to replace the fleet of presidential helicopters, saying they were examples of "really unacceptable cost overruns we've seen in the past, and apparently a failure to get a lot of it still under control."

For decades, Congress and the Pentagon have struggled with creating a more efficient system for buying weapons, tanks and airplanes, with limited success. In its report, the GAO noted that "too often we report on the same kinds of problems today that we did over 20 years ago."

But now, the renewed efforts, underway in both the House and Senate Armed Services committees and at the Pentagon, come as spending is tightening, which officials say gives an added urgency.

"We are going to have flat defense budgets as far as the eye can see, and the problems we're trying to deal with around the world are not flat," Rep. Mac Thornberry, R-Texas, who is leading the effort in the House, said in a recent interview. "So the only way to reconcile those two trends is to try to get more defense value out of the money we spend."

During the hearing, Sen. Carl Levin, D-Mich., said that there have been notable successes, the most significant being the 2009 weapons-acquisition reform law, which has helped save $23 billion. But Levin, chairman of the Senate Armed Services Committee, said the Pentagon's track record in buying IT systems "remains abysmal."

Frank Kendall III, the undersecretary of defense for acquisition, technology and logistics, told the committee that during his 40 years working in procurement, "I've seen any number of attempts to improve defense acquisition. My view is many of the things we have tried have had little discernible impact."

Fixing the problems that plague defense acquisition "isn't as easy as many people think," he said. But he said there has been improvement in recent years and pointed to the Pentagon's Better Buying Power program, which follows "a process of continual improvement that focuses on the areas in which the most progress can be made."

He also said that the process is ultimately "a human endeavor" and that there needs to be more focus on providing incentives and training for contracting officers.

Personnel turnover has been an especially acute problem, the GAO found. Since the position of the undersecretary for acquisition, technology and logistics was created in 1986, the average tenure has been 22 months, according to the report.

The F-35 Joint Strike Fighter, the most expensive weapons program in the Defense Department's history, has had six program managers since 2001.

Finally this morning, there's another great American tradition that goes hand-in-hand with the economics of war; it's that of the profiteer. While Halliburton and Blackwater spring readily to mind of recent vintage, questionable practices have been going on at least since the Civil War, and probably earlier.

But that's just business. Suppose "charity" got in on the act, too?

WASHINGTON — In 1998, an ordained minister with the United Church of Christ and his wife from the war-wrecked region of Bosnia-Herzegovina began a humble international humanitarian effort out of a modest office in downtown Washington.

After the U.S. launched the wars in Iraq and Afghanistan, the mom-and-pop nonprofit corporation boldly ramped up, undertaking some of the federal government's biggest and most ambitious projects in the battle zones, everything from building roads to funding wheat production.

In doing so, International Relief and Development increased its annual revenues from $1.2 million to $706 million, most of it from one corner of the federal government — the U.S. Agency for International Development. IRD has received more grants and cooperative agreements from USAID in recent years than any other nonprofit relief and development organization in the nation — $1.9 billion.

Along the way, the nonprofit rewarded its employees with generous salaries and millions in bonuses. Among the beneficiaries: the minister, Arthur B. Keys, and his wife, Jasna Basaric-Keys, who together earned $4.4 million in salary and bonuses between 2008 and 2012.

The story of IRD reflects the course of America's ambitions in Iraq and Afghanistan, which started with great enthusiasm and consumed tremendous resources, only to see many hopes go awry. Nation-building projects aimed at supplanting insurgents and securing the peace that looked promising on paper in Washington proved to be difficult to execute in dangerous and unpredictable war zones.

In Baghdad and Kabul, companies such as IRD were left to manage hundreds of millions of dollars' worth of taxpayer-funded programs with little meaningful oversight from USAID, according to interviews with government auditors and former IRD employees familiar with the projects.

The nonprofit organization, in turn, has hired at least 19 employees from USAID, the lead government agency for addressing poverty and supporting democracy worldwide. Several of them came directly from their desks at the agency to occupy important posts at the company.

Some of those employees, including the former acting administrator of USAID, received substantial pay raises by crossing the Potomac and joining IRD at its new offices in Arlington, Va., collecting as much as $300,000 or more in annual salaries, bonuses and other compensation.

In the world of humanitarian NGOs — non-governmental organizations — those kinds of salaries are unusual. Rarer still are bonuses of any kind.

It seems to me that the reasons for war are always easy; and as we've said for a long time now...follow the money. America's costs in blood and treasure are considerable, but nobody dies these days without somebody else turning a profit.

30 comments (Latest Comment: 05/13/2014 20:59:28 by Raine)
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