 This is Mises weekends with your host Jeff Deist Hey ladies and gentlemen welcome back once again. It is time for Mises weekends this week I'm joined by a friend Daniel McAdams someone whom I've known Gosh since the early 2000s someone with whom I worked in Dr. Paul's congressional office in Washington DC for any of you who aren't familiar with Daniel He runs the Ron Paul Institute for peace and prosperity and along with a couple of real luminaries I would list him in you know amongst the one or two top Libertarian foreign policy people we have out there working so with that Daniel good to see you welcome. Hey Jeff Thanks for having me back on Mises weekends Well, so we are talking about the financial costs of war this week And I and I notice I say war not defense Because I think this is all part and parcel of how language tends to shape our thinking about this stuff And I noticed I didn't realize this but We actually you called the Department of Defense so-called The Department of War up until after World War two it wasn't until 1949 that it that it happened in stages that we fully started using the term Department of Defense I for some reason I had it in my mind that that was earlier Yeah, and I guess that was the last time we declared war too. It's what makes sense They stopped calling it the Department of War. Yeah, well you from Mises, you know George Orwell Had that faming famous Essay about meaningless words and politics and I wonder how it would shape shape our perception if for instance if we called Mattis the Secretary of War Because these wars we don't even think of the United States as being at war the the popular Culture that we don't think of this and even as we did in Vietnam, but certainly not in World War two Which was a concerted national effort Well, it's a lot more hidden now too you have special forces that are doing the things and they you know It's very convenient for presidents to deploy special forces because it's secret You can't tell people what they're doing between that and drones It really is kept out of our of our site The only time you see them is if you turn into an NFL game and you see soldiers marching across the playing field So that's about it. I think yeah, it's very hygienic. We're separated from from the carnage I did notice a bit of Orwellian speak and Trump's state of the Union speech the other night He called on Congress to fully fund quote-unquote Our nation's defense and if you certainly remember this, that's an old trick the Democrats used to always use that because what does that mean? It's meaningless it means more, but what when is any federal program or agency or department fully funded? It's meaningless Yeah, and that's what's also meaning is this this idea that the Pentagon has been hamstrung by the so-called Sequester which even if it had been implemented like it was envisioned would have simply slowed down the rate of increase in military spending You know, this is a great canard, you know And Matt has said when he unveiled his defense strategy a couple weeks ago that we've been in a period of strategic atrophy You know, which is such a bizarre thing when you think about on the one hand the military itself talks about how uptempo It's deployments are and how engaged it is everywhere in the world But he talks about strategic atrophy as if these guys have been sitting around on their hats under the Obama administration Which this hasn't been the case although there is as I said on the Liberty report There's an atrophy when it comes to strategy Because our concept of our strategy of what we should be doing in the world That is atrophied to a large degree and there's no amount of military budget that will that will compensate for that kind of atrophy Isn't it interesting during Trump's speech that now of course the Democrats are no better on foreign policy We all know that but it's interesting how really since Reagan Militarism and support the troops all the stuff has become a Republican phenomenon Whereas to our grandparents, they would have associated the 20th century wars with Woodrow Wilson and FDR and then LBJ in Vietnam It's it's funny how that's turned around and it's become a Republican thing It's such a great bait and switch, you know the propaganda among conservatives if you're conservative you support war You support more adventure overseas. It used to be no conservatives The idea of being a conservative was you realize the government can't run your life. It can't run the lives of people here It's terrible at running the DMV. It's terrible of all these things But then all of a sudden they place their faith in this same government to go over and run the world in a place Where you don't speak the language we have no idea about the culture most of these people couldn't even find it on a map It's just so preposterous and unfortunately They fall in Fort Hook on and sacred because this idea that if you don't support the wars rather than just the troops Is that the military? Then somehow you're less American or less patriotic that really that that really is a worship of the state And it's really a not a conservative phenomenon historically Yeah, well, I'd like to get into the numbers a little bit And I think we're going to see that you can be for limited government or you can be for our current foreign policy You can't be for both So as I'm sure a lot of our listeners are familiar Right now the federal budget is about four trillion dollars You could silo that into so-called mandatory entitlement spending on Medicare Social Security Medicaid that's two trillion of it right there and Really we have about a trillion dollars in overall so-called defense spending so that's two trillion so really you're left with less than a quarter of the budget or about a quarter of the budget is You know what? Is remains for the kind of things that the federal government reports to do things? We think they shouldn't do but in the public's mind things like schools and roads and farm policy and and Welfare and all these things are actually just this this this tiny Sliver of the federal budget And the military spending will increase and you know, there's a there's a bargain this grand This grand alliance between the Republicans and Democrats if the military budget increases The Republicans will often cave on more domestic spending. It's the only way to get these things through You know Secretary Mattis the Secretary of Defense at the end of this past week was it was a green by Briar at the GOP retreat down there And he told them hey, we're gonna ask for seven percent more military spending in in for 2019 than we did in 2018 And if you remember Jeff in 2018 the president first came through with I think 680 or 690 billion dollar request Which was bumped up. I think 50 billion in Congress said that's ridiculous We need to bump it up 50 billion dollars more So they ended up with a hundred billion dollars more than they had initially discussed And when you talk about this compared to the rest of the world Just that 150 billion dollar bump-up that Congress gave the president is the entire military budget of Russia So it's just a little that's considered a little bump-up for us Yeah, isn't it interesting how the magic word support the troops Becomes an excuse for just unhinge spending of money that we're not we federal government is not bringing in taxes And I will throw this out there Daniel isn't aside these congressional trips like the one of the Greenbrier Yeah, they're not funded by taxpayers But if you're giving money to one of the either the republics of the democrats to their parties, you're an absolute chump Because this the Greenbrier I've been there. It's I think like a $500 a night place They can go stay at the days in and Anacostia if they want to talk as far as unlikely, but you know the Ostensibly from what I'm reading today that the 2018 Defense budget the military budget is 824 billion But I know you've argued and talked that we talked about this offline that there's a lot of hidden Defense spending in places like the State Department budget. So talk about that a little bit Certainly in state. You've got Homeland Security You've got a counterintelligence component of the FBI. You've got the Department of Energy that does our nuclear program You have the interest on the the the war debt, which is a huge chunk of money as well You've got veterans expenses. Those are related to the cost of our military empire So when you add it up, it's definitely well over a trillion and many many others have You know marked it at well over a trillion dollars a year and rising And the question is what do we get for it? Do we get more security? No, we're told we're even less secure than ever after 16 years 17 years Fighting this war on terror. We're even more vulnerable Than ever. So what where does this money go? So is the the appropriation for v. A Veterans affairs is that separate from the dod approach? Is that how is elsewhere in the federal budget? Yeah, that's a separate appropriations Theoretically, I know this is going to you're going to have a hard time remembering how long ago this was Jeff But we actually used to do appropriations on the hill where you'd go through Each one of these departments and and appropriate the funds Of course, that's now all gone and everything is is handled from the center from the from the speaker's Office and through crs. Etc. Etc. But yeah, they we used to go through line item These different requests each year and veterans was was separate Well, just think of how many 20 and 30 somethings we now have Who have mental or physical injuries from iraq and afghanistan? That will require Medical care for the rest of their lives. They might live to being in their 90s And of course with battlefield medicine now a lot of people survive that might not have survived in earlier wars It's I mean has anyone ever done a study of what our future va costs might look like Well, sadly the the fact is to be quite blunt The only mitigating factor is that so many of these vets are killing themselves to a quite young You know ironically and horrifically there is a big savings there because it's an epidemic of these soldiers because the other thing is You know, jeff when these guys go in with ptsd Depression alcohol addiction whatever problem. They're not given these sort of long expensive Therapies that they may need they're given a cocktail of psychoactive drugs that we have no We see over and over again produce terrible results in people All of these mass shootings you see these kids are on these drugs These guys are given a cocktail of drugs until go home take these drugs and you'll be fine And you know, it's it really is not the way to treat these guys and gals Well another angle to all this is that these wars are funded using borrowed money In effect treasury debt Going through the budget Currently the the interest on the national debt costs congress in terms of its budget appropriations about $315 billion a year But we're in a very very low interest rate environment. So the fed By by targeting and keeping the the fed funds rate very low makes it much easier for congress to service the debt but I'm sure a lot of people know that Janet Yellen and and now mr. Powell are talking about right raising interest rates I read an interesting article national review how if we ever went back to the 10 interest rates of the Early Reagan and late carter era Then with a 10 interest rate that 300 billion dollar a year interest payment would become 2.5 trillion dollars So in other words, it would be the single largest Item in the federal budget now even with an interest rate far less than that I don't think the fed will are ever going to let us get back to that But but assuming just sort of a normal range of 5 to 8 interest I just wonder if all of a sudden congress had to grapple with this gigantic Interest payment every year and people could actually see oh my gosh We're spending as much on that as entitlements I wonder if if that might be a way to wake people up To to how much we're spending on these wars Well, jeff. I mean, uh, I don't know if this happened to you It probably didn't because you're smarter than me But it reminds me when I was very young in my early 20s and I got my first credit card And had a great old time and then all of a sudden I got this bill It shocked the heck out of me, you know, and I think that might be the case If I mean these things are hidden The middle class they declined the middle class in earning power Etc etc is all a part of this hidden budget this hidden spending and if it ever becomes apparent I think they might start asking questions But who in the mainstream media is even going to bother asking right now or bringing it to their attention Well, we are hearing a lot about how republicans don't care about deficits anymore And of course they never really did and and democrats certainly never did It looks like the 2018 deficit will be about 666 billion dollars So we're back into that range of half a trillion per year I think it's going to get a lot worse than that The cbo congressional budget office certainly predicts that it's going to get a lot worse than that under current budget and revenue scenarios But let's let's just for the sake of argument assume that it holds at about half a billion or a little more per year That's still a trillion dollars of new debt every two years five trillion every decade You know, it's clearly unsustainable so The question becomes then who Who will fund our wars that right right now the majority of treasury debt is still owned by Uh, the security trust fund and americans and individuals Um and banks holding treasury debt. I mean, what's the What's the end game scenario here this dovetail between unbridled military spending and deficits How does it play out? And how will it play out in the future as you as you pointed out at the beginning You know, we have to fully fund and not only that we're in the middle of an upgrade of our nuclear nuclear weapons capabilities and that means revamping basically retooling los alamos Livermore all of the nuclear weapons labs Bringing them out of mothballs from the cold war rebuilding them with modern technology If anyone thinks this is only going to cost a trillion, you know, you've got another thing coming So you've got some big bills coming down the pipe if he continues Only on the military side Plus he said in a state of the union that he wants a trillion and a half dollars to rebuild our infrastructure So there's some big spending coming down the road If he if he if he gets what he wants or if he pursues what he claims he wants to pursue What what is our nuclear capability? What a what a ridiculous phrase? What is our nuclear capability look like do we have lots and lots of active Nuclear wet long range nuclear weapons plenty enough to to to blow up the capitals of our so-called enemies Yeah, we have about 7 000 nuclear weapons right now and they're and you know, they're they're They're pretty powerful things But you know the new nuclear posture review is expected to be released sometime this month And from what others have written about who've seen part of it part of the plan is to start making so-called usable mini nukes and Things that can be used on the battlefield Deployed into western europe as a deterrent to the russians It's a strange concept because it suggests the idea of first strike as a policy Rather than mutual assured destruction and people think mini nukes. Oh, that sounds cute You know what we can use them on the battlefield Well, a relatively low yield nuke these days is around the strength of the bombs that were dropped on Hiroshima and Nagasaki So these are some still some pretty destructive bombs But it's the new attitude toward nuclear weapons that appears to be coming down Unfortunately, this is what happens when you when you throw everything in the hands of the generals But this idea that we can use nukes and we might threaten to use nukes And also changing the previous guarantees to non nuclear countries that we will never attack you with nuclear weapons That is also expected to be done away with so there's a big incentive for worldwide proliferation If that indeed takes place Who do you think was behind sticking that crazy Language in the state of union speech about rebuilding our nuclear capabilities at trump I don't you know trump's not coming up with this stuff on his own Well, you know to be fair to trump. This is an obama policy. Obama is the one who announced Toward the end of his second term This trillion dollar plan to revamp the nuclear You know that our nuclear weapons capability But then again that just lets you know that really no matter who you vote for no matter who comes into power The same would have happened. I'm sure if hillary were president She would have probably doubled down on it But these policies remain the same because the military industrial complex The think tanks that they fund in the beltway the lobbyists that they fund These things go on and on and on regardless of who's elected. They don't even pay attention to who's elected You know daniel was interesting during the state of the union speech when trump alluded briefly to china and russia He didn't call them enemies or adversaries. I think he used the term rivals It was that was that remark telling to you in any way? I think it was I think it was it was a bright spot in a way And I think it was a soft peddling of secretary mattis's new defense strategy Where he went into great detail about how russia and china are our focus our main threats Soft peddling that that was also the only time he used the word russia and china in the speech And as a matter of fact, that's one of the things that the mainstream media criticized most about his speech Where is the russia bashing? You know, where's the china bashing? Yeah, what's going on here? so and that was really one of the The better parts of the speech that he didn't obsess about this about about russia and china gives us a little ray of hope I think and he didn't seem to go on and on about iran either I didn't hear any sort of new saber rattling Yeah, he didn't you know, he He's he's sort of a he's sort of you know A victim of his own policy. This is the one area where he's been consistent He's in a bind because the u.s official position is okay We want to go renegotiate a deal that we've already made, you know It's like you bought a house And you know three months down the road you go back to the to the seller and say hey I want you to put a pool in you know, there wasn't a pool in here that I wanted You know, we've the world has already agreed on this iran deal We've already signed off on it and he says he wants to go down go back to it and Get iran to make additional concessions. Who's going to do that? Nobody's going to do that They're trying to cajole and worse the europeans into following But the europeans are also reaping are already reaping trade benefits out of the loosening of of sanctions against iran I think it's going to be difficult for the us to put to put this genie back in the bottle Well, give us your take on the situation in north korea right now vis-a-vis not only south korea, but but trump and his rhetoric Well, this is another example. I think of the of the real strategic weakness the real What was the word we use that the the strategic atrophy of the united states and that the u.s Is no longer relevant which for us libertarians is a good thing is no longer as relevant to these to these Disputes, uh, whether it's north korea and south korea whether it's israel and palestine whether it's in syria The us because it comes to the table pounding its fists on the table is simply ignored You know all of the saber rattling all of the bloody nose strikes that we threatened against north korea And here you have the north and south get together a very productive bilateral meeting the us wasn't invited They decided to send uh athletes to compete in the winter olympics in south korea They've talked openly about reunification For the first time in ages So the us is because it is so bellicose in its approach to the world Is becoming less and less relevant to the rest of the world And I think this is particularly important when you think about jeff when you think about The kinds of things that the chinese and east asia are doing with the rebuilding of the silk road with trade routes These are these are places for commerce. These are places for international trade That are taking to place and the us is just not invited to participate I think that at the end is going to come back in haunt us and might really be the final decline of of of the us dollar Well, this is something dr. Paul Used to to say time and time again was it the neoconservative foreign policy is what's truly isolationist In the sense that it puts us Not as cooperative friends With with the rest of the world are trading partners, but but instead Positions us as boss of the world and I noticed Just the other day the washington post our friend jeff bezos announced that he's hiring max boot For some new ideological diversity at the washington post and and against my better judgment I looked at the little self-description that boot has on his twitter or something And it was you know, it was all about the united you know, I believe the united states has a role to play. I mean You know, isn't it interesting that that that that non interventionists libertarians like us Are constantly attacked even more than libertarian circles. I hate to say it sometimes that that libertarians are you know They're always ready to compromise on foreign policy and war and you know, but but everything else is you know Domestic social stuff is more important. Um, isn't it interesting to you that Uh, how this flipped how what would have been seen so much as common sense You know 150 years ago We're now seen as the outliers and I I don't like to admit that but I think it's true I think it is true and I think it is because of the neocons because uh, you know, uh, every uh, when you all have a hammer Everything's a nail and this is therefore policy max boot is writing on the glories of this new book that he came out You know an exercise in naval gazing how we could have won the vietnam war You know, if you don't need killed a few billion more or something, you know, this is the kind of person here So you have this this great diversity And and and you're right to call it that this suit of diversity of a right-wing neocon amongst a bunch of left-wing neocons There are no one on interventionists Even semi non interventionists represented on the editorial pages of of the of the post or any other major american newspaper And you know, there's a lot of criticism that you know Dr. Paul myself and a lot of others tend to go on rt But literally those are the only venues open to criticize us foreign policy to criticize the neocons It just it just simply no other options to do that that says a lot about our so-called diverse media And it's of course state-run tv in the form of public broadcasting is a okay Um, I want to wrap this conversation up with a question Not so much about the numbers but about the size and scope of the u.s. Military presence Relative to the rest of the world. I know you're you're much more familiar With how many bases we have and how many countries around the world relative to everybody else So so talk about this this thing we always hear that the united states spends more on defense than the next five or ten countries combined And that is a fact, you know, and it's I would say Not to to pick on semantics, but more on military expensive than defense We should spend everything we need to on defense But yeah, jeff. It's we've got you know, estimated thousand bases in 80 countries You can google any map of u.s bases. They're literally everywhere. They're all through africa The entire rest of the world combined has about 70 bases outside of of national borders So, you know, we're number one in that and the question is First of all, this costs about 200 billion dollars a year to maintain these bases to maintain the personnel Overseas and the question is what is it for? Is it they say it's project power to keep open sea lanes to keep open trade lanes this whole idea I don't need to tell the you at the mesas institute this whole idea that our military's job Is to is to promote trade to promote the sale of of us goods and us weapons overseas Really is a socialist, you know Proposperous preposterous socialist notion But there you there you have it. That's what we've got Yeah, it really is unfortunate People who aren't following daniel they can find him as the sign behind him says at ronpaulinstitute.org There's some other great writers there like adam dick and chris rascini Daniel, what is your twitter handle at daniel mcadams? Yes, the daniel mcadams I really encourage you to to keep up with rpi to get your alternative foreign policy news from rpi And to follow daniel on twitter because he he's an absolutely Unbelievable resource and and what's so sad about this is that there are just endless amounts of money For places like the brookings institute and a e i in washington dc To to promote the same old same old foreign policy and and You know, we'd love to see organizations like rpi grow Because if there's if there's one thing that's going to save us and our grandkids It's getting out of this war Mindset the united states with that daniel. Thanks so much for your time ladies and gentlemen. Have a great weekend Subscribe to mises weekends via itunes you stitcher and soundcloud or listen on mises.org and youtube You