§44 Military Budget Adjustment

1. The United States has the largest, best-trained and most effective military in the world. The military is an all-volunteer force of dedicated, patriotic men and women who reflect the best values and spirit of our Nation. The Department employs an estimated 2.8 million people, 1.1 million active duty troops, 700,000 civilian employees and 1.1 million in the Reserve and National Guard. In FY 2007 they received a 2.7% pay raise in appreciation for their good work reducing military spending from $505 billion to $470 billion that helped to reduce the deficit from $325 billion to $250 billion. The Department’s financial management environment includes $1.4 trillion in assets and nearly $2 trillion in liabilities that remain on the Government Accountability Office’s high risk list. The military will need to return surplus funding to the Treasury.

2. The federal government has a record budget deficit. In January 2001, the Congress and budget office predicted that the federal budget would run a surplus of in excess of $5.6 trillion between 2002 and 2011. After tax cuts, a terror attack, a recession and a war in Iraq the budget office predicted deficits for five years Oct. 2001-2006 totaling $2.2 trillion. Even with the Global War on Terror military spending must be kept to a level below $400 billion until 2011 if we wish to balance the budget. This is logical, if $300 billion was the limit in the 1990s, $400 billion should be the limit in the first decade of the 21^st century. Any movement in the direction of less spending will be rewarded with an exponential relief from the budget deficit but to decisively balance the budget a $400 billion limit is needed.

3. The experience with balancing the budget at the turn of the millennium and in FY 2006 reinforce the neo-classical principle that levies for war cause the government to get into debt and that by restraining military spending a little bit dramatic progress can be made eliminating the budget deficit. By reducing defense spending in FY 2006 to $470 billion from $501 billion the deficit was miraculously reduced from $320 billion to $250 billion. A considerable amount of this savings, $30-$50 billion can be attributed to the return of surplus funds allocated the military, the rest is probably the result of the improved functioning of the real economy as the result of the flight of military capital although their interests seem to control GDP statistics.

4. Throughout the 1990s military spending was kept below the cap of $300 billion, that most people considered too high, in the first decade of the 21^st century all discipline was removed from military spending under the guise of the levy for the Global War on Terror. It is not too late to restore limits to military spending. It is logical that after a decade inflation would cause military spending to increase into the next category, $300-$400 billion, in this case. All indicators agree that to affirmatively balance the budget Congress must restrain military spending to less than $400 billion until 2011 after which time the budget could creep into the $400-$500 billion range. Everyone, including the soldiers who would not be deceived and betrayed by the treasonous finance of terrorism, would be better off if the government would keep to the $400 billion military spending limit until 2011. The military would again be an honorable part of the federal economy, everyone would be happy and we would have peace.

5 To achieve a Department capable of functioning on $400 billion a year there are two reforms that need to be accomplished. First, the US must withdraw from Iraq at an estimated cost of $10 billion, saving $55 billion from the +/- $65 billion cost of war, in 2008. Second, Cold War weapon systems and nuclear warheads need to be disarmed to save $60 billion in savings from maintenance costs. If the Congress prioritizes these two military objectives that could be accomplished by the first quarter of 2008 the Department could easily function on $400 billion. Performing these tasks would not only save money but would improve the well-being of the nation by strengthening foreign relations under international disarmament treaties and most importantly we would be at peace.

Art. 2 History of Military Spending

6. In 1918, during World War I, the top rate of the income tax rose to 77 percent to help finance the war effort. It dropped sharply in the post-war years, down to 24 percent in 1929, and rose again during the Depression. During World War II, Congress introduced payroll withholding and quarterly tax payments. In WWII the military was 34.5% of the GDP and 82.5% of the federal budget. During the Korean War it was 11.7% of the GDP and 57.2% of the federal budget. During the Vietnam War it 8.9% of the GDP and 43.4% of the federal budget. During Gulf War it was 4.5% of the GDP and 19.8% of federal spending. Currently during the Global War on Terrorism military spending is 3.9% of the GDP and 19.3% of federal spending. During the Clinton administration defense spending was kept at less than $300 billion and the number of active duty troops declined to less than 1 million and there was peace except for the former Yugoslavia.

Figure 1: Military Spending as % of GDP and Federal Budget 1945-2005

Source: Department of Defense. FY 2008 Global War on Terror Request. February 2007

7. According to the European Union the maximum allowable deficit for a member nation is 3% of the GDP. In 1945 the federal budget deficit was an estimated 22% of the GDP. After WWII ended the federal government immediately balanced the budget. The Korean War was fought effortlessly. The deficit did not again become significant until the Vietnam War when the budget deficit was 3.2% of the GDP in 1968 and 2.4% in 1971. It was however not until 1982 that a federal budget deficit became greater than $100 billion, 3.7% of the GDP. Dramatically increasing military spending caused the deficit to rise as high as $208 billion in 1983, 6% of the GDP, a post WWII record, and $238 billion in 1986, 5.4% of the GDP. Defense spending increased to $300 billion in 1989. An effort was made in the 1990s to keep military spending less than $300 billion. The budget deficit however remained alarmingly high between 3.1% and 5.5% of the GDP until 1996 when it was 2.3% of the GDP. In 1998 the budget deficit was only 0.3% and in 1999 and 2000 there was actually a budget surplus, of $1.8 billion and $87 billion respectively, the first since 1960.

Figure 2: Defense Budget and Federal Budget Deficit 1990-2006

Source: Office of Management and Budget Historic Budget Tables as Studied in Table 2-3 of the 2007 HA Lobbying Activity Disclosure (LAD)

8. According to the Office of Management and Budget in 2001 there was a $33 billion deficit, 0.3% of the GDP, as the result of the suicide attacks on the Pentagon and World Trade Center and subsequent invasion of Afghanistan called Operation Enduring Freedom, that has so far failed to capture the alleged mastermind of the attacks, Osama Bin Laden, although military spending crossed the $300 billion limit, to $311 billion. In 2002 military spending increased to $350 billion at which time the deficit increased dramatically to $317 billion, 3.1% of the GDP. Being so heavily invested in treason the US embarked on the unauthorized attack of Iraq and defense spending increased to $389 billion plus $45 billion from the supplemental and the deficit to $375 billion, a record deficit in dollar amounts, 3.4% of the GDP. The confusing combination of regular Defense Appropriation and Emergency Supplemental continues to baffle the Office of Management and Budget.

Art. 3 Defense Budget Negotiations

9. In 2004 military spending reached $437 billion and the deficit $412 billion. In 2005 defense-spending rose to $444 billion and the deficit increased to $427. In 2006 military spending went down to $410 billion and the deficit to $250 billion according to the final decision of the Congressional Budget Office. This $175 billion reduction in deficit from the year before was attributed to increases in revenues however the low growth rate inclines one to attribute the fiscal success entirely to the $34 billion decrease in defense spending and presumed return of surplus funds from the war reserve that were concealed as tax revenues. In the fourth quarter 2006 National defense spending decreased 6.6 percent. In 2007 an increase in military spending to $423 billion is projected and a deficit of $312 billion. These figures however remain open to debate until 31 September, the end of the fiscal year. Although the passage of the emergency supplemental is a set back for people interested in balancing the federal budget there is still hoped that the military will return unexpended funds from the war reserve.

Figure 3: National Defense Budget Summary (in millions) 2001-2007

	2001	2002	2003	2004	2005	2006	2007
Total Obligation Authority	311,000	345,000	444,000	456,052	502,475	470,241	439,533
Total Budget Authority				490,621	505,796	491,815	463,,025
Total DoD				471,010	483,912	468, 153	440,958
DoD OMB				471,001	483,926	468,150	441,250
Total National Defense				490,621	505,796	491, 815	463,0125

Source: DoD. Table 1-1, 1-3 National Defense Budget Estimates FY 2007 March 2006

10. In 2004 HA ran a regression called the Military Budget Adjustment Act HA-2004 and found that $300 billion was exactly 77% of the $370 billion provided for in H.R.2658 Department of Defense Appropriation Act 2004. Noting the poor conditions of the troops and low cost of operating in a third world country it was therefore been surmised, as the result of deficits in armor plating and bullet proof vests among other things, that this money was being laundered above the $300 billion mark. H.R.3289 Emergency Supplemental Appropriations Act for Security and for the Reconstruction of Iraq and Afghanistan, 2004 appropriated $72.9 billion for the wars. The Bill immediately led to a record budget deficit and was clearly a mistake. The cost of these wars should have come from within the already grossly surplus Defense budget. The average monthly cost of operations in Iraq and Afghanistan rose 21% in FY 2006 to $8.2 billion. The occupying forces had more money than the entire impoverished economies of Iraq and Afghanistan combined. H.R.4613 Defense Appropriations Act of 2005 of $417 billion was accompanied with so many companion acts that another adjustment was not performed by HA as requested.

Figure 4: DoD Budget and GWOT (in billions) 2001-2008

Year	Base Budget	Supplemental	Total
2001	297	14	311
2002	328	17	345
2003	375	69	444
2004	377	66	443
2005	400	101	501
2006	411	115	526
2007	435	70 /93.4 request	598
2008	481	141.7 request	623

Source: DoD. FY 2008 Global War on Terror Request. February 2007

11. H.R. 2863 Department of Defense Appropriations Act, 2006 was supplemented by H.R. 4939 Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006 for a total appropriation of $526 billion of which only an estimated $470 billion was used. The surplus is presumed to have been returned to the Treasury to keep the federal budget deficit at only $250 billion. H.R. 5122 National Defense Authorization Act of 2007 limits spending to $512.9 billion for the Department of Defense (DoD) and the national security programs of the Department of Energy with a baseline budget of $441 billion. In addition, the measure authorizes an additional $50 billion in supplemental funding to support the war on terror’s operational costs, including up-armored Humvees, Humvee IED protection kits and gunner protection kits, improvised explosive device (IED) jammers and state-of-the-art body armor. The bill provides a 2.7 percent pay raise for members of the armed forces. Provides an additional $471 million for National Guard personnel, operations and maintenance and defense health, as well as $318 million for procurement to support the recommended National Guard end strength of 350,000. The bill is supported with H.R. 5385 Military Construction, Military Quality of Life Appropriations 2007 that provides $94.7 billion for military construction and veterans’ health care programs; it also includes $41.4 billion in mandatory spending (all for veterans’ health care). The maximum military budget acceptable for 2007 is estimated at $512.9 billion however it is estimated that only $440 -$450 billion will be needed, even with the troop surge. National Defense Authorization Act for Fiscal Year 2008 H.R.1585 that was placed on the Union Calendar, No. 86 on May 11, 2007. So far operations in Afghanistan and Iraq are estimated to have cost more than $350 billion.

Figure 5: Cost of Operations in Afghanistan and Iraq both Regular and Supplemental 2006-2007

	2006 PL109-147	2006 Supp	2006 Total	2007 PL 109-289	2007 Supp	2007
Pay and Benefits	6.1	10.3	16.4	5.4	10.8	16.2
Military Operations	19.6	21.7	41.3	22.5	23.2	46
Subsistence and Logistics Support	6.1	3.4	9.5	2.7	5.3	8
Total Operations	31.8	35.4	67.2	30.6	39.3	70.2
Iraq Forces		3.0	3.0	1.7	3.8	5.5
Afghan Force		1.9	1.9	1.5	5.9	7.4

Source: DoD Amendment to FY 2007 Emergency Supplemental Request for the Global War on Terror. March 2007

12. No oppressive aristocracy has ever prevailed in the colonies. Rancorous and virulent factions which are inseparable from small democracies, and which have so frequently divided the affections of their people, and disturbed the tranquility of their governments, in their form so nearly democratic. Congress is of the opinion to enhance America's security through redeployment from Iraq. The worsening situation in Iraq is a product of ongoing sectarian violence in which the United States Armed Forces have been asked to take sides and referee an ongoing civil war. Sending more United States troops to Iraq, and remaining there indefinitely, will only further increase the dependence of the people of Iraq on the United States, both politically and militarily, at a time when Iraqis should be shouldering increased responsibility for their country. The insurgency in Iraq has been fueled by the United States occupation and the prospect of a long-term presence as indicated by the building of permanent United States military bases. A United States declaration of an intention to withdraw United States troops and close military bases will help dampen the insurgency which has been inspired to resist colonization and fight aggressors and those who have supported United States policy. The cost of withdrawing United States troops from Iraq could be as low as $10 billion according to the Congressional Budget Office.

Art. 4 Management of Military Assets

17. In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, that was first published the year the United States declared its Independence in 1776 Adam Smith noted the effect of war on Public Debts in Book V Chapter III. The want of parsimony in time of peace imposes the necessity of contracting debt in time of war. When war comes, there is no money in the treasury but what is necessary for carrying on the ordinary expense of the peace establishment. When war begins, the military must be furnished with arms, ammunition, and provisions. The ordinary expense of modern governments in time of peace being equal or nearly equal to their ordinary revenue, when war comes they are both unwilling and unable to increase their revenue in proportion to the increase of their expense. They are unwilling for fear of offending the people, who, by so great and so sudden an increase of taxes, would soon be disgusted with the war. By means of borrowing they are enabled, to raise, from year to year, money sufficient for carrying on the war. In this exigency government can have no other resource but in borrowing although it would be wiser to increase taxes to pay for the cost of war because the people feeling, during the continuance of the war, the complete burden of it, would soon grow weary of it, and government, in order to humor them, would not be under the necessity of carrying it on longer than it was necessary to do so. The foresight of the heavy and unavoidable burdens of war would hinder the people from wantonly calling for it when there was no real or solid interest to fight for.

Figure 8: Accumulation of Government Debt 1940-2005 (in billions)

Source: Office of Management and Budget Historic Budget Tables

18. The correlation between war and debt is reinforced by Immanuel Kant in his essay Perpetual Peace written in 1795 that believed a majority of the people would never vote to go to war, unless in self defense. Therefore, if all nations were republics, it would end war, because there would be no aggressors. If the consent of the citizens is required in order to decide that war should be declared, nothing is more natural than that they would be very cautious in commencing such a poor game, decreeing for themselves all the calamities of war. Among the latter would be: having to fight, having to pay the costs of war from their own resources, having painfully to repair the devastation war leaves behind, and, to fill up the measure of evils, load themselves with a heavy national debt that would embitter peace itself and that can never be liquidated on account of constant wars in the future". Democracy thus gives influence to those most likely to be killed or wounded in wars, and their relatives and friends. The more the public debts may have been accumulated, the more necessary it may have become to study to reduce them. When national debts have once been accumulated to a certain degree, instance of their having been fairly and completely paid, is unheard of. The liberation of the public revenue can be done by bankruptcy and pretended payment.

19. The Constitution of the United States enforces these principles to enable the parliament to keep military spending in check through several provisions relating to treason. Art. 3 Section 3 defines, treason against the United States shall consist only in levying War against them, or in adhering to their enemies, giving them Aid and comfort. Art. 2 Section 4 provides that the President, Vice President and all civil Officers of the United States, shall be removed from Office on impeachment for and conviction of treason, bribery, or other high crimes and misdemeanors. It is of course difficult to prove that the US military is the nation’s worst enemy, however the principle holds true, that levies for war and the armed forces imbalances the federal budget. The neo-classical theories indicate there are two reasons for this. First, by financing the armed forces the government is oppressing their people and the people are less inclined to pay taxes therefore leading to a decrease in revenues and reliance of the government upon borrowing to meet the costs of unnecessary wars the taxpayers would never pay for willingly. Second, the type of leader who finances the armed forces is typically perverse and ineffective, getting their enjoyment from the suffering of humanity rather than their progress. It can therefore be surmised that the causa belli, national security interest of the United States, is peace and to achieve this the armed forces must be treated with fiscal discipline to balance the budget and escape debt. Having mastered the need for more debt the nation must seek to appease their creditors with their international development and social welfare projects.

Art. 6 $400 billion Military Spending Limit Until 2011

20. Congress is responsible for establishing spending limits to reduce the deficit under 2USC(20)§901. If waste, fraud and abuse in Defense programs can be reigned in for a gross aggregate military expenditure of not more than $400 billion it might be possible to balance the budget this 2007. However neither the President nor Congress have demonstrated a competency to balance the budget. Frustrated with the President and inspired by the HA lobbying disclosure, that balanced the budget, Congress took the reigns and agreed to Revising the congressional budget for the United States Government for fiscal year 2007, establishing the congressional budget for the United States Government for fiscal year 2008, and setting forth appropriate budgetary levels for fiscal years 2009 through 2012. H. CON. RES. 99 that passed 216 to 210 on 29 March 2007, that was Resolved by the Senate with the House of Representatives concurring in S.CON.RES.21.ES that passed 52 to 47 on 23 March 2007. In their first attempt to draft their own budget Congress has done even worse than the President, neither of whom have the resolve to approach a balanced budget before 2010. The $400 billion deficit is expected to bring the public debt to $8.9 trillion, $5 billion of which are held by the public. Social Security expects $637 billion in revenues and $447 billion in outlays, a $190 billion surplus. The military, has a budget of $619 billion with $560 billion in outlays, a $59 billion surplus. It should not be difficult to return $250 billion in funds for a deficit of only $150 billion. If waste, fraud and abuse in Defense programs can be reigned in for a gross aggregate military expenditure of not more than $400 billion it might be possible to balance the budget this year.

Figure 9: Long Range Forecast 2005-2011 (in billions)

	2005	2006	2007	2008	2009	2010	2011
DoD	483.9	468.2	441	464.2	483.8	493.9	504.2
Total National Defense	505.8	491.8	463	485.2	505.3	515.3	526.1
S Con Res 21 Budget Authority			619.4	648.8	584.7	545.3	551.1
S Con Res 21 Out lays			560.5	617.8	626.9	572.9	558.4
HA DoD			441	399	375	390	400

Source: DoD. Table 1-2 National Defense Budget Estimates FY 2007 March 2006 and S.CON.RES.21.ES that passed 52 to 47 on 23 March 2007 and HA

21. A Military budget of $400 billion after $60 billion reduction in superfluous Cold War armament and weapons maintenance is possible. In the 2007 defense budget: $111 billion (about 25 percent) will be spent on the pay and benefits of 1.4 million active duty and 800,000 selected or ready reserve military personnel. (The pay of a reservist who is mobilized or called to active duty, as 400,000 have been since September 11, is funded in the supplemental appropriation.) The Pentagon spends $154 billion or 33 percent of its budget on routine operating and maintenance costs for its 21 Army and Marine active and reserve ground divisions, 11 Navy Carrier battle groups, and 31 Air Force, Navy and Marine air wings. Included in this are pay and benefits for the 700,000 civilians employed by the Department of Defense. (The operations and maintenance costs of the forces in Iraq are also covered in the supplemental appropriation.) Another $174 billion or 38 percent of the budget goes for new investment. This is broken down into $84 billion for buying new planes and ships and tanks; $73 billion for doing research and developing and testing new weapons; and $17 billion for building the facilities for the troops and equipment. The vast majority of the final 5 percent or $24 billion is spent by the Department of Energy on maintaining and safeguarding the 10,000 nuclear weapons in our inventory. This is the six times more than either China or Russia spends on defense and almost as much as the rest of the world combined (Korb 2006). The Plan:

a. About $14 billion would be saved by reducing the nuclear arsenal to no more than 1,000 warheads, more than enough to maintain nuclear deterrence.

b. About $8 billion would be saved by cutting most of the National Missile Defense program, retaining only a basic research program to determine if this attractive idea, which has proven to be an utter failure in actual tests, could ever work in the real world.

c. About $28 billion would be saved by scaling back or stopping the research, development, and construction of weapons that are useless to combat modern threats. Many of the weapons involved, like the F/A-22 fighter jet and the Virginia Class Submarine, were designed to fight threats from a bygone era.

d. Another $5 billion would be saved by eliminating forces, including two active Air Force wings and one carrier group, which are not needed in the current geopolitical environment.

e. And about $5 billion would be saved if the giant Pentagon bureaucracy simply functioned in a more efficient manner and eliminated the earmarks in the defense budget.

Figure 10: Defense Budget and Federal Budget Deficit 1990-2006

Source: Office of Management and Budget Historic Budget Tables as Studied in Table 2-3 of the 2007 HA Lobbying Activity Disclosure (LAD)

22. The experience with balancing the budget at the turn of the millennium and in FY 2006 reinforce the neo-classical principle that levies for war cause the government to get into debt and that by restraining military spending a little bit dramatic progress can be made eliminating the budget deficit. By reducing defense spending in FY 2006 to $470 billion from $501 billion the deficit was miraculously reduced from $320 billion to $250 billion. A considerable amount of this savings, $30-$50 billion can be attributed to the return of surplus funds allocated the military, the rest is probably the result of the improved functioning of the real economy as the result of the flight of military capital although their interests seem to control GDP statistics. Throughout the 1990s military spending was kept below the cap of $300 billion, that most people considered too high, in the first decade of the 21^st century all discipline was removed from military spending under the guise of the levy for the Global War on Terror. It is not too late to restore limits to military spending. It is logical that after a decade inflation would cause military spending to increase into the next category, $300-$400 billion, in this case. All indicators agree that to affirmatively balance the budget Congress must restrain military spending to less than $400 billion until 2011 after which time the budget could creep into the $400-$500 billion range. Everyone, including the soldiers who would not be deceived and betrayed by the treasonous finance of terrorism, would be better off if the government would keep to the $400 billion military spending limit until 2011. The military would again be an honorable part of the federal economy, everyone would be happy and we would have peace.

Art. 7 Gross Domestic Pillaging

23. There is always a significant margin of error when doing macro-economic accounting. The economy is simply too large to be 100% accurate and in practice a margin of error of up to 25% should be anticipated. For instance macro-economic accounting of the US Gross Domestic Product (GDP) has recently come into question. In the United States economic activity slowed in the middle part of 2006. There was a general economic slowdown in growth from 5.3% in the first two quarters and 2.4% in the second half. These figures are down notably from the nearly 3-1/2 percent average pace of the preceding two years. The slowdown in the growth of real GDP largely reflects a cooling of the housing market (Bies Nov. 2, 2006). Economic growth in 2006 is set to reach 2.8% in the European Union and 2.6% in the euro area, up from 1.7% and 1.4% in 2005, according to the European Commission’s autumn economic forecasts (Bernanke Aug. 31, 2006). In the first quarter of 2007 GDP increased at an annual rate of 1.3 percent in the first quarter of 2007 (BEA 07-18). This rate of growth does not explain the change in GDP reported in the dollar amounts by the either the BEA or the OMB. This discrepancy is however not new, so it is difficult to go back to a date that one trusts and begin calculating anew.

Figure 11: GDP % Change from Previous Year According the BEA and OMB

Source: Table 7 Gross Domestic Product: First Quarter 2007 BEA 07-18 and Calculations from Office of Management and Budget Historic Budget Tables as Studied in Table 2-3 of the 2007 HA Lobbying Activity Disclosure (LAD)

24. The dollar amount of the GDP does make a difference. For instance, it is against the dollar amount of GDP that, the Department calculates military spending, as a percentage of the GDP. There are three lessons from the Great Moderation of inflation that should be applied to interpretation of macro-economic statistics so as not to place undue stress upon the market or place too much trust in an inaccurate abstraction. First, low and stable inflation--effective price stability--is a necessary condition for the economy to realize its full potential for sustained increases in living standards. Second, expectations are critical to policy success. Expectations about future policy help to determine the financial conditions that affect spending and inflation. Third, humility--we should always keep in mind how little we know about the economy. Monetary policy operates in an environment of pervasive uncertainty--about the nature of the shocks hitting the economy, about the economy’s structure, and about agents’ reactions. We cannot effectively implement policy without some reference to the likely level of potential, given that demand-supply pressures are an integral part of the monetary transmission mechanism. But we must be realistic about the accuracy of our estimates of potential while always doing our best to improve them (Kohn March 9, 2007).

Figure 12: Gross Domestic Product and National Income Disputes (in billions)

Statistic	2004	2005	2006
GDP high	11,713	12,456	13,247
GDP low	10,256	10,812	11,415
GNI high	9,731	10,239	10,883
GNI low	8,011	8,105	8,313

Source: Gross Domestic Product: First Quarter 2007 BEA 07-18

25. Significant economic damage has been caused by the deceptive publicity of the extraordinarily high GDP and GNI figures without a margin of error or price range. Two high profile problems come to mind. First, the housing bubble burst is attributed with causing the slump in GDP and housing prices is attributed to a large number of foreclosures amongst sub-prime adjustable rate mortgages (ARMs) as the result of surprise price increases on the basis of impersonal national indexes compiled from these economic statistics that are a deceptive and discriminates predominantly against vulnerable sub prime mortgages in the ARM Ban HA-10-5-07. Second, the military study of the CIA World Fact Book has been ransacked to remove all evidence of the monetary value of military expenditure so that the anomalous US could hide as a percentage of GDP, 4.06% a high percentage but troubling because China, the next largest national military spender, spent only $88 billion in 2005. The first issue has been as fully studied as possible and is scheduled for further hearings. The second issue requires attention to the legality of the concealment of critical information from the CIA World Fact Book because it appears to be a fraud intended to facilitate an unethical levy for the military/war/treason. HA has conveniently make copies of the information before it was deleted that are now at the end of this document with further analysis.

26. A legitimate use of the invisible hand aims to align the incentives of market participants with the objectives of the regulator. Adam Smith conceived of the free-market system as an “invisible hand” that harnesses the pursuit of private interest to promote the public good. The concealment of international military expenses fails to promote the public good, which is to bring the Department into harmony with both the federal budget and international militaries. Smith also wrote the same violence which made it convenient to hoard made it equally convenient to conceal the hoard. The illegal private interests of the new Director General of the CIA and Secretary of Defense, a former CIA Director himself, seem to be to make more money than the Congress can afford. Black’s Law Dictionary defines fraud as, “a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment”. The lesson of history is that neither market discipline nor regulatory oversight alone is completely adequate. Fortunately, regulators have a variety of ways to restore and strengthen market discipline, notwithstanding the existence of the federal safety net (Bernanke April 11, 2007). Therefore instead of criminally prosecuting these armed and dangerous leaders it seems better to demand the republication of the CIA global military expenditure covertly as a civil tort that might end Gen. Hayden’s career and be Sec. Gates’ first reprimand. Military spending must go down, not up, at this time when the budget requires a $400 billion limit on military spending to make it possible to balance the federal budget. It is not only fraud, but treason, for such powerful military leaders to deceptively, as in this case, or even spiritedly, try to levy greater military spending from the United States.

Art. 8 Comparative Militaries

27. The US is responsible for nearly 50% of the $1.25 trillion in gross aggregate military expenditure worldwide. The USA has the largest armed services budget of any nation in the world with $518 billion (inc. veteran’s benefits) expenditure in 2006. We are however willing to compromise for a balance budget that can be achieved with a military budget less than $400 billion until after 2011. The next largest military is that of the People’s Republic of China that cost $81 billion in 2005. The European Union, including prospective members except Russia has a combined military spending of $558 billion. This presents an even greater threat to the US if they were to go war with the EU. Although the US needs to be the equal of these nations and groups of nations the US co-operates with all of them in the United Nations and through our bilateral diplomatic missions. Whereas the European Union has a larger population and economy it is foolish for the US to compete with the entire continent on military terms. Not only does this military finance competition cost the nation its balance but it creates strife with our European allies who we liberated twice from German occupation. Although the US often falls below the expectations of state members the EU that continent remains our ally and the US military must not enter into an arms race with that continent but should instead seek harmony with the federal budget and the international law comforted by the high standards of human rights that preclude any preemptive actions by the EU and the mutually governing North Atlantic Treaty Organization.

Figure 13: Leading Military Spenders

1	United States	$518.1 billion (FY04 est.) (2005 est.)	4.06% (FY03 est.) (2005 est.)
2	China	$81.48 billion (2005 est.)	4.3% (2005 est.)
3	France	$45 billion FY06 (2005)	2.6% FY06 (2005 est.)
4	Japan	$44.31 billion (2005 est.)	1% (2005 est.)
5	United Kingdom	$42.87 billion (2003)	2.4% (2003)
6	Italy	$28.83 billion (2003)	1.8% (2004)
7	Korea, South	$21.06 billion FY05 (2005 est.)	2.6% FY05 (2005 est.)
8	India	$19.04 billion (2005 est.)	2.5% (2005 est.)
9	Saudi Arabia	$18 billion (2002)	10% (2002)
10	Australia	$17.84 billion (2005 est.)	2.7% (2005 est.)
11	Turkey	$12.155 billion (2003)	5.3% (2003)
12	Spain	$9.91billion (2003)	1.2% (2003)
13	Israel	$9.45 billion (2005 est.)	7.7% (2005 est.)
14	Netherlands	$9.408 billion (2004)	1.6% (2004)
15	Russia	not reported by the CIA

Source: CIA World Fact Book 2006 before the concealment of military expenditures in 2007

28. China has about 1.4 million ground forces personnel with approximately 400,000 deployed to the three military regions opposite Taiwan. China has nuclear capabilities, a large air force, numerous missiles and attack vehicles. China is a serious military power. China has however embarked upon an ambitious economic agenda that is succeeding so military domination is not their agenda. Consistent with the provisions of the Taiwan Relations Act, Public Law 96-8 (1979), the United States continues to make available defense articles, services, and training assistance to enable Taiwan to maintain a sufficient self defense capability. China’s leaders describe the initial decades of the 21st Century as a “20-year period of opportunity,” meaning that regional and international conditions will generally be peaceful and conducive to economic, diplomatic, and military development and thus to China’s rise as a great power. Over the past decade, as the People’s Liberation Army transformed from an infantry-dominated force with limited power projection ability into a more modern force with long-range precision strike assets. The Defense Intelligence Agency (DIA) estimates China’s total military related spending for 2007 could be as much as $85 billion to $125 billion.

29. The US military is far larger than the competitors. Furthermore the US has no enemies amongst the many states of the United Nations and even has a privileged position on the Security Council that would permit the US Ambassador to veto any legal military action the United States. The US possesses enough nuclear deterrence to exterminate all life on planet several times over let alone any attacking nation or group of states. We are our own worst enemy as the result of this military overspending. The surplus funds are sponsoring terrorism so as to perpetuate more GWOT spending. Disproportionate spending on military might alienates our allies, leads to US sponsored corruption amongst the military ranks internationally that undermines political progress and leads to tyranny domestically. To enhance the overseas stabilization and reconstruction capabilities of the United States Government, and for other purposes Congress finds that the resources of the United States Armed Forces have been burdened by having to undertake stabilization and reconstruction tasks in the Balkans, Afghanistan, Iraq, and other countries of the world that could have been performed by civilians, which has resulted in lengthy deployments for Armed Forces personnel. To provide for the continued development, as a core mission of the Department of State and the United States Agency for International Development, of an effective expert civilian response capability to carry out reconstruction and stabilization activities in a country or region that is at risk of, in, or is in transition from, conflict or civil strife.

Figure 14: Global Aggregate Military Expenditure 2005

Country	Military expenditures - dollar figure	Military expenditures - percent of GDP (%)
Afghanistan	$122.4 million (2005 est.)	1.7% (2005 est.)
Albania	$56.5 million (FY02)	1.49% (FY02)
Algeria	$3 billion (2005 est.)	3.2% (2005 est.)
Angola	$2 billion (2005 est.)	8.8% (2005 est.)
Antigua and Barbuda	NA	NA
Argentina	$4.3 billion (FY99)	1.3% (FY00)
Armenia	$135 million (FY01)	6.5% (FY01)
Australia	$17.84 billion (2005 est.)	2.7% (2005 est.)
Austria	$1.497 billion (FY01/02)	0.9% (2004)
Azerbaijan	$121 million (FY99)	2.6% (FY99)
Bahamas, The	NA	NA
Bahrain	$627.7 million (2005 est.)	4.9% (2005 est.)
Bangladesh	$1.01 billion (2005 est.)	1.8% (2005 est.)
Barbados	NA	NA
Belarus	$420.5 million (2006)	1.4% (FY02)
Belgium	$3.999 billion (2003)	1.3% (2003)
Belize	$19 million (2005 est.)	1.7% (2005 est.)
Benin	$100.9 million (2005 est.)	2.3% (2005 est.)
Bermuda	$4.03 million (2001)	0.11% (FY00/01)
Bhutan	$8.29 million (2005 est.)	1% (2005 est.)
Bolivia	$130 million (2005 est.)	1.4% (2005 est.)
Bosnia and Herzegovina	$234.3 million (FY02)	4.5% (FY02)
Botswana	$325.5 million (2005 est.)	3.4% (2005 est.)
Brazil	$9.94 billion (2005 est.)	1.3% (2005 est.)
Brunei	$290.7 million (2003 est.)	5.1% (2003 est.)
Bulgaria	$356 million (FY02)	2.6% (2003)
Burkina Faso	$74.83 million (2005 est.)	1.3% (2005 est.)
Burma	$39 million (FY97)	2.1% (FY97)
Burundi	$43.9 million (2005 est.)	5.6% (2005 est.)
Cambodia	$112 million (FY01 est.)	3% (FY01 est.)
Cameroon	$230.2 million (2005 est.)	1.5% (2005 est.)
Canada	$9,801.7 million (2003)	1.1% (2003)
Cape Verde	$7.18 million (2005 est.)	0.7% (2005 est.)
Central African Republic	$16.37 million (2005 est.)	1% (2005 est.)
Chad	$68.95 million (2005 est.)	1% (2005 est.)
Chile	$3.91 billion (2005 est.)	3.5% (2005 est.)
China	$81.48 billion (2005 est.)	4.3% (2005 est.)
Colombia	$3.3 billion (FY01)	3.4% (FY01)
Comoros	$12.87 million (2005 est.)	3% (2005 est.)
Congo, Democratic Republic of the	$103.7 million (2005 est.)	1.5% (2005 est.)
Congo, Republic of the	$85.22 million (2005 est.)	1.4% (2005 est.)
Costa Rica	$83.46 million (2005 est.)	0.4% (2005 est.)
Cote d'Ivoire	$246.6 million (2005 est.)	1.6% (2005 est.)
Croatia	$620 million (2004)	2.39% (2002 est.)
Cuba	$694 million (2005 est.)	1.8% (2005 est.)
Cyprus	$384 million (FY02)	3.8% (FY02)
Czech Republic	$2.17 billion (2004)	1.81% FY05
Denmark	$3,271.6 million (2003)	1.5% (2004)
Djibouti	$29.05 million (2005 est.)	4.3% (2005 est.)
Dominica	NA	NA
Dominican Republic	$0 (2002 est.)	0% (2002 est.)
East Timor	$4.4 million (FY03)	NA
Ecuador	$650 million (2005 est.)	2% (2005 est.)
Egypt	$2.44 billion (2003)	3.4% (2004)
El Salvador	$161.7 million (2005 est.)	1% (2005 est.)
Equatorial Guinea	$152.2 million (2005 est.)	2.1% (2005 est.)
Eritrea	$220.1 million (2005 est.)	17.7% (2005 est.)
Estonia	$155 million (2002 est.)	2% (2002 est.)
Ethiopia	$295.9 million (2005 est.)	3.4% (2005 est.)
Falkland Islands (Islas Malvinas)	NA	NA
Faroe Islands	NA	NA
Fiji	$36 million (2004)	2.2% (FY02)
Finland	$1.8 billion (FY98/99)	2% (FY98/99)
France	$45 billion FY06 (2005)	2.6% FY06 (2005 est.)
French Guiana	NA	NA
Gabon	$253.5 million (2005 est.)	3.4% (2005 est.)
Gambia, The	$1.55 million (2005 est.)	0.4% (2005 est.)
Gaza Strip	NA	NA
Georgia	$23 million (FY00)	0.59% (FY00)
Germany	$35.063 billion (2003)	1.5% (2003)
Ghana	$83.65 million (2005 est.)	0.8% (2005 est.)
Greece	$5.89 billion (2004)	4.3% (2003)
Grenada	NA	NA
Guatemala	$169.8 million (2005 est.)	0.5% (2005 est.)
Guinea	$119.7 million (2005 est.)	2.9% (2005 est.)
Guinea-Bissau	$9.46 million (2005 est.)	3.1% (2005 est.)
Guyana	$6.48 million (2003 est.)	0.9% (2003 est.)
Haiti	$25.96 million (2003 est.)	0.9% (2003 est.)
Honduras	$52.8 million (2005 est.)	2.55% (2005 est.)
Hong Kong	Hong Kong garrison is funded by China; figures are NA	NA
Hungary	$1.08 billion (2002 est.)	1.75% (2002 est.)
Iceland	0	0%
India	$19.04 billion (2005 est.)	2.5% (2005 est.)
Indonesia	$1.3 billion (2004)	3% (2004)
Iran	$4.3 billion (2003 est.)	3.3% (2003 est.)
Iraq	$1.34 billion (2005 est.)	NA
Ireland	$700 million (FY00/01)	0.9% (FY00/01)
Israel	$9.45 billion (2005 est.)	7.7% (2005 est.)
Italy	$28,182.8 million (2003)	1.8% (2004)
Jamaica	$31.17 million (2003 est.)	0.4% (2003 est.)
Japan	$44.31 billion (2005 est.)	1% (2005 est.)
Jordan	$1.4 billion (2005 est.)	11.4% (2005 est.)
Kazakhstan	$221.8 million (Ministry of Defense expenditures) (FY02)	0.9% (Ministry of Defense expenditures) (FY02)
Kenya	$280.5 million (2005 est.)	1.6% (2005 est.)
Kiribati	NA	NA
Korea, North	$5 billion (FY02)	NA
Korea, South	$21.06 billion FY05 (2005 est.)	2.6% FY05 (2005 est.)
Kuwait	$3.01 billion (2005 est.)	4.2% (2005 est.)
Kyrgyzstan	$19.2 million (FY01)	1.4% (FY01)
Laos	$11.04 million (2005 est.)	0.4% (2005 est.)
Latvia	$87 million (FY01)	1.2% (FY01)
Lebanon	$540.6 million (2004)	3.1% (2004)
Lesotho	$41.1 million (2005 est.)	2.1% (2005 est.)
Liberia	$67.4 million (2005 est.)	7.5% (2005 est.)
Libya	$1.3 billion (FY99)	3.9% (FY99)
Lithuania	$230.8 million (FY01)	1.9% (FY01)
Luxembourg	$231.6 million (2003)	0.9% (2003)
Macedonia	$200 million (FY01/02 est.)	6% (FY01/02 est.)
Madagascar	$329 million (2005 est.)	7.2% (2005 est.)
Malawi	$15.81 million (2005 est.)	0.8% (2005 est.)
Malaysia	$1.69 billion (FY00 est.)	2.03% (FY00)
Maldives	$45.07 million (2005 est.)	5.5% (2005 est.)
Mali	$106.3 million (2005 est.)	1.9% (2005 est.)
Malta	$38.168 million (2005 est.)	1% (2005 est.)
Marshall Islands	NA	NA
Mauritania	$19.32 million (2005 est.)	1.4% (2005 est.)
Mauritius	$12.04 million (2005 est.)	0.2% (2005 est.)
Mexico	$6.07 billion (2005 est.)	0.8% (2005 est.)
Moldova	$8.7 million (2004)	0.4% (FY02)
Mongolia	$23.1 million (FY02)	2.2% (FY02)
Morocco	$2.31 billion (2003 est.)	5% (2003 est.)
Mozambique	$78.03 million (2005 est.)	1.3% (2005 est.)
Namibia	$149.5 million (2005 est.)	2.3% (2005 est.)
Nauru	NA	NA
Nepal	$104.9 million (2005 est.)	1.5% (2005 est.)
Netherlands	$9.408 billion (2004)	1.6% (2004)
New Caledonia	NA	NA
New Zealand	$1.147 billion (FY03/04)	1% (FY02)
Nicaragua	$32.27 million (2005 est.)	0.7% (2005 est.)
Niger	$44.78 million (2005 est.)	1.4% (2005 est.)
Nigeria	$737.6 million (2005 est.)	0.8% (2005 est.)
Norway	$4,033,500,000 (2003)	1.9% (2003)
Oman	$252.99 million (2004)	11.4% (2003)
Pakistan	$4.26 billion (2005 est.)	3.9% (2005 est.)
Palau	NA	NA
Panama	$150 million (2005 est.)	1% (2005 est.)
Papua New Guinea	$16.9 million (2003)	1.4% (FY02)
Paraguay	$53.1 million (2003 est.)	0.9% (2003 est.)
Peru	$829.3 million (2003 est.)	1.4% (2003 est.)
Philippines	$836.9 million (2005 est.)	0.9% (2005 est.)
Poland	$3.5 billion (2002)	1.71% (2002)
Portugal	$3,497.8 million (2003)	2.3% (2003)
Qatar	$723 million (FY00)	10% (FY00)
Romania	$985 million (2002)	2.47% (2002)
Russia	NA	NA
Rwanda	$53.66 million (2005 est.)	2.9% (2005 est.)
Saint Kitts and Nevis	NA	NA
Saint Lucia	NA	NA
Saint Vincent and the Grenadines	NA	NA
Samoa	NA	NA
San Marino	$700,000 (FY00/01)	NA
Sao Tome and Principe	$581,729 (2005 est.)	0.8% (2005 est.)
Saudi Arabia	$18 billion (2002)	10% (2002)
Senegal	$117.3 million (2005 est.)	1.4% (2005 est.)
Serbia and Montenegro	$654 million (2002)	NA
Seychelles	$14.85 million (2005 est.)	2.1% (2005 est.)
Sierra Leone	$14.25 million (2005 est.)	1.7% (2005 est.)
Singapore	$4.47 billion (FY01 est.)	4.9% (FY01)
Slovakia	$406 million (2002)	1.87% FY05 (2005)
Slovenia	$370 million (FY00)	1.7% (FY00)
Solomon Islands	NA	NA
Somalia	$22.34 million (2005 est.)	0.9% (2005 est.)
South Africa	$3.55 billion (2005 est.)	1.5% (2005 est.)
Spain	$9,906.5 million (2003)	1.2% (2003)
Sri Lanka	$606.2 million (2005 est.)	2.6% (2005 est.)
Sudan	$587 million (2001 est.) (2004)	3% (1999) (2004)
Suriname	$7.5 million (2003 est.)	0.7% (2003 est.)
Swaziland	$41.6 million (2005 est.)	1.4% (2005 est.)
Sweden	$5.51 billion (2005 est.)	1.5% (2005 est.)
Switzerland	$2.548 billion (FY01)	1% (FY01)
Syria	$858 million (FY00 est.); note - based on official budget data that may understate actual spending	5.9% (FY00)
Taiwan	$7.93 billion (2005 est.)	2.4% (2005 est.)
Tajikistan	$35.4 million (FY01)	3.9% (FY01)
Tanzania	$21.2 million (2005 est.)	0.2% (2005 est.)
Thailand	$1.775 billion (FY00)	1.8% (2003)
Togo	$29.98 million (2005 est.)	1.6% (2005 est.)
Tonga	NA	NA
Trinidad and Tobago	$66.72 million (2003 est.)	0.6% (2003 est.)
Tunisia	$356 million (FY99)	1.5% (FY99)
Turkey	$12.155 billion (2003)	5.3% (2003)
Turkmenistan	$90 million (FY99)	3.4% (FY99)
Tuvalu	NA	NA
Uganda	$192.8 million (2005 est.)	2.2% (2005 est.)
Ukraine	$617.9 million (FY02)	1.4% (FY02)
United Arab Emirates	$1.6 billion (FY00)	3.1% (FY00)
United Kingdom	$42,836.5 million (2003)	2.4% (2003)
United States	$518.1 billion (FY04 est.) (2005 est.)	4.06% (FY03 est.) (2005 est.)
Uruguay	$371.2 million (2005 est.)	2.1% (2005 est.)
Uzbekistan	$200 million (FY97)	2% (FY97)
Vanuatu	NA	NA
Venezuela	$1.61 billion (2005 est.)	1.2% (2005 est.)
Vietnam	$650 million (FY98)	2.5% (FY98)
West Bank	NA	NA
World	aggregate real expenditure on arms worldwide in 1999 remained at approximately the 1998 level, about three-quarters of a trillion dollars (1999 est.)	roughly 2% of gross world product (1999 est.)

Source: CIA World Fact Book 2006 before the concealment of military expenditures in 2007

30. The United States has the largest, best-trained and most effective military in the world. The Department employs an estimated 2.8 million people, 1.1 million active duty troops, 700,000 civilian employees and 1.1 million in the Reserve and National Guard. In FY 2007 they received a 2.7% pay raise in appreciation for their good work reducing military spending from $505 billion to $470 billion that helped to reduce the deficit from $325 billion to $250 billion. China has a large military valued at $82 billion. The European Union has military expenditures of $550 billion. Throughout the 1990s military spending kept below $300 billion making it possible to show a federal budget surplus 1999-2000. Concerns for the balance of power should not dissuade the Congress from setting a spending limit of $400 billion after 2008 when US troops have withdrawn from Iraq and the Department has complied with the nuclear nonproliferation treaty to reduce their nuclear arsenal and other Cold war weapons. The US is at peace with all the other nations in the world. The Department must strive to honor the balanced the budget and return surplus funds.

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	2006	2005
Cash and other Monetary Assets	2,072.7	2,199.8
Fund Balance with Treasury	290,657.1	327,138.3
Investments and Related Interest, Net	231,823.2	222,573.3
General Property, Plant and Equipment, Net	465,439.5	452,541.4
Loans Receivable	191.7	75.6
Other Assets	29,118.3	25,341.2
Total Assets	1,367,053.3	1,266,140.9
Accounts Payable	28,870.7	30,633.4
Debt	382.1	467.1
Other Liabilities	44,388.3	41,136.2
Military Retirement and Other Federal Employment Benefits	1,815,769.5	1,736,057.8
Environmental and Disposal Liabilities	69,985.1	65,027.6
Loan Guarantee Liability	36.8	41.1
Total Liabilities	1,959,432.5	1,873,363.2
Unexpended Appropriations	307,709.4	271,493.6
Cumulative Results of Operations	900,088.6	878,715.9
Total Net Position	592,379.2	607,222.3
Total Liabilities and Net Position	1,367,053.3	1,266,140.9
For the Year: Total Cost	629,736.4	680,086.6
Total Earned Revenue	48,350.3	45,207.1
Net Cost of Operations	581,386.1	634,879.5