GEN McCaffrey on Strategic Challenges

[MikeF]

Attached is an overview of GEN McCaffrey's analysis of Strategic Challenges facing the Obama Administration.

Nine insights:

•Homeland Security (Secretary Janet Napolitano) is enormously improved since 9-11. Zero US strikes. Huge losses UK, Saudi Arabia, Indonesia, Spain.

•The wars in Iraq and Afghanistan have been bitter (40,199 US killed and wounded).

•The forty-four international terrorist organizations threatening the US are badly damaged, penetrated, losing international stature.

•Continuing proliferation of WMD nation states and technology arethe principle threat to the American people and regional stability. (Iran, North Korea, Pakistan, India –possible Venezuela, Saudi Arabia, etc.)

•The war in Iraq has taken a dramatic turn for the better. We will largely withdraw in the coming 36 months. (50,000 troops by the summer of 2010). Violence is down from 1,250 attacks/week in 2003 to 100 attacks/week in 2009. The civil war will be decided 2010-2012.

•The war in Afghanistan will go to high-order violence in 2009-2011. Our NATO allies are essential –and weak. The Afghan Government is both a modern miracle –and astonishingly corrupt and ineffective. The Afghan Army is the “schwerpunkt”of the 25 year campaign.

•The extremely capable and experienced Obama Administration national security team (Secretary Bob Gates, Secretary Hillary Clinton, General Dave Petraeus, General Ray Odierno, General Stan McChrystal, NSC Advisor Jim Jones, Special Envoy Dick Holbrook, Ambassador Karl Eikenberry, Ambassador Ann Patterson) must create a foreign policy that takes into account a failing US economy, disenchantment with the Bush/Rumsfeld misjudgments, and enormous animosity to perceived US arrogance and unilateralism.

•Mexico (our second largest global economic partner) is facing severe economic failure and an internal violent struggle with a 100,000 person narco-criminal force. This struggle is central to both Mexican and US Security.

•US Military forces are grievously over tasked, too small, and under resourced for the former Bush international security strategy. Domestic security institutions (Customs and Border Protection, Public Health Service, US Coast Guard, USMarshall Service, DEA, FBI) are an order-of-magnitude too anemic for the dangerous challenge at hand

v/r

Mike

[Surferbeetle]

Attached is an overview of GEN McCaffrey's analysis of Strategic Challenges facing the Obama Administration.

•The extremely capable and experienced Obama Administration national security team (Secretary Bob Gates, Secretary Hillary Clinton, General Dave Petraeus, General Ray Odierno, General Stan McChrystal, NSC Advisor Jim Jones, Special Envoy Dick Holbrook, Ambassador Karl Eikenberry, Ambassador Ann Patterson) must create a foreign policy that takes into account a failing US economy, disenchantment with the .... misjudgments, and enormous animosity to perceived US arrogance and unilateralism.

•Mexico (our second largest global economic partner) is facing severe economic failure and an internal violent struggle with a 100,000 person narco-criminal force. This struggle is central to both Mexican and US Security.

•US Military forces are grievously over tasked, too small, and under resourced for the former Bush international security strategy. Domestic security institutions (Customs and Border Protection, Public Health Service, US Coast Guard, US Marshall Service, DEA, FBI) are an order-of-magnitude too anemic for the dangerous challenge at hand

One would hope that figuring out how to fund all of these non-negotiable requirements would be something that our financial community could come together on and put ahead of their own "needs"...

From Financial Crisis to Debt Crisis? by Kenneth Rogoff

As governments pile up war-level debt burdens, when will the problem explode? One again we just don’t know. Our theoretical models tell us that even a massively leveraged economy can plod along for years, if not decades, before crashing and burning. It all boils down to confidence. It is precisely when investors are most sure that governments will eventually dig their way out of huge debt holes that politicians dig their way deeper and deeper into debt. Economics theory tells us a lot about which countries are most vulnerable, but specifying exactly where and when crises will erupt is far more difficult.

We are constantly reassured that governments will not default on their debts. In fact, governments all over the world default with startling regularity, either outright or through inflation. Even the US, for example, significantly inflated down its debt in the 1970’s, and debased the gold value of the dollar from $21 per ounce to $35 in the 1930’s.

A Phantom Recovery? by Nouriel Roubini

A second reason to fear a double-dip recession concerns the fact that oil, energy, and food prices may be rising faster than economic fundamentals warrant, and could be driven higher by the wall of liquidity chasing assets, as well as by speculative demand. Last year, oil at $145 a barrel was a tipping point for the global economy, as it created a major income shock for the US, Europe, Japan, China, India, and other oil-importing economies. The global economy, barely rising from its knees, could not withstand the contractionary shock if similar speculative forces were to drive oil rapidly towards $100 a barrel.

Stimulate or Die by Joseph E. Stiglitz

Some worry about America’s increasing national debt. But if a new stimulus is well designed, with much of the money spent on assets, the fiscal position and future growth can actually be made stronger.

It is a mistake to look only at a country’s liabilities, and ignore its assets. Of course, that is an argument against badly designed bank bailouts, like the one in America, which has cost US taxpayer hundreds of billions of dollars, much of it never to be recovered. The national debt has increased, with no offsetting asset placed on the government’s balance sheet. But one should not confuse corporate welfare with a Keynesian stimulus.

[Valin]

MikeF

Thank you for this.

•The wars in Iraq and Afghanistan have been bitter (40,199 US killed and wounded).

If I may make a small point....
Today the 2nd bloodiest battle of the War Between The States ends
Battle of Chickamauga
Date: September 19-20, 1863

Location: Georgia
Confederate Commander: Braxton Bragg
Union Commander: William Rosecrans
Confederate Forces Engaged: 66,326
Union Forces Engaged: 58,222
Winner: Confederacy
Casualties: 34,624 (16,170 Union and 18,454 Confederate)

[slapout9]

Stimulate or Die by Joseph E. Stiglitz

John Kenneth Galbraith once said that there is nothing in Economics that the average person cannot understand and that is true. For every tax liability you create make sure there is a physical asset to support it, (a road, a dam, a power plant,rail road,etc.) The Amercican Society of Civil Engineers has a report that says we need to spend 2.2 TRILLION dollars on infrastructure alone, and that is just to fix or maintain what we have now. Ignore the debt and get to work rebuilding our physical country and we will be just fine.

[Wargames Mark]

Continuing proliferation of WMD nation states and technology arethe principle threat to the American people and regional stability. (Iran, North Korea, Pakistan, India –possible Venezuela, Saudi Arabia, etc.)

I think that a more pressing threat is the decline of U.S. economic power and its effects. First, there is the problem of paying to maintain an advanced military in the future, and second, there are the negative effects of U.S. economic decline on the economic well-being of other countries and the increased frequency of armed conflict that may be associated with it. The private sector is the goose that lays the golden eggs by which we pay for defense and the goose is not doing so well now and is unlikely to improve over the coming decades if the government continues to conduct massive economic intervention.

As nation states and nonstate actors further develop their capabilities through innovation in adaptive tactics and the adoption of proliferated military and dual-use technologies, we have a problem. This problem will be much worse if we lack the resources to keep expanding our own capabilities to maintain our edge.

The extremely capable and experienced Obama Administration national security team (Secretary Bob Gates, Secretary Hillary Clinton, General Dave Petraeus, General Ray Odierno, General Stan McChrystal, NSC Advisor Jim Jones, Special Envoy Dick Holbrook, Ambassador Karl Eikenberry, Ambassador Ann Patterson) must create a foreign policy that takes into account a failing US economy, disenchantment with the Bush/Rumsfeld misjudgments, and enormous animosity to perceived US arrogance and unilateralism.

I would prefer that the U.S. government de-emphasize concern for the opinions of those who criticize the U.S. for "unilateralism" and perceived arrogance. The weakness of public support in Europe for operations in Afghanistan is one reason why American defense should never be designed to rely on the performance of others. The WMD threat mentioned in an earlier bullet is another reason. At the same time, pragmatic concessions and compromises with other governments should be made - if those concessions/compromises get us something concrete, reasonably reliable, and effective against our enemies. (IOW, what's in it for us?)

US Military forces are grievously over tasked, too small, and under resourced for the former Bush international security strategy. Domestic security institutions (Customs and Border Protection, Public Health Service, US Coast Guard, USMarshall Service, DEA, FBI) are an order-of-magnitude too anemic for the dangerous challenge at hand

The U.S. remains the center of the economic universe and we will continue to have lots of security concerns that require the commitment of troops and equipment. That will not change. Ignoring those security concerns will just give us more 9/11s. At the same time, I think that going forward into the next two decades, we will have a hard time paying for those capabilities we currently possess - due to my pessimistic view of our economic future. I think that our military will need to become adaptive. However it deals with that problem, I think the approach to countering the kinds of irregular and hybrid threats that we are likely to face must be offensive, must be preemptive, and must focus on stopping dangerous developments before they become an organization like al Qaida, or before they become a nuclear-armed Pakistan. The elements of our national security community that are focused on domestic operations (the law enforcement and homeland security agencies mentioned in the bullet) are vital, but they are a last defense.

[Schmedlap]

The forty-four international terrorist organizations threatening the US are badly damaged, penetrated, losing international stature.

Just out of curiosity, does anyone know where to find a list of those 44 nefarious organizations?

Also, is there a more in-depth narrative to accompany these slides? Many of the bullet comments pair up raw data with a conclusion for which the connection is not entirely obvious. For example, he states that "Homeland Security (Secretary Janet Napolitano) is enormously improved since 9-11." and immediately follows this up, in the same bullet, with "Zero US strikes. Huge losses UK, Saudi Arabia, Indonesia, Spain." Is the suggestion that zero strikes in the US versus many strikes abroad equates to DHS improvement? I can think of several other explanations off the top of my head. If he is drawing that connection, then I'd be curious to know he arrived at it. He also states that the "United States has provided only modest support to the Government of Mexico to date. ($400 million)." That's kind of vague.

John Kenneth Galbraith once said that there is nothing in Economics that the average person cannot understand and that is true. For every tax liability you create make sure there is a physical asset to support it, (a road, a dam, a power plant,rail road,etc.) The Amercican Society of Civil Engineers has a report that says we need to spend 2.2 TRILLION dollars on infrastructure alone, and that is just to fix or maintain what we have now. Ignore the debt and get to work rebuilding our physical country and we will be just fine.

I'm not sure what you're advocating here. By "make sure there is a physical asset to support it," I suspect that you mean balancing our assets and liabilities. I don't think that works in the way that you recommended. A maintenance expense is not an asset and a temporary upgrade of a depreciated asset that will quickly depreciate again isn't really a balancing of assets and liabilities.

Analogy: Ignore your credit card debt and get to work on repairing your automobile and you'll be fine.

That doesn't make a ton of sense to me. Did I misunderstand where you were going?

[Surferbeetle]

I’ll state the obvious and say that effective National Strategy is about precisely and accurately shooting for that theoretical balance point between cost and benefit, which allows for the efficient and sustainable (resources used are less than or equal to resources generated) use of a nations capital and minimizes negative opportunity costs. I’ll again state the obvious and note that a nations government requires an ongoing investment from its populace so that it can adequately provide for its populace's needs in the realms of economics, security, and governance. If we take a nation's GDP as a representative metric for analysis it is possible to project a typical government’s expected expenditures in these three particular arenas as a percentage of GDP. I’m going to be lazy and just touch upon infrastructure (seen as a subset of governance unless you follow the Thatcher/Reagan/Mulroney model of Public-Private-Partnerships/Outsourcing) of the US, Germany, Italy, and Iraq: four nations in which I have lived in, portions of whose infrastructure and security arenas I am familiar with, and whose respective languages I have made some laughably meager attempt to learn. My observation is that a nation which does not adequately invest in both its infrastructure and security is not meeting the needs of its populace; furthermore just building infrastructure (or a security apparatus) is not an endpoint, lifelong maintenance is required.

Onwards…

United States

• $14.26 trillion USD GDP (2008 estimate)

• Electricity Consumed 3.892 trillion kWh (2007 est.)

• Roadway total: 6,465,799 km

• Military Expenditures 4.06% of GDP (2005 est.)

Germany

• GDP $2.918 trillion USD (2008 estimate)

• Electricity Consumed 549.1 billion kWh (2006 est)

• Roadway total: 644,480 km

• Military Expenditures 1.5% of GDP (2005 est.)

Italy

• GDP $1.823 trillion USD (2008 estimate)

• Electricity Consumed 316.3 billion kWh (2006 estimate)

• Roadway total: 487,700 km

• Military Expenditures 1.8% of GDP (2005 est.)

Iraq

• GDP $103.9 billion USD

• Electricity Consumed 39.88 billion kWh (2008 est.)

• Roadway total: 2,272 km

• Military Expenditures 8.6% of GDP (2006)

From GAO Report # GAO-09-476T

Despite its substantial budget surplus and international assistance, Iraq has not spent the resources it set aside for reconstruction efforts essential to its economic recovery. As table 2 indicates, Iraq has spent about 12 percent, or $2 billion, of the $17.2 billion it allocated for reconstruction activities in the oil, electricity, and water sectors. In contrast, U.S. agencies have spent almost 90 percent, or $9.5 billion, of the $10.9 billion Congress made available for investment activities in these sectors since fiscal year 2003. Moreover, Iraqi ministries have consistently spent far higher percentages of their operational budgets, which include employee compensation, than they have of their investment budgets, which include infrastructure construction costs.

We need to balance an analysis of reconstruction stats in Iraq with this observation by SIGIR

From the June 26th 2008 Economist article The Cracks are Showing:

“America invests a mere 2.4% of GDP in infrastructure, compared with 5% in Europe…”

“Only around 20 states use cost-benefit analyses to evaluate transport projects; of these, just six do so regularly. Alaska’s “bridge to nowhere” is an infamous result of this sort of planning.”

“Congestion on [US] roads costs $78 billion annually in the form of 4.2 billion lost hours and 2.9 billion gallons of wasted petrol, according to the Texas Transportation Institute.”

“How can all this be fixed? In January a national commission on transport policy recommended that the government should invest at least $225 billion each year for the next 50 years. The country is spending less than 40% of that amount today.”

David Canning (Harvard University) and Peter Pedroni (Williams University) have a 2004 paper (it does not appear to have been submitted to a journal with the attendant peer/editor review process) on the internet entitled The Effect of Infrastructure upon Long Run Economic Growth. It can be seen as a ‘how-to paper’, lists some interesting references, and provides the following summary:

For telephones and paved roads we find no evidence of a worldwide infrastructure shortage. For these, we find that on average countries are near the growth maximizing levels of infrastructure provision, although a significant number of countries are over providing while in others there is under provision. For electricity generating capacity our results can be taken to support the view that countries are all close to the optimal level of provision, though we do have some evidence of under provision in some countries.

An examination of US bridge failures can be found here

Popular Mechanics: The 10 Pieces of U.S. Infrastructure We Must Fix Now

No one can predict what bridge, levee or water main will fail next. But some problems are widely known, and work is long overdue. As PM's new special report makes starkly clear, we need to begin rebuilding the nation's infrastructure somewhere. Here are 10 great places to start.

American Society for Civil Engineers has posted it’s 2009 Report Card for America’s Infrastructure. BLUF the cost estimate is 2.2 trillion USD. The executive summary is here

[slapout9]

J
I'm not sure what you're advocating here. By "make sure there is a physical asset to support it," I suspect that you mean balancing our assets and liabilities. I don't think that works in the way that you recommended. A maintenance expense is not an asset and a temporary upgrade of a depreciated asset that will quickly depreciate again isn't really a balancing of assets and liabilities.

Analogy: Ignore your credit card debt and get to work on repairing your automobile and you'll be fine.

That doesn't make a ton of sense to me. Did I misunderstand where you were going?

Schmedlap, yes you misunderstand, but don't worry most people do...... most of them are in Washington

Example. The TVA (Tennessee Valley Authority) created during the great depression. They received a loan(s) to build Dams and create electricity. The loan was paid back because everyone gets an electric bill every month and part of the bill serviced the debt that was created when the loan was taken out. So you have a physical asset(that makes money) on the books that cancels out the financial tax liability.....The Guvmint even made a little profit off of it I think but that was not the primary goal. So just extend the analogy to any public utility type infrastructure and presto...little or no unemployment, rising tax revenues and a brand new country to boot.

[Schmedlap]

The TVA (Tennessee Valley Authority) created during the great depression. They received a loan(s) to build Dams and create electricity. The loan was paid back because everyone gets an electric bill every month and part of the bill serviced the debt that was created when the loan was taken out.

That makes a little more sense. But now I'm thinking about the real world versus "on paper" implementation of such a project if it were to occur today. Consider the initial cost projection for Boston's Big Dig: less than $7 billion in today's dollars. Actual price tag: about $22 billion (and counting, as they repair the portions of it that were substandard and as trials continue for various torts and crimes). And traffic really isn't much better. And the state does not expect to pay it off for another 30 years (even after toll hikes, tax raises, and other measures). I suspect that another upgrade will be necessary before this one is even paid off. Then what?

I think the problem with most proposed solutions to our economic woes (both short and long term) is that they are easy answers to complex problems. Consider how many people in this country are addicted to drugs, in jail, or opted to drop out of school and find themselves unemployed. Rather than contributing to economic growth, they unnecessarily take from it, in the form of social services. Consider how much of our economic activity surrounds creation of financial instruments that serve the purpose of giving higher returns on idle capital, rather than what used to spur the innovation of financial products: facilitation of commercial business (rather than facilitation of commercial banking). These gains are on paper and evaporate quickly, as we have seen. And then there is the rampant fraud, unethical behavior, and depravity at all levels of banking and real estate that facilitated the real estate bubble and burst. The people who perpetrated that are still out there. If they acted unethically in their old jobs, then they will also probably behave unethically in their next jobs. Their behavior will come back and bite us again. This was not just lax oversight - it was rampant immorality.

Most of our ills are a function of a basic lack of morals, facilitated by a culture that is increasingly leaning towards norms that reject personal responsibility and patience and embrace greed and narcissism. Those are not easy problems to solve, so we ignore them and look for easier solutions - at our peril. Our problem is immorality and we think the solution is to write better spending bills.

[Wargames Mark]

To oversimplify: Economic growth would be spurred by a withdrawal of government from those aspects of business beyond enforcement of contracts, protection of private property rights, and enforcement of laws against fraud and negligence.

Government interference in the economy creates inefficiency. Some interference (such as the examples in the first paragraph) is necessary and reasonable, but the federal government is much too deeply involved in economic affairs in the United States. The courts have done a poor job interpreting the Constitution and the federal government has stepped far outside of the constitutional bounds set by the enumerated powers and the 10th amendment. Federal intervention is far more damaging that state or local meddling because it is spread across the entire national economy. If the federal government would adopt more laissez-faire policies and remove itself from those lines of effort that it is not explicitly empowered to engage in, then we would be able to reap the benefits of competitive federalism. Competitive federalism, in which the policies of each state could have far greater diversity, would support a rapid evolution of policy across the entire country a policies that do not work are exposed as being ineffectual, and those that do work are revealed to be successful. States then generally adopt those policies associated with economic success and shun those associated with poor economic performance. Additionally, more local control of policy should create more appropriate policies (getting rid of "one-size-fits-all").

There does not seem to be much chance of a slowing of government growth, however, and this will reduce our ability to pay for defense in the future. So, how does one address new threats, such as WMD and adaptive enemies, while experiencing a long decline in physical resources? One must do it by employing those resources in different ways - by being as adaptive (or more so) than the adaptive enemies that we face.

An interesting aspect of it all (warning: stating more of the obvious) is that it is much cheaper to disrupt stability than to maintain it. For this reason, I think that our national view of security will need to be more offensively-oriented and more pro-active than it was pre-9/11. It would also help if the government would more plainly speak on matters of security - less concern for the idea of the Just War and more realpolitik.