Empire of Illusion (25 page)

The bill is now due. America's most dangerous enemies are not Islamic radicals but those who sold us the perverted ideology of free-market capitalism and globalization. They have dynamited the foundations of our society.

“The Big Lies are not the pledge of tax cuts, universal health care, family values restored, or a world rendered peaceful through forceful demonstrations of American leadership,” Bacevich wrote in
The Limits of Power
:

The problems we face are structural. The old America is not coming back. Our financial system was taken hostage and looted by bankers, brokers, and speculators who told us that the old means of
making capital by producing and manufacturing were outdated. They assured us money could be made out of money. They insisted that financial markets could be self-regulating. Like all financial markets throughout history that have thrown off oversight and regulation, ours has collapsed. Speculators in the seventeenth century were hanged. Today they receive billions in taxpayer dollars and huge bonuses.

The corporate forces that control the state will never permit real reform. It would mean their extinction. These corporations, especially the oil and gas industry, will never allow us to achieve energy independence. That would devastate their profits. It would wipe out tens of billions of dollars in weapons contracts. It would cripple the financial health of a host of private contractors from Halliburton to Blackwater/Xe and render obsolete the existence of U.S. Central Command. This is the harsh, unspoken reality of corporate power. The unseen hands of Lockheed Martin, Boeing, and Northrup Grumman, the nation's top-three defense contractors, divided up $69 million in Pentagon contracts in 2007, the last year for which contracting data are available. These industries, which have judiciously spread their parts and supply business throughout the country, defend the production of weapons systems as vital for employment. But their leaders are clearly nervous. The Aerospace Industries Association (AIA), which represents more than one hundred defense and aerospace corporations, has an ad campaign with the slogan: “Aerospace and Defense: The Strength to Lift America.” It claims its manufacturers contribute $97 billion in exports a year and employ 2 million people, a figure disputed by the U.S. Bureau of Labor Statistics, which puts the number at 472,000 wage and salary workers. But this has not dampened the promise made by these corporate executives to help lift the nation out of its economic morass. “Our industry is ready and able to lead the way out of the economic crisis,” Fred Downey, an associate vice president, told the Associated Press. The ads are useful, but so is the some $149 million a year the industry lavishes on lobbying firms, according to the Center for Representative Politics.

Seymour Mellman spent his academic career, which spanned the Cold War, at Columbia University, researching, writing, and speaking about the large military portion of the federal budget. In
Pentagon Capitalism
he described the redundancy and costliness of modern
weapons systems—such as the next wave of fighter planes, missiles, submarines, and aircraft carriers. He said that high-tech weapons yet to be designed always escalate spending as new, costlier systems replace the old, which are often junked.

The United States has become the largest single seller of arms and munitions on the planet. The defense budget for fiscal 2008 is the largest since the Second World War. More than half of federal discretionary spending goes to defense. And so we build Cold War relics such as the $14 billion
Virginia
-class submarines as well as the stealth fighters we engineered to evade radar systems the Soviets never built. We spend $8.9 billion on ICBM missile defense systems that would be useless in stopping a shipping container concealing a dirty bomb. The defense industry is able to monopolize the best scientific and research talent and squander the nation's resources and investment capital. These defense industries produce nothing that is useful for society or the national trade account. They offer little more than a psychological security blanket for fearful Americans who want to feel protected and safe.

The defense industry is a virus. It destroys healthy economies. We produce sophisticated fighter jets while Boeing is unable to finish its new commercial plane on schedule and our automotive industry goes bankrupt. We sink money into research and development of weapons systems and starve renewable energy technologies to fight global warming. Universities are flooded with defense-related cash and grants yet struggle to find money for environmental studies. The massive military spending, aided by this $3 trillion war, has a social cost. Our bridges and levees collapse, our schools decay, our real manufacturing is done overseas by foreign workers, and our social safety net is taken away. And we are bombarded with the militarized language of power and strength that masks our brittle reality.

Mellman coined the term
permanent war economy
to describe the American economy. Since the end of the Second World War, the federal government has spent more than half its tax dollars on past, current, and future military operations. It is the largest single sustaining activity of the government. The military-industrial establishment is especially lucrative to corporations because it offers a lavish form of corporate welfare. Defense systems are usually sold before they are produced, and
military industries are permitted to charge the federal government for huge cost overruns. Huge profits are guaranteed. Foreign aid is given to countries such as Egypt, which receives some $3 billion in assistance but is required to buy American weapons with $1.3 billion of it. The taxpayers fund the research, development, and building of weapons systems and then buy them on behalf of foreign governments. It is a circular system that little resembles the paradigm of a free-market economy.

There is rarely any accounting to the client (i.e., the government and people of the United States) if work is shoddy or produces flawed weapons systems. The U.S. Coast Guard, in one of many examples, undertook a five-year, $24 billion modernization program called “Deepwater.” The Coast Guard spent $100 million to lengthen by thirteen feet the 110-foot Island Class patrol boats. They shipped the boats to the Bollinger Shipyard outside of New Orleans. The eight boats, when they returned, had such severe structural problems that they all had to be retired from service.

The Pentagon, Mellman noted, is not restricted by the economic rules of producing goods, selling them for a profit, then using the profit for further investment and production. It operates, rather, outside of competitive markets. It has erased the line between the state and the corporation, and it subverts the actual economy. It leeches away the ability of the nation to manufacture useful products and produce sustainable jobs. Mellman used the example of the New York City Transit Authority and its allocation in 2003 of $3 billion to $4 billion for new subway cars. New York City asked for bids, and no American companies responded. Mellman argued that the industrial base in America was no longer centered on items that maintain, improve, or are used to build the nation's infrastructure. New York City eventually contracted with companies in Japan and Canada to build its subway cars. Mellman estimated that such a contract could have generated, directly and indirectly, about 32,000 jobs in the United States. In another instance, of 100 products offered in the 2003 L.L. Bean catalogue, Mellman found that ninety-two were imported and only eight were made in the United States.

The defense industries, like all corporations, rely on deceptive ad campaigns and lobbyists to perpetuate their lock on taxpayer money.
The late Senator J. William Fulbright described the reach of the military-industrial establishment in his 1970 book
The Pentagon Propaganda Machine
. Fulbright explained how the Pentagon influenced public opinion through direct contacts with the public, Defense Department films, close ties with Hollywood producers, and use of the commercial media to gain support for weapons systems. The majority of the military analysts on television are former military officials, many employed as consultants to defense industries, a fact they rarely disclose to the public. Barry R. McCaffrey, a retired four-star army general and military analyst for NBC News, was,
The New York Times
reported, at the same time an employee of Defense Solutions, Inc., a consulting firm. He profited, the article noted, from the sale of the weapons systems and expansion of the wars in Iraq and Afghanistan he championed over the airwaves.
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The grip of corporations on government is not limited to the defense industry. It has leeched into nearly every aspect of the economy. The attempt to create a health-care plan that also conciliates the corporations that profit from the misery and illnesses of tens of millions of Americans is naïve, at best, and probably disingenuous. This conciliation insists that we can coax these corporations, which are listed on the stock exchange and exist to maximize profit, to transform themselves into social-service agencies that will provide adequate health care for all Americans.

“Obama offers a false hope,” says Dr. John Geyman, former chair of family medicine at the University of Washington and author of
Do Not Resuscitate: Why the Health Insurance Industry Is Dying, and How We Must Replace It
. “We cannot build on or tweak the present system. Different states have tried this. The problem is the private insurance industry itself. It is not as efficient as a publicly financed system. It fragments risk pools, skimming off the healthier part of the population and leaving the rest uninsured or underinsured. Its administrative and overhead costs are five to eight times higher than public financing through Medicare. It cares more about its shareholders than its enrollees or patients. A family of four now pays about $12,000 a year just in premiums, which have gone up by 87 percent from 2000 to 2006.
The insurance industry is pricing itself out of the market for an ever-larger part of the population. The industry resists regulation. It is unsustainable by present trends.”

Our health-care system is broken. There are some 46 million Americans without coverage and tens of millions with inadequate policies that severely limit what kinds of procedures and treatments they can receive. Eighteen thousand people die, according to the Institute of Medicine, every year because they can't afford health care.

“There are at least 25 million Americans who are underinsured,” Geyman says. “Whatever coverage they have does not come close to covering the actual cost of a major illness or accident.”

The corporations that run our for-profit health-care industry would be shut down if single-payer, not-for-profit health-care was provided for all Americans. The for-profit health-care industry, like the defense industry, has vigorously fought to protect itself through campaign contributions and lobbying. They have placed profit before the common good. A study by Harvard Medical School found that national health insurance would save the country $350 billion a year. But Medicare does not make campaign contributions. The private health-care industries do.

“The private health insurance companies and the pharmaceutical industry completely and totally oppose national health insurance,” says Stephanie Woolhandler, one of the founders of Physicians for a National Health Program. “The private health insurance companies would go out of business. The pharmaceutical companies are afraid that a national health program will, as in Canada, be able to negotiate lower drug prices. Canadians pay 40 percent less for their drugs. We see this on a smaller scale in the United States, where the Department of Defense is able to negotiate pharmaceutical prices that are 40 percent lower.”

We cannot improve the system by expanding government oversight or improve for-profit health care by requiring doctors and hospitals to prove they provide quality medical services. Proposals to require insurance companies to use more income from premiums for patient care or link payment with reported quality are unworkable. Nor will turning record-keeping from paper to electronic data blunt rising costs.

“There isn't an enforcement mechanism,” Geyman says bluntly. “Most states have been unable to control rates or set a cap on rates.”

“The only way everyone will get insurance is with national health insurance,” says Woolhandler, who is a professor at Harvard Medical School. “People with catastrophic illnesses usually lose their jobs and lose their insurance. They often cannot afford the high premiums for the insurance they can get when they are unable to work. Most families that file for bankruptcy because of medical costs had insurance before they got sick. They either lost the insurance because they lost their jobs or faced gaps in coverage that meant they could not afford medical care.”