Friday, February 15, 2008

On Money and Real Estate

At one time, asking a real estate agent to name the three most important considerations affecting their profession would invariably draw the stock answer: “Location. Location. Location.”

With the sub-prime mortgage financing debacle and the collapse of the U.S. housing market still rippling through economies and contributing to sharp declines in stock market valuations worldwide, that glib answer may no longer be so readily on the tip of the tongue. Indeed, Congress heard again this week from Federal Reserve Chairman Ben Bernanke that 2008 will see sluggish growth.

The administration’s answer – one supported by Congress and the Federal Reserve Board – to preclude these accumulating pressures from coalescing into recession is to give every tax payer a $600 rebate (couples filing joint returns are eligible for up to $1,200) with additional sums given to parents for minor-age children.

Not to be outdone, the Army has just unveiled a new recruiting incentive that also is – for now – dependent on “location, location, location.” Five test markets in New York, Alabama, Washington State, Illinois, and Georgia will experiment over the next six months with awards of up to $40,000 that can be applied toward purchasing a house or starting a business when soldiers successfully completes their obligation.

Whatever one thinks of this particular program, the tradition established by the post-World War II Montgomery GI Bill of Rights to help military personnel transition successfully into civilian occupations has served as an important bridge for those eligible for the program and as a source of energy for the economy – i.e., every dollar put into the program has returned seven dollars to the economy.

Now most recruits don’t know – and probably don’t much care – about the multiplier effect of GI benefits on the national economy. What they see is a guaranteed government windfall in their post-service future (which is also “guaranteed” by the shared youthful sense of indestructibility).

What is increasingly and appalling apparent, however, is that this White House doesn’t seem to care either. It is quite ready to throw money or other special benefits to entice potential recruits to join up, but when the recruits come back from as long as 15 months of active anti-insurgency combat with this youthful sense of invincibility – and frequently their bodies and psyches as well – shattered, the institutional services and critical support structures simply have been underfunded if not unfunded.

(One cannot help but draw a parallel between the administration’s priorities and actions when the issue is the moral obligation to defend and care for those unable to fend for themselves – e.g., unborn children and those severely wounded while serving their country.)

This failure is immediately evident by a cursory look at the President’s Fiscal Year 2009 Budget request sent to Congress February 4th, particularly the State Department (DoS) and Foreign Affairs budget, the Department of Defense (DoD) budget, and the Department of Veterans Affairs (VA) budget. Taken together, these three constitute almost the entire “people” life-cycle for engaging with foreign nations on their turf with the goals of preventing war, removing the causes of war; fighting wars when absolutely necessary for the nation’s survival, and caring for all those who served and their families when war is over.

Administration budget documents show a $4.93 billion increase in State Department 2009 discretionary outlays above the projected 2008 total outlays of $34.40. But this increase, as welcome as it is in such areas as fighting HIV/AIDS and malaria or in funding international development banks and UN peacekeeping, pales along side of DoD’s one year increase of $68.11 billion to $651.16 billion. For the third leg of the soldier support stool, the VA, The White House proposed a $5.25 billion increase from the $86.65 billion allocated for 2008. Of this increase, $4.88 billion will go to medical care.

Rough addition gives $130 billion that the administration is willing to spend in 2009 on non-military means and methods in dealing with other countries and international organizations, for taking care of those wounded in war (always unknowable when starting a war), and for fulfilling the promises made to new recruits when they signed up for military service. But what it will spend on preparing for, recovering from, and fighting wars in 2009 is five times the spending proposed for DoS and VA.

Unlike another threat – global warming, which will continue to increase even should every country dramatically cut greenhouse gas emissions tomorrow – this five-to-one war spending ratio can be cut this year. Pull all troops out from all bases in Iraq and Afghanistan, rebalance the forces that are still needed for military defense, and relocate these within the U.S. according to the real estate agent’s credo: “location, location, location.”


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