How politicians and the press overstated US military budget cuts by $100 billion

Opponents of military budget cuts and several mainstream media outlets in the US have repeatedly cited an inaccurate, inflated figure

Anxiety is rising in Washington about the big cuts to military spending slated to go into effect in January unless Congress takes action.


Republicans, defense industry executives, and some Democrats are arguing hard against the automatic cuts, which were the result of last summer’s deal to raise the debt ceiling and would also cut nondefense spending equally. Multiple members of Congress have warned that slashing defense spending by $600 billion would devastate the military, with Sen. Lindsey Graham this month predicting the cuts would deal “a death blow to our ability to defend ourselves.”

There’s just one problem: The number they cite is wrong.


The law triggering the cuts does not slash the military budget by $600 billion. That figure — which has also been widely cited in the media — overstates the amount of military cuts by more than $100 billion.  


Signed by President Obama last August after the debt ceiling drama, the law actually requires $492 billion in military budget cuts. (The cuts are slated to take place over nine years.)


The oft-repeated higher figure of $600 billion is actually the total in projected deficit reduction that the government would get by cutting $492 billion from the military. The extra $108 billion in projected savings would come via interest payments the government wouldn't have to make. Since the government would be spending less, it could borrow less and thus save on interest.


“It is downright misleading to say that sequestration will cut defense by $600 billion,” said David Berteau, senior vice president at the Center for Strategic and International Studies and a former Defense Department official. (Sequestration is the term often used in Washington to refer to the cuts.)


“This entire exercise against sequestration is tainted by the intense desire of several parties — from the members of Congress who voted for the bill to the Pentagon that wants to avoid the cuts — to make sequestration seem untenable,” Berteau added.


Both a Congressional Budget Office report and the head of the Office of Management and Budget concur that the proper figure for the cuts is $492 billion, or about $55 billion annually over nine years.


In arguing against the cuts, the $600 billion figure has been cited recently by Sen. Lindsey Graham, R-S.C., Rep. Phil Gingrey, R-Ga., House Aerospace Caucus Co-ChairRep. Pete Olson, R-Texas, and Virginia Gov. Bob McDonnell. Republican presidential candidate Mitt Romney cited the figure last year, and it is also included in a July press release on his website.

Asked about the figure, spokespeople for the politicians offered a range of responses, none offering backing for the higher number.


A spokesperson for Rep. Olson, Melissa Kelly, said that the congressman “just misspoke” and that he was not trying to inflate the figure. “It was an honest mistake,” she said.


The Romney campaign declined to comment. Sen. Graham didn't respond. A spokesperson for Rep. Gingrey said the figure includes other cuts but declined to offer details.


As for Gov. McDonnell, a close ally of Romney, a spokesperson said “the governor is using widely quoted numbers” from the media and legislators.


Indeed, the inflated figure has been cited as fact in the New York TimesWashington PostNational JournalPoliticoRoll Call, and on MSNBCCNN and Fox News, among others.

Sometimes outlets have also offered conflicting numbers. For example, a June 3 article in the Times reported that if Congress fails to act to prevent the triggered cuts, a “$600 billion, across-the-board spending cut is to hit the Pentagon.” On June 22, another Times article got it right, referring to “the roughly $492 billion in planned Pentagon cuts” that will start next year, barring congressional action.


To understand the law requiring the cuts and how much money it really cuts from the military budget, let's turn to the text of the bill, called the Budget Control Act of 2011. Here is the section that governs the cuts — half from defense and half from non-defense — that will start in 2013 barring action by Congress:

Sequestration calculation (p. 18)

(OMB stands for Office of Management and Budget.)

The law requires deficit reduction of $984 billion – half from defense and half from nondefense.

Here’s the formula in the bill that gets to that number. It starts with a baseline of $1.2 trillion. That's the minimum amount in deficit reduction that last year's so-called congressional supercommittee had to achieve to avoid the triggered cuts. (They did not achieve any deficit reduction.) This is the figure that the incorrect references seem to be based on. But the formula doesn't end there. 

The formula then reduces the $1.2 trillion by 18 percent to account for projected savings because of interest payments the government would avoid. $1.2 trillion minus 18 percent is $984 billion. Half of $984 billion — the military portion of the cuts — is $492 billion.


As it turns out, the inflated $600 billion figure may not be correct even as the amount that the government would save. That's because those projected savings on interest payments from the defense cut could be a bit smaller than originally estimated.


The Congressional Budget Office released a report in January, several months after the Budget Control Act passed, projecting that the savings from debt service would be just $142 billion. Add that to the $984 billion in required cuts, and the law would save the government $1.13 trillion, not the much-touted $1.2 trillion figure. Since half of the cuts come from the military, the total savings attributed to defense cuts would be about $560 billion. None of this would affect the amount of required military budget cuts. 


There's one other wrinkle here. (Sorry.) House Armed Services Committee Chairman Buck McKeon, R-Calif., a fierce opponent of the impending cuts, has referred to “$500 billion to $600 billion” in cuts. When we asked committee spokesman Claude Chafin where McKeon's figures came from, Chafin offered an argument separate from the debt service issue.


“[T]o achieve that [$492 billon in] savings, cuts will need to be much deeper to accommodate a variety of additional costs,” Chafin said in an email. “These include, but certainly are not limited to the costs of contract renegotiation, contract cancellation penalties, terminating civilian positions and involuntarily separating members of the military.”


In other words, this argument goes, by cutting the military budget the government will incur extra costs that will require still further cuts to achieve the required $492 billion in deficit reduction. Another House Armed Services Committee aide said that there are no specific calculations that led to McKeon's claim of “$500 billion to $600 billion” in cuts because it's not yet clear which programs will be cut. 


Several military budget experts interviewed by ProPublica were skeptical that any “additional costs” -- such as a contract termination fee-- could push the total figure up to $600 billion.

Russell Rumbaugh, director of the Budgeting for Foreign Affairs and Defense program at the Stimson Center and a former defense analyst on the Senate Budget Committee, says that cuts will likely be structured to avoid penalties or other costs. 


“The armed services committee argument is straight spurious,” Rumbaugh said. “It assumes dumb decisions throughout.”


McKeon's own committee also cites the correct $492 billion figure in a fact sheet on its own website.




US presidential polls: Romney’s right turn

It is difficult to see how Paul Ryan will appeal to the independent voter who is in the middle of the political spectrum rather than to the right. Mitt Romney’s decision is bold. The question is—is it wise?

It is a move to energize the base. It is a move to break out in the polls. It is a choice which recognises where the new power in the Republican Party lies. The choice of Paul Ryan, the “Darling of the Right” by Governor Mitt Romney to be his vice-presidential running mate is a move by Governor Romney away from his centrist roots to the right. It is the completion of the transformation of Governor Romney from the Massachusetts moderate to a full-blown conservative. As the Republican moderates have slowly disappeared and the middle of the Republican Party has fallen through. Governor Romney has decided to follow the Republican Party instead of getting the Republican Party to follow him and for that he has chosen Paul Ryan, the young dynamic ideologue, who is the chairman of the House Budget Committee and a thorn in President Obama’s side.


The young representative from the Midwestern state of Wisconsin (representing its first district) will immediately put the key swing state of Wisconsin and possibly the Midwest into play, goes the calculation. But more than that it is a recognition of who the boss in the Republican Party is and that is the right. The small town roots of Paul Ryan, he comes from the Jane’s town in Wisconsin, his amazing rise, his youth, his energy, will all help the Romney ticket to move on and there is already great enthusiasm as Romney and Ryan campaign together.


What got Paul Ryan onto the Republican ticket is undoubtedly his brain power and energy. He has been a foot soldier and a general for the right and the fact that he rose from the Republican ranks working among others with Jack Kemp who served as housing secretary in the administration of President George Bush and was the Republican Party’s nominee for vice-president in the 1996 election where he was the running mate of presidential nominee of Bob Dole. Further he has an appealing back story about life in a small town in Wisconsin, his resilience after his father’s premature death and his allergenic family. His interests are hunting, fishing and noodling (catching catfishes with his bare hand), which he said on CNN, was great fun which all make for an attractive story.


But he comes with a lot of baggage. His proposed budget is highly controversial with a lot of cutbacks and the choice of Paul Ryan enables President Obama and the Democrats to run against Congress, which is deeply unpopular as they can tie more closely to the Romney ticket.


The choice of Paul Ryan does nothing to bolster the Republican vote in two key constituencies where they are lagging behind the Democrats badly—women and minorities. Actually the choice of Paul Ryan is likely to make the female vote gap between the parties sharper as Paul Ryan is socially very conservative and believes that life begins at conception and opposes funding for contraception. This choice is likely to throw more women in the arms of the Democrats and it does nothing to strengthen the Republican Party’s appeal among the minorities and Hispanics who are a key voting block. The choice of Senator Marco Rubio of Florida would have possibly done both. It is particularly difficult to see how Paul Ryan will appeal to the independent voter who is in the middle of the political spectrum rather than to the right. Representative Paul Ryan is particularly known for the attitude on Medicare, the programme that provides health care for seniors, and Representative Ryan’s policies are going to frighten seniors. But what Paul Ryan will do is keep Governor Romney honest i.e. to the core beliefs of the Republican Party and sharpen the debate with the Democrats. They have dubbed themselves as the come back team. Indeed the trillion dollar deficit may take centre stage rather than the 8.2% unemployment rate as will trickle down economics.


David Axelrod, President Obama’s advisor, told Candy Crawly on the State of the Union programme of CNN that Mitt Romney was paying only 13.9% income tax and  under Paul Ryan’s budget he would pay only 1% tax.


The debate has been sharpened and at stake is the direction in which America is headed.

Mitt Romney’s decision is bold. The question is—is it wise?


Life Exclusive
Google to pay $22.5 million for breaching privacy on Apple’s Safari browser

Google, however has said the whole affair was a ‘mistake’ and said it has discontinued the practice of placing unauthorized cookies on users’ machines

US Federal Trade Commission (FTC) has directed Google to pay $22.5 million for violating consumer privacy settings on Apple’s Safari browser. It is the largest civil penalty ever assessed by the FTC for violating its order. What irked the Commission was that Google said that the privacy violation was not deliberate.


Google has said the whole affair was a ‘mistake’ and said it has discontinued the practice of placing unauthorized cookies on users’ machines as soon as the Wall Street Journal published a story about it.


However, David Vladeck, Director of Consumer Protection at the FTC said, “I think that defence raises red flags to regulators.”


“Their intent is immaterial. It’s troubling to us that Google says they didn’t know it was going on. A company like Google is the steward of personal information from hundreds of millions of people and they have to do better,” Vladeck added.


In addition to the civil penalty, the FTC order also requires Google to disable all the tracking cookies it had said it would not place on consumers’ computers. 


In the conference call, James Kohm, Associate Director for Enforcement at the FTC, said that most of the illicit cookies have already been removed but said that under the terms of the order, Google has until 15 February 2014 to remove all of them. “The extra time is because they can only remove the cookies when somebody visits a site in their ad network,” Kohm said.


It’s the latest in a long series of ‘accidental’ privacy violations by Google. It pales in comparison to the so-called “Wi-Spy” case in 2010, when Google admitted it invaded Wi-Fi networks and downloaded private data from those networks as its fleet of gadget-encumbered cars crept through neighbourhoods around the world, collecting information for its street-mapping project.


The Commission in April fined Google $25,000, saying it was obstructing the agency’s investigation of the matter. As usual, Google said any such obstruction was inadvertent. It didn’t apologize.


Last year, in a settlement with the Justice Department, Google agreed to pay a $500 million penalty for promoting and advertising unlawful sales of prescription drugs through its ubiquitous AdWords program. It said its role in establishing a global network of illicit drug sites was unintentional.


Responding to queries about whether the penalty was adequate, Vladeck said Google was “paying a heavy price.”


“$22.5 million may not seem like a lot of money to Google but given the magnitude and duration of this violation, we think it's quite substantial,” he said. “We have Google under order for another 19 years and this sends a message that the FTC isn’t kidding around,” he added.


In its complaint, the FTC charged that for several months in 2011 and 2012, Google placed a certain advertising tracking cookie on the computers of Safari users who visited sites within Google’s DoubleClick advertising network, although Google had previously told these users they would automatically be opted out of such tracking, as a result of the default settings of the Safari browser used in Macs, iPhones and iPads.


According to the FTC’s complaint, Google specifically told Safari users that because the Safari browser is set by default to block third-party cookies, as long as users do not change their browser settings, this setting “effectively accomplishes the same thing as (opting out of this particular Google advertising tracking cookie).”  In addition, Google represented that it is a member of an industry group called the Network Advertising Initiative, which requires members to adhere to its self-regulatory code of conduct, including disclosure of their data collection and use practices.


The FTC charged that Google’s misrepresentations violated a settlement it reached with the agency in October 2011, which barred Google from—among other things—misrepresenting the extent to which consumers can exercise control over the collection of their information.  The earlier settlement resolved FTC charges that Google used deceptive tactics and violated its privacy promises when it launched its social network, Google Buzz.


(Courtesy: James R Hood)


Read the original article here: Google Pays $22.5 Million for Privacy Violations


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Online Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine)