China in the Americas

   The Monroe Doctrine,  the American policy that has kept foreign powers from pursuing military gains in our Western Hemisphere for two centuries, is apparently no longer in vogue in Washington.

   Pursuing three main goals, the Beijing government has dived deeply into Latin America and the Caribbean.  Economically, China seeks access to raw materials throughout the region.  Diplomatically, it seeks to persuade nations to cut ties with Taiwan.  And finally, and perhaps most worrisome, it seeks to gain dependable military outposts right on America’s borders. 

   China has become a major factor in Latin American affairs. After President Hu Jintao’s first visit to Latin America in 2004, it took just three years for bilateral trade to reach over $100 billion, notes policy expert Russell Hsiao. 121 bilateral agreements and cooperation initiatives have been signed since 2000, concentrating in trade, cultural, public administration/consular affairs, science and technology, tourism, and military matters.

   Along with billions in cash, thousands of Chinese workers have poured into the region, training troops, manning strategic facilities, and deeply interacting with inter-American organizations.   Beijing joined the Organization of American States as a permanent observer. It also joined the Inter-American Development Bank  with a donation of $350 million.  It expanded diplomatic ties with the Group of Rio, the Andean Community, and the Caribbean Community groups.  

   China clearly seeks to replace American influence in the region. Its government recently sent a very celebratory congratulatory message to Venezuela’s Hugo Chavez and Chilean President Sebastian Pinera last December on the founding of the “Community of Latin American and Caribbean States” (CELAC), a grouping that includes every nation in the western hemisphere except the United States and Canada.

   China’s recently released official policy statement on Latin America clearly adopts a policy of ever-deepening military relations with our neighbors to the south.

    Any rational analysis of China’s investments leads to the conclusion that military, as well as economic, goals are the top priority.  As Dr. Evan Ellis notes in Chinese Engagement with Nations of the Caribbean, Beijing has developed port facilities on both the east and west sides of the Panama Canal, and a massive deepwater port and airport facility in Freeport, The Bahamas, just 65 miles from the USA, as well as a deep sea port in Suriname.

  To enhance its military’s familiarization with the region, China has sent a naval hospital ship to Cuba and peacekeeping forces to Haiti. Ellis notes that “The PRC also conducts significant interactions with the militaries of virtually all of the Caribbean nations with which it has diplomatic relations.  A series of senior level Caribbean military leaders have visited China in the past two years…At a lower level, people-to-people military interactions have included inviting uniformed Caribbean military personnel and defense civilians for professional education trips to the PRC…The PLA donated $3.5 million in non-lethal military equipment to the Jamaica defense Force in 2010….The PLA is also reported to have personnel at Soviet-era intelligence collection facilities in Bejucal, Lourdes, and Santiago de Cuba…” 

   The U.S.-China Economic & Security Review Commission reports that Venezuela, Chile, Bolivia and Cuba now maintain strong ties to the Chinese military “through a high number of official visits, military officer exchanges, port calls, and limited arms sales.”  Venezuela, Bolivia and Ecuador have begun to buy Chinese arms and military equipment, including radar and aircraft.  Bolivia has signed a military cooperation agreement with China. 

   A Jamestown Foundation study of China’s arms sale to the region notes highlights China’s goal of allowing Latin American and Caribbean nations to distance themselves from Washington,  The report notes indicates that “Beijing’s military to military ties are growing with the states of South America across the board:  military missions, educational exchanges and arms sales.  This activity is part of Beijing’s overall advancement of a foreign policy.”

  For centuries, presidents, whether Republicans or Democrats, liberals or conservatives, have reacted forcefully and quickly to foreign military inroads to this region.  President Kennedy’s forceful response in the Cuban Missile Crisis and President Reagan’s moves to oust the Soviets from Central America are the most recent examples.  The White House needs to inform Americans why it has abandoned this successful policy. 

State Budgets Succeed Where Washington Fails

      State governments are accomplishing what Washington has utterly failed to do:  balance their budgets.

     Members of the New York State Legislature are bragging about their efforts, while noting that much more remains to be done to truly put the Empire State on a financially secure trajectory. Assembly minority leader Brian Kolb (R/C-Canandagua) has advocated legislation freezing the municipal share of Medicaid funding, cutting the size of state government, providing targeted tax credits, placing a moratorium on unfunded mandates, and banning “backdoor borrowing.”

     While the states did receive $135 to $140 billion in aid from the federal government, (mostly in the form of assistance to pay Medicaid expenditures, according to the Center on Budget & Policy Priorities) they did not have the deficit-fighting tools, including the ability to print money, that Washington has at its disposal.  They had to address the crisis realistically, by making hard choices and balancing budgets, remedies the White House has chosen to ignore.  49 of the 50 states have at least some form of balanced budget requirement.  Vermont is the sole exception.

     The results are telling.  Currently, the $15,874,365,457,260 federal deficit continues to climb ever higher. On July 27, the White House Budget Office projected a $1.211 trillion federal deficit in the current fiscal year.  Growth projections continue to appear dismal, and the potential expiration of the Bush tax cuts could have a harshly detrimental impact on the economy.

     In contrast, 19 states have no deficits and the other 31 share a $55 billion dollar budget gap. The states addressed their gaps by reducing spending and tightening their belts.  40 states have also raised taxes (nine reduced them) —an option the federal government cannot take, since it would depress a national economy already in danger of sliding back into recession, or, under some views, continuing the current recession and making it far worse. 

     The accomplishment is worth noting.  State and local government employees represent 15% of the national workforce, employing over 19 million workers, 6 times as many as the federal government. The 50 states and their local jurisdictions spend $2.5 trillion annually.

     Despite the massive tasks given to state governments, they have managed to spend less since 2008, with 37 states below pre-recession fy 2008 spending levels, according to the Pew Center for the States. To accomplish this, the National Association of State Budget Officers reports that cuts have been made to education, public assistance, Medicaid, corrections, transportation, local aid, state employee levels.  Agencies have been reorganized.

     The National Association of State Budget Officers notes that despite a gradually improving fiscal prospect and rising general fund spending, resources remain tight, and revenue growth will remain below peak levels in the coming year.  NASBO describes a “new normal,” where scarce resources produce slower revenue growth, and the challenges of rising health care, education, and pension costs will continue to grip state capitals.

     The GAO is concerned that property tax receipts, which had improved 3% from the second quarter of 2009 to the third quarter of 2010, increased less than 1% from 2010 to 2011.  Combined with reduced federal aid, rising Medicaid/health care costs, and decreased return from investments of held pension funds, the GAO’s outlook is not optimistic.  The impact of the Patient Protection and Affordable Care Act (Obamacare) also provides significant uncertainty.

     On July 17, the State Budget Task Force (SBTF) led by former Federal Reserve Chairman Paul Volcker and former New York Lieutenant Governor Richard Ravitch released what they described as the “first ever comprehensive report detailing threats to states fiscal sustainability and actions that can be taken to address them.” It focused on the fiscal conditions in six heavily populated states, including California, New York, Illinois, New Jersey, Texas and Virginia.  Their conclusion: “the existing trajectory of state spending, taxation, and administrative practices cannot be sustained.  The basic problem is not cyclical, it is structural.”

     According to the SBTF, the major threats to financial stability include: Medicaid spending growth is crowding out other needs; federal deficit reduction threatens state economies and budgets; underfunded retirement promises create risks for future budgets; narrow, eroding tax bases and volatile tax revenues undermine state finances; local government fiscal stress poses challenges for states; and budget laws and practices hinder fiscal stability and mask imbalances.

     Devoid of access to gimmicks and faced with competition from other jurisdictions, the states have made hard choices that will lead to their long term financial stability.

China's Military Technology

     Americans generally assume that their technological superiority makes up for the larger military fielded by China, which has become increasingly threatening.  That comforting thought no longer applies. Aided by a robust economy (thanks to all those products we buy!) an increasingly sophisticated scientific and engineering capability and an espionage effort worthy of James Bond, Beijing’s commitment to establish a military second to none is succeeding. 

     China explained its military world view in its National Defense white paper: “International military competition remains fierce.  [China is] “accelerating the modernization of national defense and the armed forces…the PLA [China’s armed forces] has expanded and made profound preparations for military struggle, [through the] development of high-tech weaponry and equipment.”

     Beijing’s success has produced an armed force rivaling in sophistication our own, even in areas in which Washington has long held unquestioned superiority, such as stealth and space capability. Meanwhile, The White House plans to cut roughly a trillion dollars from the armed forces over the next ten years.

     Beijing accelerates its technology in more ways than just standard R&D investment.  It makes significant use of illegally acquired dual-use civilian technology, as well as data stolen by spies.      Despite all this, the Administration’s maintains an optimistic outlook. Its2010 Quadrennial Defense Review states “Today’s export control system is a relic of the Cold War and must be adapted…the current system impedes cooperation, technology sharing… [and] is largely outdated…”

     While the U.S. slashes its nuclear deterrent in accordance with the “New Start” Treaty, Beijing’s power grows rapidly. James Woolsey’s U.S. Nuclear Deterrence in the 21^stCentury white paper notes that “China…is modernizing and expanding its nuclear forces.  Nuclear threats have also been periodically made by senior Chinese generals.” 

     Beijing has been clear on the priority it places on making its armed forces as sophisticated as possible.  Dean Cheng reports that Beijing leader Hu Jintao has discussed the need to “accelerate its transformation and modernization … and make extended preparations for military combat.”

     Washington has been naïve about the PLA. A  report released in April, Indigenous Weapons Development in China’s Military Modernization, notes that: “China’s selective transparency—or strategic deceptions that asserted opposition to the development of space weapons—may have misled foreign observers outside of military and intelligence channels.”

     Instead of responding effectively to the threat, Washington has adopted a concept called the “Air Sea Battle Concept,” shifting resources from the Atlantic to the Pacific. The operational plan is to integrate Naval, Air Force and Marine assets to deter China.  However, those assets are dwindling.  As we previously reported, The U.S. has only 284 combat ships, down from a high of 600 in the Reagan era, and the Air Force has been reduced from 37 combat wings to 20.  Funds for vitally needed modern fighter planes have been slashed.  There are plans to cut funding for the Marines.

     The U.S.-China Economic & Security Review Commission believes that “The apparent disparity over the past decade between U.S. predictions and the actual pace of development…raises questions as to whether flawed underlying assumptions may have affected analysis in this area, inside or outside the U.S. government.” America has been warned. 

Terrorists Target NYC Again

     Once again, New York City is ground zero for those wishing to harm the United States. According to AP published reports, Iranian intelligence operatives are engaging in activities that continue to worry the NYPD.  Fortunately for residents of the five boroughs, the local police force seems to be more realistic about the threat than the federal government.

     America’s largest city is not alone.  Brian Higgins (D-NY) believes that Tehran’s terrorist proxy Hezbollah presents a danger throughout the Western Hemisphere, with an active presence in fourteen North American cities. The threat to New York is part of a larger movement by Iran to establish a military presence within the western hemisphere, with a particular emphasis on using several anti-U.S. states in South America as a base for their operations.

     There is bipartisan concern in Congress that the White House has not responded to the threat, although the problem is recognized.    In recent testimony before Congress, Southern Command General Douglas Fraser recently told Congress that “Iran is very engaged in Latin America. The Director of National Intelligence, James R. Clapper, believes that Iranian officials…are now more willing to conduct an attack in the U.S. in response to real or perceived Y.S. actions that threaten the regime.”

     Iran’s involvement goes far beyond mere advice and technical assistance. The Pentagon’s 2010 report to Congress on Iran’s military power, emphasizes that the Qods force, the elite paramilitary unit of Iran’s Revolutionary Guards, is now deeply involved in the Americas.

     Roger F. Noriega, the former ambassador to the Organization of American States and former Assistant Secretary of State, notes that “Iranian officials have made no secret of the regime’s intention to carry its asymmetrical struggle to the streets of the United States and Europe.”

     The challenge goes far beyond ground-level threats. Germany’s Die Welt publication described the Islamic Republic’s construction of intermediate range missile launch pads on Venezuela’s Paraguana Peninsula. Both nuclear and ballistic missile threats are emerging from Venezuelan-Iranian cooperation.  Iran’s Admiral Habibollah has announced plans to send warships to the Atlantic coast of the United States.  This is far more than a “show the flag” exercise.  Having these vessels this close places American cities within range of nuclear-capable missiles.

     The Tehran/Caracas axis, encouraged by Venezuela’s Hugo Chavez, is particularly troubling.  The Foundry’s Peter Brookes reports that the two nations have a Memorandum of Understanding “pledging full military support and cooperation that likely increases weapons sales… One could easily see Tehran using Caracas as a stepping off point for attacking U.S. or other (e.g. Israeli) interests in this hemisphere or even the American homeland, especially if action is taken against Iran’s nuclear program…There is concern that Iran and Venezuela are already cooperating on some nuclear issues.  There have been reports that Iran may be prospecting for uranium ore in Venezuela, which could aid both countries’ nuclear programs, should Caracas proceed...  While still prospective, of course, there is the possibility that Tehran, which has an increasingly capable missile program, could sell or help Caracas develop ballistic missiles capable of reaching American shores.”

     Despite wide-scale concern, the White House has slashed funds from the military’s Southern Command, the armed forces’ organization responsible for Latin American affairs. New York’s  police force may have the best anti-terrorist capabilities in the world. However, the threat coming from Iran is a full-scale military challenge, and Washington must live up to its responsibilities to protect both our city and our nation. 

10 Reforms for NYC

It’s time for the people of New York City to take a hard look at whether real issues and common sense concepts are being ignored in favor of boutique causes that appeal only to politicians, pressure groups, and militant activists.

       Genuine challenges such as high unemployment, excessive taxation, the harassment of small business owners, a crumbling transportation infrastructure, rising crime, failing schools, and an unresponsive municipal government take a back seat to ridiculously trivial concerns such as bike lanes, big sodas, and assorted other matters that have little impact or meaning to the vast majority of residents. 

       Here are the reforms that should be undertaken to get NYC back on track:

  1.     Stop the endless cycle of ever-increasing taxes, fees, and fines that are driving families and small businesses out of the city. It’s become painfully obvious that no matter how much revenue City Hall collects, it will never be enough.  Giving more cash to our politicians is like giving more booze to an alcoholic.

2.     Adopt budgetary common sense.  Fully fund our vital municipal services such as police, fire, sanitation, ems and transportation before a penny is spent on any other matter.  The annual mayoral threat to close down firehouses and reduce the size of law enforcement personnel is disgraceful. As far as all other expenses go, let’s make sure they actually are for the benefit of the people, and not just to reward campaign contributors to politicians.

3.     Look at transportation needs realistically. The solution to overcrowded roads, subways and buses isn’t higher fares, new tolls, or draconian prohibitions against private vehicles.   Throughout the rest of America, most freight moves by rail.  NYC has less rail freight capability now than it did seventy years ago.  It’s time to finally build that long-awaited cross-harbor rail freight line to take trucks off our bridges, tunnels, and highways. Let’s expand the use of express buses from the boroughs, and have that service managed by someone other than the inept MTA.  If the Port Authority can’t develop new trans-Hudson commuter lines, than petition the governor to pull New York State out of that increasingly worthless agency.  Its’ administration of LaGuardia Airport is an utter disgrace, and ditching the overpaid bureaucrats at the P.A. is long overdue. And, for heaven’s sake, tear up those ridiculous, “street furniture” lane closures in Manhattan that endlessly back up traffic.

4.     Small businesses are the bedrock of our economy.  Stop harassing them.

5.     Wrest control of all municipal services, especially schools, away from the unions and “educrats.”  Great civil servants go unrewarded, bad ones go unpunished, and the people, particularly students, suffer.  We need to streamline rules to more easily get rid of bizarre administrators, such as the Brooklyn principal who doesn’t want her students to sing patriotic songs.  We need to stop teaching politically motivated nonsense to our students, and get back to the basics of reading, writing, arithmetic, and U.S. history.  Speaking of history, let’s stop shoving anti-American propaganda down our students’ throats. To make sure each school is doing all that it can to provide a quality education, support competitive funding methods such as voucher systems and charter schools.

6.     Both public sector unions and businesses that contract with the city should be barred from contributing money, office space, or any services to political campaigns.

7.     Let’s develop better waterfront and industrial zoning rules. Over the years, luxury housing and parks have replaced working port facilities and industrial areas.  Along the way, we’ve also zoned light manufacturing and the maritime industry to the brink of extinction.  NYC needs blue collar jobs.  Better use of our waterfront and our zoning laws is urgently required.

8.     Utilize fingerprinting for local benefits, to insure that only bona fide New Yorkers receive them. 

9.     Embrace local government.  The boroughs would be better served if more authority over local matters was left to local residents and borough presidents.  Making the BP position more meaningful would attract more qualified individuals to run for that office. However, the appointment of community board chairs and district managers should be completely taken out of the hands of all politicians.  If those positions are to be meaningful, than they must be responsible to local residents, not the elected officials who they depend upon for appointment. 

10.   Replace current campaign finance rules that are essentially windfalls to incumbents and political bosses, with simple disclosure requirements and the provision of public forums so that all contenders can access the voters. We need to get more competition into our elections.

"Law of the Sea" Treaty

America’s right to freely use the ocean’s bounty may be jeopardized by a treaty currently under debated in The United States Senate.  Opponents of the potential law are enraged that they have not been invited to participate fully in a scheduled hearing. 

 The Law of the Sea Treaty has already been approved by 162 nations.  However, many Americans remain concerned that the bill was tilted to the benefit of other countries at the expense of the U.S.  They note that it is anti-free enterprise, and would literally force private companies to surrender highly valuable seabed mining technology to other countries.

Supporters of the treaty, including Presidents Obama, G.W. Bush and Clinton, believe that the measure provides a legal right to enforce environmental restrictions, and oppose aggressive acts by foreign powers and pirates, by providing a comprehensive system of law and order in the world’s oceans and seas. Opponents note that existing international law already does that, and the only force powerful enough to oppose those interests is the U.S. Navy. 

The truly contentious point arises from the Treaty’s grant to “land locked and geographically disadvantaged states…the right to participate on an equitable basis the exploitation of an appropriate part of the surplus of the living resources of the exclusive economic zone of costal states of the same region and sub-region…States are bound to promote the development and transfer of marine technology ‘on fair and reasonable terms and conditions’ with proper regard for all legitimate interests.” They point to the Treaty’s preamble, which notes that “the area of the seabed and ocean floor and the subsoil thereof, beyond the limits of national jurisdiction, as well as its resources, are the common heritage of all mankind, the exploration and exploitation of which shall be carried out for the benefit of mankind as a whole, irrespective of the geographic location of states.”

Opponents (who have coined the acronym L.O.S.T. to describe the treaty) both elected officials and in the private sector, continue to note that the treaty doesn’t grant any provable benefits to the U.S. that America’s naval power, advanced technology, and enterprising private sector don’t already provide. Further, since the U.S. has the most advanced technology and the greatest ability to utilize the ocean’s resources, it would essentially be providing numerous and highly valuable benefits to other nations and interests and receive almost nothing in return.

Recently, 27 Senators delivered a letter to Majority Leader Harry Reid stating that the treaty “reflects political, economic and ideological assumptions which are inconsistent with American values and sovereignty.”  Noting that the Treaty includes “redistribution of the wealth from developed to undeveloped nations” and other provisions harmful to U.S. interests, the 27 senators stated they are “particularly concerned that United States sovereignty could be subjugated in many areas to a supranational government” and that “compulsory dispute resolution could pertain to public and private activities including law enforcement, maritime security, business operations, and nonmilitary services performed aboard military vessels.”

Several Senators have stated that the  treaty imposes an “international tax” that would transfer billions, if not trillions, of dollars out of the American economy, and that U.S. companies would have to give away  “the very types of innovation that historically have made our nation a world leader.”

 Business leaders are concerned that U.S. companies would be forced to confront a global environmental agency that would be hostile to the private sector.  They are even more worried that, since the majority vote on international policy making panels will be third-worlders, the entire treaty could essentially devolve into a transfer the wealth scheme. The Competitive Enterprise Institute notes that “at a time when U.S. consumers are struggling with the rising costs of gasoline, the U.S. would eventually have to share oil revenues from development of the Outer Continental Shelf (OCS) beyond 200 nautical miles—roughly 14 percent of the OCS.”

       Supporters clearly have failed to establish that the benefits of this treaty outweigh its problems. 

America's Troubled Economy

Insanity has been famously described as doing the same thing over and over again, but expecting a different result each time.  The pattern of massive government spending, heavy Washington control, and cash handouts to politically connected ventures has been repeated for four years, with the same dismal results each time.  Retail spending remains in the doldrums, manufacturing languishes, and home prices continue at their low level.

Most devastatingly, unemployment remains at near-depression levels.  Both the number of unemployed persons, at 12.7 million, and the unemployment rate, at 8.2%, remain unacceptably high. The number of long-term unemployed (those jobless for 27 weeks and over) rose from 5.1 to 5.4 million, accounting for a deeply troubling 42.8% of the unemployed. The number of those forced to work only part time edged up to 8.1 million. There are also 830,000 discouraged workers, and many others who remain uncounted.On the other hand, since January 2008, the federal government’s payroll has skyrocketed by 11.4%.  With a near-depression economy, there are no funds to pay for all those extra government jobs, and no tangible programs or results to justify the hires.

Other economic indicators are equally troubling. Since 2007, inflation-adjusted family income fell 7.7%, and the decline in family median net worth has dropped 38.8%.  No improvement is in sight. Recent college graduates, whose consumer habits and needs can normally spark the economy, are now a drag on it due to heavy tuition indebtedness, at a stunning $904 billion, a $30 billion jump since the last quarter.  It’s so high that it exceeds America’s massive credit card debt.

The future currently holds no immediate hope of improvement.  Stocks are expected to sharply drop this fall.  Most worrisome of all is the looming threat of “taxmageddon,” the combination of the expiration of the Bush tax cuts and the implementation of 5 of the 18 new tax hikes from the President’s Health Care Act.  These two factors will draw almost $500 billion out of the private sector.

The Heritage Foundation  breaks down the increase on individuals as follows:  for families in general, a $4,138 increase; baby boomers, $4,223; low income workers, $1,207; millenials, $1,099;  and retirees, $857.  The burden falls primarily on the already hard-hit middle class, since the expiring Bush Tax Cuts provided 60% of its benefits on them and low-income taxpayers. Many analysts believe that the reluctance of businesses to hire now is a reflection of their concern over the predicted economic downturn from “taxmageddon.”

The reason the economy hasn’t improved over the past several years is clear.  Washington’s overspending—which benefits incumbents and not the nation or its citizens—remains unabated.  Even worse, bureaucratic meddling in the private sector, which prompted the Great Recession in the first place, continues to prevent it from recovering.

Governmental intervention in the housing market in the1977 Community Reinvestment Act forced vast numbers of unsafe mortgages on financial institutions. Decades later, President Clinton pressured Fannie Mae to increase its ratio of unsafe loans. The inevitable result of extensive mortgage failure held by these large institutions prompted the Great Recession.

Rather than pull back from high taxes and intrusive regulation, Washington continued and enhanced the very attitude that prompted the recession in the first place. Decisions were and are being made based on politics, not practicality.

Bailouts and “stimulus” programs have left the taxpayers deeply in debt, with nothing to show for it.   Unlike President Roosevelt’s New Deal, which failed to end the Depression but at least produced roads, buildings, parks, and other “brick & mortar” projects, there are no tangible results.  In fact, the depression-era arms buildup that did eventually put the nation back to work has been replaced by budgetary policies that cut planned funding for the military.

Our federal, state and local elected officials use your tax dollars as a campaign piggy bank for the benefit of their own re-election bids, offering everything to everybody regardless of whether it helps or hurts the national interest.  Heavy handed Washington control, and the redistribution of collected revenue, particularly from middle income taxpayers, is bankrupting the USA