Saving Grace

It is a costly extravagance for most Americans, roughly equal to the entire US debt added in this century. But it pays huge dividends for powerful participants; suppliers, lobbyists, and politicians.

The Death of Marat, in pen and ink. Source: Getty Images

Friday, December 6th, 2024

Bill Bonner, writing today from Baltimore, Maryland

There is something so sweetly innocent... so endearingly naïve... about a revolution — even a fake one. Trying to Make America Great Again, for example.

The thrill of a new start... a new direction... another chance to build a better world. The exhilaration of calling each other ‘citoyen’... or comrade... of holding mass rallies, giving the prescribed salute or waving copies of Mao’s Little Red Book. It’s like losing your virginity or discovering online sports betting; it opens up a world of pleasant possibilities.

We recall the Grace Commission, in which Ronald Reagan asked businessman Peter Grace to “drain the swamp... be bold. We want your team to work like tireless bloodhounds. Don’t leave any stone unturned in your search to root out inefficiency.”

The results of the study came out in 47 volumes, in 1984, concluding:

With two thirds of everyone's personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services that taxpayers expect from their government.

But hope springs up from time to time... and now, even our friend David Stockman is staying up late... working out the details. Well after midnight... his candle flickering... he labors over the obese body of US spending. He’s already found $400 billion in ‘fat’ that could be readily lipo-sucked from the US budget. Now, he’s got his scalpel into the muscle of the Empire — the military, industrial, surveillance, full spectrum dominance complex.

There, he finds another $500 billion — a half-trillion per year that could be Ozempic-ed by simply returning to an America First strategy. There are no enemies on earth that could possibly mount a conventional attack on the US. Their war fleets (which they don’t have)... built and sustained by their large economies (that they don’t have)... sent out by conquest-lusting megalomaniacs (which they don’t have)... from huge military-grade ports in Siberia or on the Black Sea (which don’t exist)... equipped with the millions of troops, supplies and sophisticated weapons needed to overcome US resistance (which they don’t have) would be spotted from the air by tourists... and obliterated by US bombers, missiles and submarines... long before they got anywhere near California or New Jersey.

The only real vulnerability of the US is nuclear. And the answer to that is America’s nuclear Triad... submarines, bombers, and missiles — all carrying things that go ‘boom’ in a major way. The cost of this protection, however, is less than one-tenth of the present all-in Empire budget.

But power is the ultimate aphrodisiac, as Mr. Kissinger pointed out. And once you can get away with it, throwing your weight around becomes irresistible. You become the ‘indispensable nation’ (Madeleine Albright), without whom ‘nothing good happens.’ So, instead of spending, say, $100 billion per year on a reasonable ‘defense’ strategy, the US spends $1 trillion-plus... and gets to meddle in places most Americans have never heard of.

This is a costly extravagance for most Americans... roughly equal to the entire US debt added in this century. But it pays huge dividends for a few powerful participants, suppliers, cheerleaders, lobbyists, and politicians.

The budget cutters — including, notably, Musk and Ramaswamy — may have charm and logic on their side. Mr. Stockman has the numbers. And who wants to waste $500 billion every year? But on the other side are those who get the $500 billion... and have a keen incentive to keep it.

They use the money to buy complex, probably useless, weapons systems... with enough ‘fat’ in the contracts to support politicians, lobbyists and think-tanks who will argue for more of them. They will explain how it is vital to US security to bomb even the poorest people on earth... people who could not possibly do the US any significant harm. They will see the benefit in even larger outlays... to counter even less likely threats... in even more implausible ways.

They do not want revolution; they want things to remain as they are. And by the way, these people are now very well armed... very well- funded... very well-schooled at bending America’s politics in their direction…and they’ll soon be looking for Mr. Ramaswamy’s home address!

The Grace Commission handed in its report in 1986. A few of its recommendations were actually implemented, resulting in trivial savings. US deficits and debt continued to rise.

We’ll see what happens this time.

Regards,

Bill Bonner

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Research Note, by Dan Denning

The Grace Commission, which Bill refers to above, was originally created by Ronald Reagan and known as the President’s Private Sector Survey on Cost Control (PSSCC). The Congressional Budget Office (CBO) and the General Accounting Office (GAO) did a joint analysis of the Grace Commission’s recommendations in 1984.

You can read that 412-page analysis here.

Behind the scenes here at BPR, we’ve been working on building our own AI Agent. It’s being trained on all the material we’ve published over many years. And it goes away and does work autonomously while we’re sleeping, eating, reading, writing, and researching.

We uploaded the 412 page copy of the CBO/GAO report and asked it to summarize the conclusions and potential impacts of Commission’s recommendations (as analyzed in the report). Our conclusion? There are a lot of vested interests in Washington who will do everything they can to delay, deny, or dilute any attempts to make the government more efficient.

Here are the key points (from our as-yet un-named proprietary AI Agent).

Budget Impact: The potential deficit reductions from implementing the Grace Commission's recommendations would be significantly smaller than originally projected.

- The Commission estimated $424 billion in savings over three years
- CBO/GAO analysis found only $98 billion in potential savings for 1985-1987, about 33% of what was projected
- Of 396 recommendations reviewed, budget estimates could only be prepared for 274 of them

Types of Proposals: The recommendations fell into two main categories:

Management Improvements
- Represented the majority of recommendations
- Could achieve about 40% of projected savings
- Half could be implemented administratively
- Half would require Congressional action

Policy Changes
- Represented fewer recommendations but bulk of projected savings
- Would require significant changes to laws and policies
- Involved difficult political tradeoffs

GAO Assessment: The Government Accountability Office's review found

- About two-thirds (242) of the recommendations had merit
- 83 recommendations lacked merit
- 71 recommendations could not be evaluated
- Many high-savings proposals were among those deemed to lack merit[

Key Conclusion
The analysis revealed that the Grace Commission did not find an easy solution to the federal deficit problem. While it helped focus attention on controlling government costs, the projected savings were overstated and many proposals would require substantial policy changes rather than simple efficiency improvements. The magnitude of savings projected was too large to be attributed simply to eliminating waste and inefficiency.