Explaining why America is broke is rather simple. All we have to do is look at two separate and distinct problem areas: public unions and defense spending, then generalize the problem. Let's start with a look at defense spending.

Here's an article on Foreign Affairs magazine by William Pfaaf making a solid case How Militarism Endangers America . The article is subscription, but a decent sized synopsis and lead-in follows:

Summary:

The United States has built a worldwide system of more than 1,000 military bases, stations, and outposts -- a system designed to enhance U.S. national security. It has actually done the opposite, provoking conflict and creating insecurity.

WILLIAM PFAFF wrote a syndicated column that appeared in the International Herald Tribune from 1978 to 2006 and contributed political "Reflections" to The New Yorker from 1971 to 1992. His latest book, The Irony of Manifest Destiny: The Tragedy of America's Foreign Policy, was published in June.

[Article Start]

It is time to ask a fundamental question that few government officials or politicians in the United States seem willing to ask: Has it been a terrible error for the United States to have built an all-but-irreversible worldwide system of more than 1,000 military bases, stations, and outposts? This system was created to enhance U.S. national security, but what if it has actually done the opposite, provoking conflict and creating the very insecurity it was intended to prevent?

The most compelling arguments for opposing this system of global bases are political and practical. U.S. military bases have generated apprehension and hostility and fear of the United States, and they have facilitated futile, unnecessary, unprofitable, and self-defeating wars in Afghanistan and Iraq and now seem to be inviting enlarged U.S. interventions in Pakistan, Yemen, and the Horn of Africa. The 9/11 attacks, according to Osama bin Laden himself, were provoked by the "blasphemy" of the existence of U.S. military bases in the sacred territories of Saudi Arabia. The global base system, it seems, tends to produce and intensify the very insecurity that is cited to justify it.

AN ACCIDENTAL EMPIRE

The United States' present global military deployment does not seem to be the product of conscious design, nor was it assembled absent-mindedly. In part, it is the natural result of bureaucracy left unchecked. At the end of World War II, a precipitous dismantling of the U.S. wartime deployment was halted only by the outbreak of the Cold War. The United States' intervention in Vietnam brought some base expansion in Southeast Asia, but after its failure in Vietnam, the U.S. military was determined to have nothing further to do with insurgencies and quickly returned to reorganization and retraining for what it still considered its primary mission: classical warfare in Europe in the event of a Soviet invasion. This eventually led to the brilliant blitzkrieg against Iraq in the first Gulf War, fought under the Powell Doctrine of popular support, overwhelming force, focused objectives, and rapid withdrawal.

America's Misdirected Missile

I am 100% in agreement with the synopsis and prelude as presented above. Here is a second article on the same subject. This one is courtesy of the Business Spectator.

Please consider America's Misdirected Missile by Alexander Liddington-Cox.

The latest WikiLeaks scoop for The Age is a cable from the United States embassy in Canberra expressing concern to Washington about Australia's ability to meet its purchases of military equipment. Australia's defence budget currently sits at around $22 billion a year and, apparently, US diplomats were left unimpressed by the efforts of Australia's Defence Materiel Organisation chief Stephen Gumley to explain how Australia would meet its aims to increase military spending, as laid out in the White Paper. While the article didn't reveal whether or not the cable's author appreciated the irony of a US official lecturing anyone about measured military spending, this graph should really be passed on to them - just in case.

While this graph puts the US defence budget at $US711 billion in 2009, that doesn't include a number of "off-budget" items that, on some estimates, push US defence spending above $US1.3 trillion. And yet, America continues to drown in debt with only modest efforts to reign in how much it puts towards guns, tanks and missiles. Now, being the world's superpower invariably comes with a large military budget and sure some cash can go missing. But in 2002, then Defence Secretary Donald Rumsfeld admitted that on some estimates the Pentagon had lost track of $US2.3 trillion in transactions and there was no way of ascertaining how the money was spent. How long will it be before the US really does something about its own military spending problems?

For a complete graph and additional commentary, please see the article.

There is no rational reason for such spending. So how does it happen? The answer is the same way we are stuck with collective bargaining and absurd public union wages and benefits. Let's compare.

Public Unions

In the case of public unions, union members lobby vociferously for untenable wages and benefit packages. Greedy politicians willing to accept bribes to get reelected, go along. On any threat of reduction in benefits, union organizers get out the vote with massive fear-mongering campaigns promising ruin if they do not get what they want. At election time unions donate massively to candidates willing to back union sponsored agenda. Over time, school boards, city halls, and legislative bodies in general get packed with politicians accepting bribes (campaign contributions) from the unions.

Warmongers

Greedy politicians willing to accept bribes to get reelected, support massive defense budgets. Defense contractors as well as those receiving handouts from defense contractors label anyone not in favor of wars and massive military spending as "soft on defense". With massive fearmongering campaigns, including pictures of nuclear bombs going off, those organizations are able to whip up public sentiment to do whatever they want, which essentially is to spend more on defense. Every soldier in another country is another soldier that needs to be equipped. At election time defense contractors donate massively to candidates willing to waste more money on needless wars that do not need to be fought. Over time, legislative bodies in general get packed with politicians accepting bribes (campaign contributions) from warmongers.

Unfortunately, "compromise" is such that taxpayers get stuck with the worst of both. We have baseless wars and untenable defense spending. We also have untenable collective bargaining rules, untenable social handouts, and untenable union wages and benefits.

General Terms

It's easy to generalize the above example. I received this email from reader "Kevin" after I wrote the above but before I posted it. Kevin had seen the union example above as I had used it previously. Kevin writes ....

Hello Mish

Here is the corporate lobbyist problem in a nutshell:

Organizations of all types lobby vociferously for untenable subsidies and tax breaks. Greedy politicians willing to accept bribes to get reelected, go along. On any threat of reduction in subsidies or increase in taxes, the organizations get out the vote with massive fear-mongering campaigns promising ruin if they do not get what they want. At election time organizations donate massively to candidates willing to back their agenda. Over time, board of directors, city halls, and legislative bodies in general get packed with politicians accepting bribes (campaign contributions) from the organization.

Kevin had written "corporations" but I changed it to "organizations" to be more broad-based. The above describes quite nicely what happened with health care legislation and it sure helps explain earmarks as well.

In case you missed it, please see Interactive Map Showing Where $130 Billion in Earmarks Went, by State, District, and Politician.

The big problems are military spending, public unions, and entitlements. However, problems big and small are everywhere you look, and the process of buying votes and seeking special favors is generally smack in the midst of it all.

Republicans keep campaigning for "small government". It certainly would be nice if they delivered for a change. Unfortunately, Republicans will not give in on military spending (nor will Obama quite sadly), and Democrats won't budge on entitlements.

Compromise in D.C. most often means taxpayers get the worst of what each party has to offer.