Social Security, Defense Top List of Debt Panel's Targets

The bipartisan fiscal commission has been working on a plan to reduce the national debt, and Social Security and Pentagon expenses are at the top of their list of major federal expenses. The commission has yet to propose tactics to reduce these expenses, but they are already being confronted with major opposition. Check out the following story on this new development—courtesy of USA Today.

Social Security and the Pentagon are among the early targets of the bipartisan fiscal commission established by President Obama to address the USA's spiraling national debt.

The panel, which held its second public meeting today, barely mentioned the biggest reason for the $13 trillion debt and annual $1.5 trillion budget deficits: health care. The president recently signed an overhaul that's projected to save $143 billion over 10 years, but that won't be nearly enough to reverse the tide of red ink.

What's emerging on the 18-member panel is a split between a majority favoring tough action to tame the debt and a minority, led by House Speaker Nancy Pelosi's appointees, who appear more concerned about today's economy and jobs picture.

"Cutting now would be a mistake," said Rep. Jan Schakowsky, D-Ill. -- despite the fact that cutting spending and/or increasing taxes is the presumed goal of the panel. Her colleague, Rep. Xavier Becerra, D-Calif., raised one of Congress' sacred cows -- treating wounded war veterans -- as but one reason to avoid too much deficit reduction.

On the other side were panel chairmen Erskine Bowles, a North Carolina Democrat, and Alan Simpson, a Wyoming Republican; several powerful Democrats who long have favored deficit reduction; and most of the commission's Republicans.

Continue reading at USA Today.com…

Pentagon Preps For Economic Warfare

As the US economy continues to suffer, the Pentagon is beginning to give more attention to the possibility of economic warfare. Just the other day some of America’s smartest financial scholars and executives got together to discuss the idea, and potential warriors. Check out the following article about the meeting, courtesy of Politico.

The Pentagon sponsors a war game that examines how hostile nations might seek to cripple the U.S. economy.

The Pentagon sponsored a first-of-its-kind war game last month focused not on bullets and bombs — but on how hostile nations might seek to cripple the U.S. economy, a scenario made all the more real by the global financial crisis.

The two-day event near Ft. Meade, Maryland, had all the earmarks of a regular war game. Participants sat along a V-shaped set of desks beneath an enormous wall of video monitors displaying economic data, according to the accounts of three participants.

“It felt a little bit like Dr. Strangelove,” one person who was at the previously undisclosed exercise told POLITICO.

But instead of military brass plotting America’s defense, it was hedge-fund managers, professors and executives from at least one investment bank, UBS – all invited by the Pentagon to play out global scenarios that could shift the balance of power between the world’s leading economies.

Their efforts were carefully observed and recorded by uniformed military officers and members of the U.S. intelligence community.

In the end, there was sobering news for the United States – the savviest economic warrior proved to be China, a growing economic power that strengthened its position the most over the course of the war-game.

The United States remained the world’s largest economy but significantly degraded its standing in a series of financial skirmishes with Russia, participants said.

The war game demonstrated that in post-Sept. 11 world, the Pentagon is thinking about a wide range of threats to America’s position in the world, including some that could come far from the battlefield.

And it’s hardly science fiction. China recently shook the value of the dollar in global currency markets merely by questioning whether the recession put China’s $1 trillion in U.S. government bond holdings at risk – forcing President Barack Obama to issue a hasty defense of the dollar.

“This was an example of the changing nature of conflict,” said Paul Bracken, a professor and expert in private equity at the Yale School of Management who attended the sessions. “The purpose of the game is not really to predict the future, but to discover the issues you need to be thinking about.”