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The Cost of Fighting Currency Manipulation
Posted By: Michael Tasselmyer - 11/02/12

In its analysis of multiple Senate races as well as the 2012 Presidential campaign, NTUF has noted several candidates making reference to currency manipulation in some countries - particularly China - and the need to "crack down" on our trading partners' monetary practices. The position has found its way into the agendas of:

Currency Manipulation

The alleged issue is that some countries artificially lower the value of their currency. This increases the cost of U.S. exports to those countries, and decreases the cost for the U.S. to import those countries' goods. Policymakers have proposed various regulations in response, hoping to make U.S. exports more competitive on the international market.

The topic can be a confusing one to examine from a taxpayer's perspective not only because of the complexity of international trade, but also because these types of policies can significantly affect revenues in addition to outlays.

However, there are some regulatory and administrative costs associated with these policies that we can examine. Let's take a look at how the campaign proposals might translate into actual dollar figures.

What Has Been Proposed

The basis that NTUF used for its analysis of the above candidates' "currency crackdown" proposals was Senate Bill 1607, the Currency Exchange Rate Oversight Reform Act of 2007, which lawmakers introduced in the 110th Congress. That bill would have directed the Treasury to:

  • identify currencies that were "fundamentally misaligned" with equilibrium exchange rates; and
  • change international monetary policy accordingly to penalize them should they not address the problem. The penalties would be coordinated with the World Trade Organization and the International Monetary Fund.

The bill as introduced would apply to the currencies of countries with whom the United States has "major" trade relationships. Clearly, China would be included amongst those countries: in 2011, the U.S. Department of Commerce reported $103.9 billion in exports to China, and imports of $399.3 billion.

What It Could Cost

The CBO's report on S. 1607 estimated that the bill would cost about $4 million per year to implement; over the course of 5 years, that would amount to $20 million. Part of the cost would be a result of the extra workload imposed on the Treasury: tracking exchange rates and identifying whether or not certain countries may be manipulating them.

Additionally, the legislation would require the formation of an entirely new federal agency, the Advisory Committee on International Exchange Rate Policy. The Committee would advise the Treasury on how to penalize countries found to be manipulating the value of their currencies. These penalties would depend on Congressional approval and would be proposed after consulting with the WTO and IMF.

Be sure to take a look at NTUF's candidate studies for more on how this issue fits in to the rest of the candidates' proposed spending agendas.

NTUF does not endorse any candidate or position mentioned.

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VA Senate Race: Border Security Costs Uncertain
Posted By: Michael Tasselmyer - 10/30/12

A popular theme throughout this election season has been the security of our nation’s borders. In Virginia's U.S. Senate race, former Senator George Allen has stated that "...our first priority needs to be securing our borders." His challenger, former Governor Tim Kaine, has said that "...we must have a strong and secure border."

Unfortunately, both candidates in Virginia have been vague regarding how they intend to achieve this goal. For the sake of attaining a general grasp of how they might affect our wallets, we can take a look at the budgetary effects of some common border security measures policymakers have proposed during such discussions. Note: NTUF does not endorse any position or candidate.

Additional Law Enforcement

One way to presumably "secure the border" is to simply put more law enforcement officials there. In the 110th Congress, the House introduced H.R. 4088, the Secure America through Verification and Enforcement (SAVE) Act of 2007. It was reintroduced in the 112th Congress as H.R. 2000. Part of the original bill called for an additional 5,000 full-time border patrol agents. The Congressional Budget Office estimated those additional personnel demands would cost $2.276 billion over five years, or $455 million annually. Adjusted for inflation, that annual amount would be closer to $508 million today.

Also in 2007, CBO reported that it costs between $120,000-180,000 per year for each additional border patrol agent, including the cost of salaries, benefits, training, equipment, and support.

It's unclear to what extent Kaine or Allen would support these measures, if at all.

Border Fencing

Another way to secure the border is to, quite literally, draw a line in the sand and build a fence around it. A 2009 report from the GAO stated the target length for the border fence was 661 miles. According to a February 2012 Customs and Border Protection update, 651 miles of fence had been constructed. The cost of additional fencing would depend on the materials used, and whether Kaine or Allen would expand the fence to reach the initial target of 661 miles or extend it up to the entire 1,993-mile border.

According to the GAO report, fencing completed by October 2008 cost an average of $3.9 million per mile for pedestrian fencing and $1.0 million per mile for vehicle fencing. The report also notes, "However, once contracts were awarded, the average per mile costs had increased to $6.5 million per mile for pedestrian fencing and $1.8 million per mile for vehicle fencing … the per mile costs increased over time due to various factors, such as property acquisition costs incurred for these miles that were not a factor for many of the previous miles and costs for labor and materials increased."

Drones & "Virtual" Fences

Developments in unmanned aircraft technology have lead to their increasing application in patrolling and safeguarding. As of August 2012, U.S. Customs and Border Protection was operating seven MQ-9 Reaper (formerly, Predator B) surveillance drones; five were in the Southwest region. According to the Department of Defense's latest Selected Acquisition Report (from December 2011), 404 MQ-9 drones would cost $11.54 billion in 2008 dollars (including ground control and maintenance equipment), which comes to an individual cost of almost $31 million per drone after adjusting for inflation. Depending on how extensively candidates would modify existing drone patrol resources, the associated costs or savings could be substantial.

Worth noting is a May 2012 report from the DHS Office of Inspector General that suggests a lack of human and financial resources has hampered the use of already existing CBP drones.

In addition to drones, the Department of Homeland Security has tried to implement other surveillance technology such as thermal imaging systems, motion detectors, and long-range cameras as part of a "virtual fence." Expansion of the SBInet system, as it was referred to at conception in 2006, was cancelled in January 2011 due to its high cost. When expansion stopped, over $1 billion had been spent on 53 of the 1,993 miles of land that make up the border. Costs to expand the virtual fence would depend on the nature of the technology used, and how extensive the expansion would be.

When it comes to how much they would spend on border security, neither candidate in Virginia has offered enough detail to draw any definitive conclusions. Nevertheless, taxpayers can expect the issue to present significant fiscal implications going forward.

Be sure to check out NTUF’s Virginia candidate studies for more:

Spending Analysis: George Allen

Spending Analysis: Tim Kaine

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In the Fight Over Defense Cuts, Taxpayers Are the Real Losers
Posted By: Nan Swift - 10/11/12

When it comes to defense, much of the rhetoric surrounding this issue, both in the Virginia senate race where defense contractors are a major source of employment for citizens of the state, and in the Presidential race, has focused on the potential effects of pending sequester cuts that will take $55 billion off the top of the current $562 baseline budget on January 3.

Unfortunately, by focusing solely on potential job losses (sincerely unfortunate though they would be), the larger more serious problem of the entrenched military-industrial complex, that a departing President Eisenhower so famously warned us about, and the enormous waste associated with the bloated Pentagon bureaucracy has been largely ignored.

For years, NTU has maintained a steady drum beat against costly, wasteful, and all too often unnecessary projects and programs. These include the risky and highly experimental IIB version of the Standard Missile-3, the costly Medium Extended Air Defense System, the superfluous F-35 joint strike fighter engine, the unreliable V-22 Osprey, and the similarly beleaguered F-35B aircraft  - just to name a few!

At a time of record spending and debt, with tough cuts looming just over the horizon, it can be hard to understand why programs with obvious, severe flaws that make little budgetary or strategic sense aren’t simply discontinued. This article from CNN, “Army to Congress: Thanks, but no Tanks,” articulates just how wasteful some defense spending can be, and just how hard it is to change:

CNN was allowed rare access to what amounts to a parking lot for more than 2,000 M-1 Abrams tanks. Here, about an hour's drive north of Reno, Nevada, the tanks have been collecting dust in the hot California desert because of a tiff between the Army and Congress.

The U.S. has more than enough combat tanks in the field to meet the nation's defense needs - so there's no sense in making repairs to these now, the Army's chief of staff Gen. Raymond T. Odierno told Congress earlier this year.

If the Pentagon holds off repairing, refurbishing or making new tanks for three years until new technologies are developed, the Army says it can save taxpayers as much as $3 billion.

But guess which group of civilians isn't inclined to agree with the generals on this point?

Congress.

To be exact, 173 House members - Democrats and Republicans - sent a letter April 20 to Defense Secretary Leon Panetta, urging him to continue supporting their decision to produce more tanks.

That's right. Lawmakers who frequently and loudly proclaim that presidents should listen to generals when it comes to battlefield decisions are refusing to take its own advice.

You need to read the whole thing. The article goes on to describe the toxic combination of deep-seated special interests, campaign donations, and jobs that are spread out through as many congressional districts as possible for maximum influence. As former NTU staff member Andrew Moylan put it back in July:

The Defense Appropriations bill before the House this week spends $3.1 billion more than was even requested by military leaders. When you're outspending the wishes of budget-hungry bureaucrats, that's a serious problem.

It’s clear that despite the obvious problems and even more obvious opportunities to save money without negatively impacting our national security, there’s a serious lack of political will to enact the real reforms that are so urgently needed.

Sadly, when big government and big business collude in this manner it’s the taxpayers who end up on the hook for things like the 2,000 tanks gathering dust in the desert. And while it’s true that halting the pointless production of ever more unwanted tanks and other machines will mean a loss of jobs, what the candidates aren’t talking about it the increased prosperity that can flourish in other areas when funds aren’t so dramatically misallocated. Cutting spending means less borrowing and debt, decreasing the enormous drag on our economy. If taxpayers don’t have to shell out for a fighter jet engine we don’t need, that’s money that will still do enormous economic good, that has untold potential.

 

 

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Pentagon's Bad Bookkeeping Helps GAO Scoop Ig Noble Prize
Posted By: Nan Swift - 09/24/12

Each year, the creative people at Improbable Research honor “achievements that first make people laugh, and then make them think” by awarding the Ig Nobel Prize in fields such as physics, fluid dynamics, peace,  and chemistry to name a few. While denizens of DC might not be familiar with the great work of Rouslan Krechetnikov and Hans Mayor, who finally unlocked the secret as to why coffee spills when walking, many will recognize the winner of this year’s prize in Literature: the U.S. Government General Accountability Office (GAO).

Founded in 1921 by the Budget and Accountability Act, it is the role of the GAO to investigate “how the federal government spends taxpayer dollars.” To this end it conducts audits, examines the performance of programs, and keeps an eye on our growing debt.  As the number crunchers in Congress it is surprising that they would be so honored for their work in literature.

The winning piece, published in May, is called “Actions Needed to Evaluate the Impact of Efforts to Estimate Costs of Reports and Studies.”  If that gripping title isn’t enough to make you pick up the report immediately for a quick read, the piece was summarized thusly for the Ig Noble Awards:

The US Government General Accountability Office, for issuing a report about reports about reports that recommends the preparation of a report about the report about reports about reports.

It would be easy to dismiss this as yet another reason why we can’t have nice things – because the government spends time and taxpayer money on reports about reports about reports. But a quick glance at the summary reveals a far more sobering side to the funny report. Everyone loves a good report about a report about a report, but the underlying story is about how poorly the Department of Defense (DOD) estimates costs by deviating from the accounting standards published by the GAO and using inconsistent practices that can miss the full scope of DOD costs. GAO points out that not only are costs going unaccounted for, but also DOD cost estimates are lacking when it comes to documentation and accuracy.

With defense spending at the center of sequestration discussions and serious belt tightening needed across the board to halt our out of control spending, it is disconcerting to find that this budgetary third rail can’t even begin to get its books in order.  It is unjustifiable that when defense spending consumes 25% of the federal budget of government spending, the DOD can’t say exactly where that money is going.

The Ig Nobel award points less to any dysfunction on the part of bureaucrats at GAO than it does to the extreme bookkeeping ineptitude at DOD that necessitated the report in the first place. In light of looming cuts and repeated failed attempts to root out waste at the Pentagon, Sens. Coburn (R-OK) and Manchin (D-WV) have introduced S. 3487, the Audit the Pentagon Act.

Writing in the Washington Examiner, Coburn explains:

Auditing the Pentagon is critically important not just because it is the law but also because our ignorance of how we spend defense dollars undermines our national security. When the Pentagon can't tell Congress -- or itself -- how it is spending money, high-priority defense programs face cuts along with low-priority programs, the exact situation in which we find ourselves today under sequestration. In short, this bill helps the Pentagon to help itself. For instance, the United States Marine Corps did a study in which the corps found that "for each $1 spent on financial improvement, an estimated $2.77 in value was created for the warfighter." A thorough financial audit, done correctly, will free up existing resources for national security.

DoD's inability to pass an audit has potentially wasted billions and undermined our readiness and morale. For example, as Sen. Manchin has noted, while DoD is considering laying off service members, the Pentagon overspent $8 billion -- almost half of NASA's budget -- on information technology programs that are failing in part because DoD's books are such a mess. This would be enough money for more than 15,000 active-duty troops.

Some of the more egregious wastes of taxpayer funds at DOD such as microbreweries and an iPhone app for monitoring caffeine intake are themselves deserving of Ig Nobel prizes. CBS reports:

Pentagon dollars also funded studies that concluded:

- Men are perceived as more muscular if they're holding a gun, instead of tools.

- New Yorkers and Californians use different regional slang on Twitter.

- The first prehistoric bird probably had black feathers.

- The same basketball teams will always dominate March Madness.

Though the Ig Nobel award ultimately lampoons the extremely serious lack of financial accountability at the Pentagon, on the bright side according to a summary of this year’s prize winners and ceremony, GAO did not send a representative to the ceremony last week at Harvard University, thus saving taxpayers money. Had it been the Pentagon receiving an award for any of their wasteful studies, it would no doubt have involved a full report on The Curse of the Bambino and a flyover.  

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Expert Panel Shoots Straight on Missile Defense
Posted By: Pete Sepp - 09/24/12

As regular readers of “Government Bytes!” will remember, National Taxpayers Union has often contended that by spending smarter instead of just harder on ballistic missile defense programs, elected officials can protect the nation’s finances as well as its citizens. For example, we’ve been encouraging Congress to concentrate funding for the Standard Missile-3 (SM-3) component of the Aegis defense platform on the “IB” and “IIA” variants rather than the somewhat tenuous “IIB” version. Our commentary appearing on The Hill’s Congress Blog earlier this month praised Senate Appropriators for doing just that:

Increases in overall missile defense spending notwithstanding, Senators were right to direct resources toward the next generation of SM-3, known as Block IB, instead of the more futuristic IIB version (which received a cut of $169 million). After a challenging first test in the development phase, Block IB has met with several successes, including two difficult intercepts this year. …Meanwhile, Block IIB remains an ambitious design that is confined more to the drawing board than the test range. … [A]ll Senators ought to agree upon setting budget priorities for systems that can maintain a predictable cost pattern between now and the end of the decade. On this score, SM-3 Block IB holds better promise than Block IIB.

Others share NTU’s opinion on this matter, from a similar fiscal standpoint. In April, six conservative organizations joined us on an NTU-led open letter to Congress that stated:

Over our organizations’ histories we have encountered projects throughout the armed services that promised massive technological advancements for warfighters, only to yield underwhelming   results, behind-schedule evolution, and overinflated price tags. … Highly risky ventures like Block IIB often take similar trajectories – all offer huge potential on paper, many are kept alive long after that potential fades, and few have fiscal outcomes that are acceptable to overburdened taxpayers.

Recently this stance received a vindication of sorts from a report authored by the National Research Council for the National Academy of Sciences entitled, “Making Sense of Ballistic Missile Defense: An Assessment of Concepts and Systems for U.S. Boost-Phase Missile Defense in Comparison to Other Alternatives.”

Given the government’s penchant for studying problems rather than solving them, it is a miracle more American taxpayers aren’t injured from becoming entangled in all the blue ribbons shed from the multitude of commissions in Washington. But as The New York Times explained, the findings represent “the first time that the research council – an arm of the National Academy of Sciences, chartered by Congress to give scientific and technical advice to the government and considered the nation’s preeminent group of scientists – has weighed in on the nation’s overall plans for defeating missile attacks.” The 16-member panel included engineers, scientists, and other experts from think tanks, academic institutions, and the defense industry.

Their conclusion, laid out in more than 250 technical and jargon-filled pages, was that the current approach to missile defense needs an adjustment to stress “evolutionary” approaches using existing systems and practical, proven designs. Calling the recommendations “a major blow to President Obama’s strategy,” which NTU has also criticized, the Times reported that the panel is calling for a “stronger domestic system” of sensors and ground-based interceptors that would abandon step four of the current “Phased Adaptive Approach” (PAA). Although the National Research Council’s document is a veritable alphabet soup of acronyms, one section describes the panel’s conclusion in relatively simple terms:

Phase 4 of PAA … is an expensive solution for improving homeland defense yet limited in effectiveness. The committee’s analysis shows that notional interceptors with a fly-out velocity greater than 4.5km/sec benefit neither European defense nor other Aegis defense missions. Therefore, Phase 4 of PAA, which is the SM-3 Block IIB higher performance interceptor, has value only for an early shot opportunity for homeland defense, provided it has sufficient burnout velocity to preclude being overflown, but comes at a high acquisition and life-cycle cost. [The panel’s] alternative – an evolved GMD [Ground-Based Midcourse Defense] system – provides a more effective homeland defense solution and avoids any need for Phase 4 of PAA.

The Times noted that the report claims the National Research Council’s strategy “could fit within current antimissile spending – which runs about $10 billion a year – if the military eliminated what the panel describes as costly and unneeded systems.” Still, the report cites somewhat higher life-cycle costs with its plan, meaning that Congress would need to examine the details carefully to ensure that stewardship of tax dollars remained a top priority. Other offsetting reductions might be necessary. Despite these caveats, the bottom line is becoming more and more evident: a missile-defense plan that relies on maturing technologies like SM-3 Blocks IB and IIA is a better move than gambling on systems like IIB with less predictable cost and performance patterns. Now Congress needs to demonstrate it’s willing to learn from these findings rather than roll the dice with more tax dollars at stake.

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Representatives From Separate Parties Help Stop Wasteful Military Program
Posted By:  - 07/16/12

Representatives Jack Kingston and McCollum have teamed up to stop the military from sponsoring professional sports through an amendment to the DOD authorization bill. This practice, which is an $80 million a year expense, has shown little in the way of effectiveness towards its ultimate goal of recruiting more members for the military. The large price tag and lack of any direct benefits is what has brought this unlikely team of a Republican and a Democrat together. Even those who support the program have little to offer in defense. USA Today reports:

Creech (resource and contracts manager for the National Guard recruiting division) said that in fiscal year 2012, the National Guard has been contacted by more than 24,800 individuals interested in joining because of the racing sponsorship. Of those, Creech said that 20 were qualified candidates and that none joined.

The military is obviously a vital program, and having a way to recruit people is necessary for its success. There is also little doubt that NASCAR fans are strong supporters of the military.  All that being said, the military sponsoring professional sport is not yielding results. Not one candidate joined the military from the $80 million dollar program, and the program is not doing what it is meant to.

While no one wants to harm ability of the military to recruit, there has got to be a better way for them to use the money they receive to reach more qualified recruits, and actually have them sign up. This money, however small the amount in comparison to what we spend, is being wasted on a program that is not working. Regardless of amount, our elected leaders need to be held accountable for how tax dollars are spent and not waste them on programs that do not work.

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New Documentary Takes On Wasteful UN
Posted By:  - 06/29/12

Concerned taxpayers have long kept watchful and weary eyes on the activities of the United Nations. Thanks to a recently-released documentary, “UN Me,” their eyes will have reason to shed some more tears.

The film focuses primarily on the UN’s failures as an organization chartered to promote world peace, by critically examining election monitoring in Cambodia, peacekeeping operations in Cote d’Ivoire, and nuclear non-proliferation efforts, to name a few.  Yet, the movie also demonstrates how the UN’s institutional corruption and dysfunction have fostered the misuse of American taxpayer dollars. According to the Narrator and Producer, Ami Horowitz, the United States spent $8 billion on the UN and its programs in 2010, a 21 percent increase from the year before. What has happened to money like this over the years? According to the film:

  • UN vehicles, underwritten by member country contributions, have actually been used by terrorists to commit crimes;
  • The International Atomic Energy Agency, funded at $380 million, devoted major resources on countries like Germany, Japan, and Canada instead of concentrating on countries posing a greater security threat; and
  • Several multilateral institutions, including the UN, were providing aid to Rwanda during its internal turmoil that the country’s military forces were able to spend for ammunition purchases.

It seems evident that if the UN is plagued with corruption and difficulty in peacekeeping management, then its fiscal management of taxpayer funds is most likely handled poorly as well. To learn more regarding the use of US tax dollars in the UN, visit the “UN Me” website at: http://unmemovie.com/ (also available on iTunes)

 

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Has Defense Spending Declined Significantly Since 1965? It Depends on Which Numbers You Use
Posted By: Demian Brady - 02/03/12

In a recent op/ed, the Washington Examiner featured a chart from our friends at the Heritage Foundation (based on data from the Office of Management and Budget) that shows spending on national defense and entitlements as a percentage of GDP over the past several decades. The data shows that defense spending consumed 7.4 percent of GDP in 1965, rising to its peak of just under 10 percent a few years later during the Vietnam War. The subsequent years show a steady decline that was partially interrupted by the Reagan years, but then resumed, sinking to around 3 percent of GDP in 2000. The post-September 11th build-up saw defense spending rise to 5 percent of GDP by 2010.

A caption on the chart notes that “spending on national defense … has declined significantly over time, despite wars in Iraq and Afghanistan.” But there are other ways to examine the numbers. Here’s another chart, also based on budget data.

defense_outlays_thumbnail
(Click to open chart in a new window)

 

The above chart converts annual defense spending totals to the dollar’s value in 2005. A constant-dollar comparison illustrates how much we have been spending while accounting for inflation that changes the worth of the currency from one year to another.

In 1965, defense spending was $364 billion in constant dollars. Rather than shrinking steadily since that time, the chart shows that spending on defense reached $402 billion in 2002 before rising to $608 billion in 2010. Because our economy is much larger than it was in 1962, we were able to spend comparatively more on defense than we did in 1965, $245 billion more, in constant dollars, even though the figure represents a smaller percentage of total GDP.

In current dollars, we spent $693.6 billion on defense in FY 2010. If we did return to a 7.4 percent level of GDP, defense outlays would have been $1.07 trillion in current dollars.

But is it necessary to maintain that ratio of defense spending? As our technology and productivity improves, shouldn’t we expect to get a bigger bang from our defense dollar as we do from domestic programs? We can invest less as portion of the economy, but get smarter, better results than were possible half a century ago.

The President has called for a plan to cut the number of forces and procurement of programs in order to reduce defense spending by $487 billion over a ten year period. These reductions would be in addition to the military cuts mandated in last year’s deficit deal. Many are concerned that this will reduce our regular troop levels too far, especially given the extensive reliance on National Guard units that were deployed in Iraq and continue to be deployed in Afghanistan.

There is also concern as to how much of these savings will be used to reduce the deficit, and how much would be re-allocated to expand discretionary programs. After consecutive years of annual deficits exceeding $1 trillion, savings need to be found across the board. But despite the President’s vow to go line-by-line through the budget to cut out waste and duplication, taxpayers have not seen significant reductions in domestic program from this Administration. If last week’s State of the Union address was a preview of the forthcoming FY 2013 budget, we will see more of the same: NTU Foundation tallied up the cost of new proposals in the President’s speech and found that for every dollar in domestic spending that would be cut, defense spending would be cut by $128. And only lip-service was paid to confronting the fastest growing part of the budget: entitlements.

Over the ten years since FY 2001, defense spending rose by about $24 billion a year, in constant dollars. After major wars, such expenditures typically decline with a draw-down of forces. We are now having a national debate about the best way to proceed with reductions while maintaining a strong military. A complete picture of the budget figures needs to be a part of this discussion.

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Iran Threat Reduction Act - Taxpayer's Tab Supplement
Posted By: Dan Barrett - 01/13/12

This week's Taxpayer's Tab focused on H.R. 3638, Act for the 99%, which left us with some additional material that we're highlighting here. This week's "Most Friended" bill is H.R. 1905, the Iran Threat Reduction Act of 2011.

Annualized Cost: $3 million ($13 million over five years)

Number of Cosponsors: 364 Congressmen

Congresswoman Ileana Ros-Lehtinen (R-FL) sponsored the Iran Threat Reduction Act to compel Iran to abandon its pursuit of nuclear weapons. In order to achieve that goal, H.R. 1905 would expand existing sanctions.

The bill calls for the President to coordinate with other nations to place additional pressure on Iran to give up it efforts to obtain or develop a nuclear weapon or systems that would deliver a nuclear bomb. The U.S. would lobby the United Nations Security Council to impose new sanctions and would work to limit to whom Iran could sell its petroleum products.

The President would also be authorized to impose sanctions on individuals or companies investing in, buying from, or selling Iranian petroleum. The trade of restricted nuclear or other weapons of mass destruction technologies is also prohibited. The U.S. would also reserve the right to cancel any transaction or transfer of goods, services, or money between Iran and anyone that is subject to the jurisdiction of the U.S. government. Iranian assets would remain frozen.  Fewer Iranians would be granted visas to enter the U.S.  The sanctions would be terminated when, and if, it is verified that Iran is no longer perusing a nuclear weapon, supporting international terrorism, and “poses no threat to the national security, interests, or allies of the United States.”

Federal funds would also go toward supporting democratic change in Iran.  The Secretary of State would be required to develop a strategy of promoting Internet freedom and access to information in Iran.

According to a CBO estimate, H.R. 1905 would result in $13 million in new spending over the next five years. New regulations and financial tracking would lead to increased administrative expenses however, the sanctions would not result in any new spending or increased revenues.

Cosponsors include 148 Democrats and 216 Republicans in the House.

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Spending Smarter on Missile Defense
Posted By: Pete Sepp - 12/01/11

 

Admiral Mike Mullen, who recently completed a stint as Chairman of the Joint Chiefs of Staff, was a thoughtful proponent of the connection between America’s economic security and its national security, often mentioning the national debt as the biggest threat to both and stressing the need to “steward every dollar that we have.” Mullen has retired, but the national debt sure hasn’t been, which means that “stewardship” is more important than ever. Earlier this week NTU weighed in with a letter to lawmakers on one such development our budget team came across – the Senate Appropriations Committee’s decision to shift tax dollars away from a missile defense project with uncertain prospects and toward ventures with greater near-term promise.

Much bigger brains than my own can delve into the technical details of the SM-3 missile, which is part of the anti-missile phase of the Navy’s Aegis air defense system. However, NTU’s four-decade institutional knowledge of federal contracting and project oversight tells us that the Senate Committee made the smart move.

SM-3 Blocks II-A and I-B, which the Committee chose to fund, have good potential for a solid capability to defeat several ballistic missile threats our nation may be encountering before Block II-B (the version the Committee directed funding away from) could be reliably tested and fielded. Plus, on a dollar-for-dollar basis, funding II-B might not pay off with a vastly better weapon in a predictable period of time -- potentially risking an all-too-familiar ascent into an alarming cost spiral. As the Committee noted, “the requirements for the SM-3 Block II-B remain in flux, as does its acquisition strategy and the associated costs for integration into the Fleet.”

NTU has communicated its views to Congress on a variety of  defense projects this year, including the F-35 alternate engine and the Evolved Expendable Launch Vehicle. In many cases, we’ve had to offer words of caution about Congress’s decisions.

But on SM-3, the Senate Committee is making the right call. As our letter to Appropriators in both chambers states, “the Senate Committee’s funding choice on SM-3 represents the best possible prioritization of resources based on prudent risk assessments, and [NTU] would urge that any conference agreement reflect this stance.”

We’ll be keeping a watchful eye and urging a steady hand as the appropriations process moves forward, to make sure the Senate’s position on SM-3 becomes law.

 

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