Category Archives: Fiscal Freedom

Building spoke to six construction industry figures to understand their considerations for the upcoming administration and the priorities it must focus on.

What are the key concerns for Caroline Gumble, Alan Jones, Peter Caplehorn, Mark Robinson, Yolande Barnes and Stephanie Canham?

It is imperative that the BuildingRegulations review is completed and that the new building safety regime, which has been talked about since Dame Judith Hackitts report over 12 months ago now be brought into force and made a reality.

The industry wants to get on with it. We are doing what we can but, from a government perspective, they need to stop faffing around with their own personal agendas and show leadership on this.

One of the other things I would really like to see is some stability with a minister. We have had three different construction ministers over the past 18 months and that is not giving our sector stability.

They need to stop faffing around with their own personal agendas and show leadership on this

The government also needs to deliver on its infrastructure and construction promises, particularly around housing, because that creates huge opportunity for the industry.

We also need to be wary that we have got the right skills base in the industry and, post-Brexit, there could well be some issues in terms of how we resource the industry moregenerally.

The government must act quickly andwith vigour to ensure all of our buildings are safe.

The tragedy at Grenfell tower and the spate of fires since have shown that some buildings, materials, regulations and procurement methods once assumed safe simply arent.

Englands fire safety regulations lag shamefully behind other countries

Aside from the combustible cladding ban on new-build housing over 18m, we have yet to see a thorough overhaul of building safety regulations and, of the 435 buildings identified with cladding systems similar to Grenfells, only 114 have had this successfully removed and replaced.

Englands fire safety regulations lag shamefully behind other countries including Wales, Scotland, the US and the United Arab Emirates and this must be urgently addressed.

The new government must provide the industry with strong baseline prescriptive regulations on the use of combustible materials, means of warning and escape and sprinkler systems.

We must take action now peoples lives are at risk.

The new government must recognise thevalue of the built environment and construction industry to our society and economy. If we are to build the high-quality, low-carbon homes, schools, hospitals and infrastructure this country needs, construction must be given an appropriate level of consideration and investment, particularly in the digital transformation of our industry currently under way.

Clarity and robust leadership on regulatory changes resulting from Brexit will be essential

Recent economic forecasts from the Construction Products Association (CPA) identify infrastructure delivery as crucial to the fortunes of the industry over the next few years. While new infrastructure project announcements are encouraging, many CPA members are concerned about whether projects, once announced, will in fact be delivered. The new government must provide greater certainty to encourage the necessary long-term investment.

There is also a strong concern that the Brexit process could derail progress and reform already made with regards to building standards and quality. With our industry undergoing a critical review of regulations post-Grenfell, clarity and robust leadership on regulatory changes resulting from Brexit will be essential.

Similarly, procuring for value rather than lowest cost should be a priority if we are to reduce risk in our built environment. As the largest client of construction services, government should lead the way on this.

As the UK housing crisis deepens, ensuring the countrys ageing infrastructure is fit for purpose before building new homes is essential to maximise connectivity between communities. Too often, minds are drawn to big-ticket infrastructure projects such as HS2 and airport expansion. But it is the roads, hospitals, doctors surgeries and schools thatare the lifeblood of a functioning and efficient society.

Priority needs tobe ensuring that we are making sound andconsidered investments in projects

To date, there has been a lack of cross-party consensus on infrastructure funding, which makes meeting challenges across the entire country and ensuring value for money more difficult. Turnover of ministers is regular and many are not in their posts long enough to make a mark or better understand the complexities of the issues at hand.

I urge the next government to improve thespeed of decision-making, in order to make itmore streamlined and ensure we aredelivering essential infrastructure now. This can be achieved by driving home thedevolution agenda and by providing localauthorities with greater fiscal freedom, enabling them to make improvements quickly.

Whatever the outcome of the election, the new government will undoubtedly invest billions of pounds in infrastructure over the next few years. But the No1 priority needs tobe ensuring that we are making sound andconsidered investments in projects that support the creation of new communities and connect existing ones.

The No1 priority for the new government has to be sustainability. But any new measures will have to affect all three pillars ofit simultaneously: social, environmental and economic. Tackling one without the others will be, at best, ineffectual and, atworst, counter-productive. A new government will be faced with mounting social pressures around housing affordability and inter-generational inequities.

Ordinary owner-occupiers will be among those who suffer value loss or high capital expenditure demands

Economically, the pressures will include a dire shortage of skilled construction workers in the wake of Brexit. Environmentally, the pressing need is to start retrofitting existing building stock. If we do not, carbon emissions will continue to rise and so will utility bills and fuel poverty. In the medium term, we willbecome increasingly aware of unsustainability in certain types of buildings and car-reliant environments. Some use classes will become obsolete, buildings too expensive to own, some assets literally stranded by rising tides and rivers. Ordinary owner-occupiers (as well as investors and commerce) will be among those who suffer value loss or high capital expenditure demands. The woes of impecunious leaseholders in high-rise buildings will be added to growing safety fears as well as concerns over environmental performance.

The long-term prospect is that society divides further around real estate sustainability. The experience of stakeholders in productive, efficient properties and in neighbourhoods with thriving communities will differ substantially from those with obsolete, expensive-to-own and difficult-to-run buildings in struggling local economies and socially stranded communities.

The incoming government needs to do something that will help to kick-start the countrys property market, which has been flattened by the uncertainty of Brexit.

Getting rid of stamp duty for a period of between three and five years across almost allproperty values, with possibly a reduced amount at the very top end, but certainly for properties under 1.5m, is something that would help to unlock the residential market. By definition, this would bring in its wake more infrastructure investment and development for the UK.

Getting rid of stamp duty for a period of between three and five years is something that would help to unlock the residential market

The government also needs to look at reforming the existing planning regime, which dogs our developments and ability to bring a greater amount of housing for those that need it within a reasonable time and without so much cost investment for developers, be they private or public sector. Improvements in this area could lead to less costly housing.

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Election 2019: What does construction want from the new government? - Building

Problem

For decades, Illinois lawmakers have misspent state funds like drunken sailors. Even worse, they have increased taxes to the point that the Prairie State is now on the precipice of economic Armageddon.

Altogether, Illinois legislators have created billions in unfunded liabilities while imposing the highest tax burden in the United States. The average Illinois household earning the median U.S. income pays a whopping 14.9 percent in state and local taxes alone.

As a result of Illinois decades-long spending and taxing binge, the state is experiencing an exodus that will continue to worsen its shaky economic situation as time marches on.

Under a progressive tax system,tax ratesrise as the taxable income amount increases. Progressive taxes are a form of income redistribution, with the taxes paid by higher income earners used to cover government services for lower income earners. While supporters of the progressive tax argue this is both fair and an example of social justice, these taxes violate democratic tax principles by placing an undue burden on certain groups of taxpayers. Even under a flat tax, those who earn higher incomes pay more in taxes, the social justice progressive tax proponents claim to seek.

Progressive taxes are problematic for several reasons. First, as a 2008 Organisation for Economic Co-operation and Development working paper explained, progressive income tax systems across the world have negatively impacted economic growth.

Progressive tax systems also make it more difficult to accurately predict tax revenue and prepare state budgets. Progressive tax systems result in tax revenues that are more volatile than flat tax systems. As the economy waxes and wanes, tax revenue received from taxpayers, especially those in the upper brackets, rises and falls. When the economy improves, more individuals and corporations move into higher tax brackets and pay larger percentages of their higher incomes in taxes.

Policy Solution

Unfortunately, Illinois lawmakers are on the verge of making the states dire fiscal situation even worse by pushing for a progressive income tax, which would likely increase the rate at which residents are abandoning the state.

At present, the Illinois Constitution requires a flat income tax. Changing the current tax structure to a progressive system would require a state constitutional amendment approved by a voter referendum and three-fifths of the state legislature.

Despite liberals talking points to the contrary, the flat tax is beneficial for several reasons. First and foremost, a flat tax does not disproportionately penalize the most productive residents with higher tax rates. Second, a flat tax is fair to all. Third, a flat tax boosts economic performance by eliminating the tax bias against savings and investments.

Although supporters of the progressive fair tax claim it will solve the Prairie States budget crisis, this could not be further from the truth. Illinois does not have a tax revenue problem. Rather, Illinois has a massive spending problem.

Illinois is already an economic basket case: its population is decreasing at an alarming rate, unemployment remains high, and future unfunded liabilities keep growing. Simply put, increasing taxes on Illinois residents is the wrong path, and will only compound the Prairie States economic woes. Illinois legislators should focus on making the state a more attractive place for businesses and residents by decreasing spending, lowering taxes, and reducing unnecessary regulations.

Instead of focusing only on the tax revenue side of the equation, lawmakers should focus on fixing the structural issues on the spending side. This is where the real problem lies and where the long-term fiscal health of the state can be shored up.

Policy Message

Point 1: Currently, the combined state and local tax rate in Illinois ranks as the most severe burden in the country, according to a March report by WalletHub.

Point 2: Every 4.6 minutes, another resident flees the Prairie State for greener pastures.

Point 3: Since the Great Recession in 2008, Illinois tax revenues have increased faster than all Midwestern states, except Minnesota, according to a recent study from Pew Charitable Trusts.

Point 4: Imposing a progressive income tax is likely to have long-term negative effects on all Illinois residents by further damaging the states business climate and eliminating more jobs.

Point 5: By increasing taxes on higher income earners, progressive tax systems disincentivize certain economic activities like investment, entrepreneurship, and financial risk-takingactivities that are the engines of economic growth and more commonly undertaken by those with higher incomes.

Point 6: According to 2019 report released by the Fraser Institute, Illinois is one of the least free states in the nation, ranking 34th in the country when it comes to economic freedom, recent slides in this ranking came due to recent tax hikes and increased fees.

Point 7: Relying on a small percentage of higher income taxpayers for a larger percentage of revenues often generates larger budget gaps during economic recessions.

Income tax Hike Dropped Illinois Economic Freedom Rank, Fair Tax would Drop it Morehttps://www.illinoispolicy.org/income-tax-hike-dropped-illinois-economic-freedom-rank-fair-tax-would-drop-it-more/In this article, Orphe Divounguy and Bryce Hill of the Illinois Policy Institute examines the potential effects of the fair tax.

7 Reasons to Reject a Progressive Income Tax in Illinoishttps://www.illinoispolicy.org/7-reasons-to-reject-a-progressive-income-tax-in-illinois/In this article, Bryce Hill of the Illinois Policy Institute outlines seven reasons Illinois should protect its flat income tax structure.

Ten Principles of State Fiscal Policyhttps://www.heartland.org/publications-resources/publications/ten-principles-of-state-fiscal-policyThe Heartland Institute provides policymakers and civic and business leaders a highly condensed, easy-to-read guide to state fiscal policy principles. The principles range from Above all else: Keep taxes low to Protect state employees from politics.

Progressive Income Tax Money Grab Disguised as Tax Reformhttp://illinoispolicy.org/policy_posts/progressive-income-tax-money-grab-disguised-as-tax-reform/Ted Dabrowski of the Illinois Policy Institute dispels several myths behind progressive taxes. Dabrowski argues a progressive income tax would raise taxes on middle-income Illinoisans and destroy needed jobs for poor and working families.

Moving to a Progressive Income Tax Would Increase Taxes on the Majority of Illinois Employershttps://taxfoundation.org/moving-progressive-income-tax-would-increase-taxes-majority-illinois-employers/Elizabeth Malm of the Tax Foundation examines the effect a progressive tax would have on businesses located in Illinois.

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Publications - Policy Tip Sheet: Progressive Fair Tax Will Worsen Illinois Economic Woes - The Heartland Institute

By DONNA KAURANEN

One year ago, Gov. Mike Dunleavy submitted a budget representing the starting place for his budget challenge, a gap of $1.5 billion dollars on a $6.7 billion state funds budget, over a 20% difference between annual revenues and expenditures.

While Alaskas budget gap had developed over time, the governor directed his Office of Management and Budget team to provide him options to close that gap in one year with no new revenues and no borrowing from reserves.

Alaska had borrowed from reserves for six years, drawing down rainy day funds and racking up a debt of over $10 billion to the Constitutional Budget Reserve (CBR). OMB worked with state agencies and brought options to the governor to meet his direction.

The Permanent Fund Dividend is not included in these numbers because, while the Alaska courts have ruled the Legislature can ignore statute and set a dividend amount through the budget, the governor has been, rightly, steadfast in his policy that dividends must be distributed according to decades-old law to Alaskans who are the owners of subsurface resources.

After the governors final budget submission in February, he made presentations around the state, some with Commissioner of Revenue Bruce Tangeman and me, laying out the case in numbers and graphs that Alaska had been spending beyond its means for years and needed to cut its budget, and that it was running out of time to do so, given the squandering of reserves that preceded his governorship.

He has more than one year to fulfill his policies, but seems to be taking budget reducing options off the table and is instead tilting toward additional taxes.

In addition to the mathematical reality, there was an economic reality to the governors policies. My former colleague and Alaska economist Ed King has been telling us consistently, Alaska is a high-taxed state. While this economic fact may not be obvious, as Milton Friedman said:

Keep your eye on one thing and one thing only: how much government is spending, because thats the true tax If youre not paying for it in the form of explicit taxes, youre paying for it indirectly in the form of inflation or in the form of borrowing. The thing you should keep your eye on is what government spends, and the real problem is to hold down government spending as a fraction of our income, and if you do that, you can stop worrying about the debt.

Every dollar government spends is a dollar not used for labor or investment in the private economy. If Alaska desires a diversified economy with a thriving private sector, it must reduce the amount of money government spends.

Alaskas state government spends more than twice the amount on government than the national average of states on a per capita basis, or $13,000 per every man, woman and child in Alaska compared to $6,000 in other states.

While Alaska enjoys a strong GDP per capita, a significant portion of its GDP goes to government. In addition, Alaskas private economy is significantly dependent upon government.

Compare Alaska to Florida, for example, a state whose existence was largely developed after the U.S. Army Corps of Engineers dredged the Everglades and when the availability of electrical air conditioning occurred not long before Alaskas Statehood.

Floridas state government spending per capita ($3,640) is only 27.6 percent of Alaskas government spending per capita of $13,000.

State spending compared to state GDP in Alaska is over 18 percent while Floridas is 7.5 percent.

Alaskas government debt compared to state GDP is almost 20 percent, while Floridas is just over 12 percent.

Alaska consistently loses population to other states, while Florida has had the second highest net domestic migration over the last decade.

The Fraser Institute measures the economic freedom of states based on taxes, spending, and labor market freedom. The Frazier Institute ranks Florida second best and Alaska third worst state on its economic freedom index.

I have learned through my vast experience that sticking with fiscal and economic policies that are politically difficult in the short run are economically beneficial for the long term. Washington D.C. has shown us this recently as the U.S. economy is enjoying the benefits of the Tax Cut and Jobs Act of 2017, including a 50-year low in the nations jobless rate.

Alaska is a beautiful state with tremendous opportunities if its leaders are willing to do whats necessary to embrace them.

Donna Arduin Kauranen is the former director of the Office of Management and Budget and is the president of Arduin, Laffer & Moore Econometrics.

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For a thriving economy, government spend must come down even more - Must Read Alaska

Ever since the UK voted to leave the European Union in the June 2016 referendum, the country has been in a state of paralysis.

That looks to be over now thanks to a thumping win in the general election for Prime Minister Boris Johnson and his ruling Conservative Party.

It seems certain now that the UK will leave the European Union by January 31, 2020. This and other consequences of this decisive victory are sure to have significant consequences for the travel and tourism industry, not just in the UK but in Europe and the rest of the world.

The UK is the 10th biggest travel destination in the world, while also being the fourth biggest outbound market by spending, according to the United Nations World Tourism Organization. What happens to the country matters for the global market.

Businesses hate uncertainty. It might be a cliche but its a cliche for a reason. Following Thursdays election, share prices seem to have reacted pretty positively.

The likes of EasyJet, On the Beach, and Premier-Inn owner Whitbread all saw significant rises on Friday morning.

The pound has soared against both the dollar and the euro. Good news for outbound travel but less so for inbound.

Political clarity and fiscal expansion should drive a growth pick-up, said analysts at investment bank Morgan Stanley before adding the caveat unless derailed by the EU trade talks.

Johnson should have no problem getting his Brexit bill through parliament, which means the UK will officially leave by the end of January but remain in a transition period where nothing rally changes until at the least the end of 2020.

In that time the Prime Minister will have to decide what kind of relationship he wants with the European Union: something closely aligned or a more drastic rupture?

In what was one of the bitterest contests in recent years, the main choice voters had is between Johnsons Get Brexit Done right-wing Conservative Party and the left-wing Labour Party, campaigning under the slogan For the Many, Not the Few.

In an election dominated by Brexit and other issues such as the National Health Service unsurprisingly tourism had a limited look in.

Each party puts out a manifesto setting out their agenda should they win the election and searching for the word tourism produced limited results. The Conservatives offering was pretty slim, in keeping with their tactic to avoid serious scrutiny.

In it, the word tourism comes up three times and two of these are a reference to health tourism i.e. people coming to the UK specifically to use its free healthcare. The only other mention relates to Northern Ireland with vague plans to improve infrastructure, enterprise and tourism.

(Before Theresa May left office one of her last bits of business was to approve a tourism sector deal, although it remains to be seen how the new government will go about implementing it.)

But, as we always like to point out at Skift, tourism is much more than the sum of its parts. It includes things like infrastructure and immigration: how people get to and around the country, as well as who is serving them in bars, restaurants and hotels.

The issue of immigration was core to the Brexit vote and has continued to be a plank of Conservative Party policy. The partys manifesto pledged an end to freedom of movement one of the EUs core policies and in its place an Australian-style points-based immigration system.

Ultimately this will lead to fewer lower-skilled migrants.

Sectors like hospitality are very reliant on workers from the EU, where according to consultants at KPMG they make up 12.3 percent of the entire workforce and even more in places like London where various estimates put it between 25.7 percent and 38 percent.

With the Conservatives back in power, their restrictive immigration policy looks like bad news for travel, tourism, and hospitality employees.

The industry contributed 23 billion [$30.7 billion] to the UK economy last year but in order to keep growing and flourishing we need to have continued access to employees from all over the world, frictionless borders for our visitors post Brexit and continued strong promotion of the UK as a welcoming destination, said Joss Croft, CEO of travel association UKinbound.

Story continues

Writing for the UKs Daily Telegraph newspaper earlier this year, InterContinental Hotels Group CEO Keith Barr made a pretty compelling case for less draconian measures.

A thoughtful, pragmatic approach is required to avoid a damaging shortage of skills, labour and the rich cultural mix that makes our industry, and the UK, so special, he wrote.

Its not just one way either. Businesses based in the EU have been able to take advantage of freedom of movement to deploy UK staff abroad.

Once the UK leaves the EU, each entity will offer reciprocal immigration controls. If the UK, for example decides it wants to drastically cut numbers, the EU will likely do the same. Freedom of movement has always been treated as a one-way street by most in the Conservative Party.

This is likely to at best restrict the number of UK citizens who are able to work in the EU and at worst curtail them to such a degree that many UK companies business models will be rendered completely unsustainable, a new report by the trade body Seasonal Business In Travel said.

A 2019 survey of members indicated that the number of holidays on offer had fallen, as had employment numbers, with holiday prices increasing.

Another major decision that keeps getting kicked into the long grass is whether the UK needs a new runway at its largest airport, London Heathrow.

Politicians have been talking about building a third runway for more than a decade but have avoided making a firm commitment until recently but even then now it is still on shaky ground as the Conservative Party manifesto made clear.

It is for Heathrow to demonstrate that it can meet its air quality and noise obligations, that the project can be financed and built and that the business case is realistic, it said.

And while the document didnt go into specifics, the Conservatives support clean transport to ensure clean air, as well as setting strict new laws on air quality.

Although the Conservatives won a clear majority, in Scotland, the Scottish National Party increased its seat share and now have 48 of the 59 seats. Theres now a very-real possibility of a second Scottish independence referendum in the next couple of years.

Scotlands tourism industry is of huge importance to our economy, contributing around 7 billion [$9.3 billion] to GDP and employing over 200,000 people, the partys manifesto said.

The document outlines the damage Brexit could do to the industry and calls for the UK government to examine a reduction in VAT for the hospitality sector.

The Scottish Nationals also want to make the Highlands and Islands region the worlds first net zero aviation region by 2040 with trials of low or zero emission flights, including electric planes, starting in 2021.

In Northern Ireland too there was a realignment, which points to a further fracturing of the union. For the first time ever, Northern Ireland returned a majority of nationalist MPs nine versus eight unionists and one from the cross-community Alliance Party. This also means a majority are anti-Brexit.

Thursdays vote was arguably the most important vote in recent years given the substantial differences between the two main political parties and the shadow of Brexit hanging over things. It is this last factor that is likely to impact travel and tourism going forward.

A Skift Research report released earlier this year painted a particularly subdued picture

Brexit negatively impacts travel, the question is by how much? it explained, suggesting an outcome of between -7 percent and +3 percent for inbound arrivals between 2019 and 2024 with a similar result for outbound trips.

The report also points to the strong correlation between GDP and tourism performance, in relation to inbound arrivals and spending, and outbound spending. Meaning that if there is a downturn Brexit-related or otherwise we should expect a tourism hit.

Whats interesting about this election is the widely diverging views of economic forecasters, as this recent article in the Financial Times makes clear. In the short-term the markets bankedon a Conservative win, with their ensuing victory propelling the stockmarket upwards.

But that short-term thinking negates the long-term impact of Brexit, which would arguably be worse for the economy. Presenting a big problem for Johnson.

In a pre-election briefing document The UKs National Institute of Economic and Social Research made clear just how pivotal the departure from the EU would be.

The impact of tax and spending plans depends crucially on the economic environment in which they are implemented. Over the next Parliament, the UKs economic environment heavily depends on the outcome of Brexit, it said.

An increased majority gives Johnson room for flexibility and he can now choose to ditch certain policies in the upcoming negotiations with the EU. Will he show a more pragmatic side and pursue a so-called softer Brexit with closer regulatory alignment with the remaining 27 countries or will he listen to the right wing of the party?

The choices he makes will shape the country into the next decade.

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What the UK Election Result Means for Travel and Tourism - Yahoo Finance

Key point: This billion-dollar program is long overdue.

The commander of U.S. Strategic Command, Air Force Gen. John E. Hyten, said the United States has about the right numbers of nuclear weapons, but they need to be modernized.

A Pentagon statement said the General asked reporters to imagine what the world was like in the six years preceding the atomic bombings of Hiroshima and Nagasaki. In those six years, the world in conflict killed somewhere between 60 million and 80 million people, he said. Thats about 33,000 people a day, a million people a month.

The world has seen bloody conflicts -- Korea, Vietnam, Desert Storm, Enduring Freedom and Iraqi Freedom were awful, but nowhere near the level of carnage the world had experienced, he said.

The submarines are the most survivable element of it; the ICBMs are the most ready; the bombers are the most flexible, he said. When you put those pieces together, it gives our nation the ability to withstand any attack and respond if we are attacked, which means we wont be attacked.

The Future of ICBMs:

The Air Force is now evaluating formal proposals from three vendors competiting to build hundreds of new, next-generation Intercontinental Ballistic Missiles designed to protect the US homeland well into the 2070s and beyond, service officials said.

Submissions from Northrop, Boeing and Lockheed are now being reviewed by Air Force weapons developers looking to modernize the US land-based nuclear missile arsenal and replace the 1970s-era Boeing-built Minuteman IIIs.

If one were to passively reflect upon the seemingly limitless explosive power to instantly destroy, vaporize or incinerate cities, countries and massive swaths of territory or people -- images of quiet, flowing green meadows, peaceful celebratory gatherings or melodious sounds of chirping birds might not immediately come to mind.

After all, lethal destructive weaponry does not, by any means, appear to be synonymous with peace, tranquility and collective happiness. However, it is precisely the prospect of massive violence which engenders the possibility of peace. Nuclear weapons therefore, in some unambiguous sense, can be interpreted as being the antithesis of themselves; simply put potential for mass violence creates peace thus the conceptual thrust of nuclear deterrence.

It is within this conceptual framework, designed to save millions of lives, prevent major great-power war and ensure the safety of entire populations, that the U.S. Air Force is now vigorously pursuing a new arsenal of land-fired, Inter-Continental Ballistic Missiles, or ICBMs

In an interview with Scout Warrior several months ago, Lt. Gen. Jack Weinstein, Deputy Chief of Staff for Strategic Deterrence and Nuclear Integration, cited famous nuclear strategist Bernard Brodie as a way to articulate the seismic shift in thinking and tactics made manifest by the emergence of nuclear weapons.

Considered to be among the key architects of strategic nuclear deterrence, and referred to by many as an American Clausewitz, Brodie expressed how the advent of the nuclear era changes the paradigm regarding the broadly configured role or purpose of weaponry in war.

Weinstein referred to Brodies famous quote from his 1940s work The Absolute Weapon: Atomic Power and World Order. --- "Thus far the chief purpose of our military establishment has been to win wars. From now on, its chief purpose must be to avert them. It can have almost no other useful purpose.

The success of this strategy hinges upon the near certainty of total annihilation, should nuclear weapons be used. ICBMs are engineered to fly through space on a total flight of about 30 mins before detonating with enormous destructive power upon targets.

If another nation believes they can have an advantage by using a nuclear weapon, that is really dangerous. What you want to do is have such a strong deterrent force that any desire to attack with nuclear weapons will easily be outweighed by the response they get from the other side. That's the value of what the deterrent force provides, Weinstein said in an exclusive interview with Scout Warrior.

Although Weinstein did not take a position on the prior administration's considerations about having the U.S. adopt a No First Use, or NFU, nuclear weapons policy, Air Force Secretary Deborah James has expressed concern about the possiblity, in a news report published by Defense News. Limiting the U.S. scope of deterrence, many argue, might wrongly encourage potential adversaries to think they could succeed with a limited first nuclear strike of some kind.

Ground-Based Strategic Deterrence:

It is within the context of these ideas, informing military decision-makers for decades now, that the Air Force is in the early stages of building, acquiring and deploying a higher-tech replacement for the existing arsenal of Minuteman III ICBMs.

Weinstein pointed out that, since the dawn of the nuclear age decades ago, there has not been a catastrophic major power war on the scale of WWI or WWII.

When you look at the amount of people who died in WWI and then the number of people who died in WWII, you're talking about anywhere between 65 and 75 million people. WWI killed about 1.8 percent of the world's population. WWII killed 2.8 percent of the world's population. What you want is to have a really strong capability so that they're used every day to prevent conflict. If you use one, then you've failed, Weinstein said.

Weinstein added that, in total, as many as 45 million people died during WWII.

All you need to do is look at pictures of what Dresden looked like and what Stalingrad looked like. These are major powers fighting major powers, he said.

Nevertheless, despite clear evidence in favor of deploying nuclear weapons, modernizing the US arsenal has long been a cost concern and strategic liability for US strategic planners. In fact, Weinstein said there is concern that both Russian and Chinese nuclear arsenals are now more modern and advanced than existing U.S. Minuteman IIIs.

The new effort to build ICBMs, what the Air Force calls Ground Based Strategic Deterrence, aims to construct durable, high-tech nuclear-armed missiles able to serve until 2075.

The new weapons will be engineered with improved guidance technology, boosters, flight systems and command and control systems, compared to the existing Minuteman III missiles. The weapon will also have upgraded circuitry and be built with a mind to long-term maintenance and sustainability.

Solid rocket fuel ages out after a period of time. You need to have an upgraded guidance package for sustainability and warfighting requirements. Looking at the current technology, it has moved faster than when these were first developed. Civilian industry has leapfrogged so we want the ability to use components that have already been developed, Weinstein added.

Northrop Grumman and Boeing are among the major vendors planning to compete for the opportunity to build the new weapons; the Air Force released a formal Request For Proposal to industry at the end of last month.

Citing a Congressional Research Service report, a story in National Defense Magazine says the GBSD the program is expected to cost $62 billion from 2015 through fiscal year 2044. That breaks down to about $14 billion for upgrades to command-and-control systems and launch centers, and $48.5 billion for new missiles, the report says.

In keeping with the NEW START Treaty, the US plans to field 400 new missiles designed to replace the aging 1960s-era Minuteman IIIs.

The new ICBMs will be deployed roughly within the same geographical expanse in which the current weapons are stationed. In total, dispersed areas across three different sites span 33,600 miles, including missiles in Cheyenne, Wyoming, Minot, North Dakota and Great Falls, Montana.

If you look at the ICBM field, it's 33,600 square miles. That's how big it is. We sometimes say it's the size of the state of Georgia. It was developed that way for a specific reason. You didn't want them too close together. You wanted it so if the adversary were to attack at one time, you'd still have ones that would survive, Weinstein explained.

This first appeared in Scout Warrior here.

This article first appeared several years ago.

Image: Reuters.

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Upgrading The Triad: The Air Force Has Plans To Build 400 Modern ICBMs - The National Interest Online

The war in Afghanistan is the longest armed conflict in U.S. history, and throughout the 18 years of fighting, U.S. officials have publicly said they were making progress. Yet a new investigative report by Craig Whitlock of The Washington Post based on thousands of pages of federal documents shows that many senior officials knew the reality was very different than their optimistic public pronouncements.

The American people have constantly been lied to, John F. Sopko, the special inspector general for Afghanistan reconstruction, told The Post.

The documents, which the Post says it obtained under the Freedom of Information Act after a three-year legal battle, were created as part of a federal project studying the failures in Afghanistan and include notes of interviews with key players in the war.

With most speaking on the assumption that their remarks would not become public, U.S. officials acknowledged that their warfighting strategies were fatally flawed and that Washington wasted enormous sums of money trying to remake Afghanistan into a modern nation, Whitlock writes. Several of those interviewed described explicit and sustained efforts by the U.S. government to deliberately mislead the public.

The cost of the war: More than 775,000 troops have deployed to Afghanistan, and 2,300 died there while 20,589 were wounded, Whitlock writes, citing Defense Department data. As for the financial cost:

Since 2001, the Defense Department, State Department and U.S. Agency for International Development have spent or appropriated between $934billion and $978billion, according to an inflation-adjusted estimate calculated by Neta Crawford, a political science professor and co-director of the Costs of War Project at Brown University.

Those figures do not include money spent by other agencies such as the CIA and the Department of Veterans Affairs, which is responsible for medical care for wounded veterans.

One unidentified official at the United States Agency for International Development told interviewers in 2016 that officials on Capitol Hill only cared about spending and the burn rate of funding they provided. We were given money, told to spend it, and we did without reason, the unidentified officialsaid. And an unidentified contractor reported being told to give out $3 million a day for projects in one Afghan district.

The New York Timess Sarah Almukhtar and Rod Nordland offer a more detailed look at the money spent on the war, which they say totals more than $2 trillion so far and will end up being much more over time, with little to show for it.

Heres how the Times broke down the costs and results:

Read more at The Washington Post and The New York Times.

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The Terrible Cost of the War in Afghanistan - The Fiscal Times

Former European Central Bank president Mario Draghi told business leaders in Dublin on Thursday evening that Europe must pull closer together to uphold rules of international commerce, a day after US president Donald Trump crippled a key body for settling trade disputes.

Mr Trumps administration effectively shut down the World Trade Organisations appeals court, which has the final say on disputes covering billions of dollars of international trade, on Wednesday by blocking appointments to replace two judges on the so-called appellate body.

At its core, the global system still depends on the willingness of the most powerful states to voluntarily accept constraints on their freedom of action, Mr Draghi said as he received a Business & Finance award in the name of the late Peter Sutherland, who was instrumental in setting up the WTO and became its first director general in 1995.

That willingness is not infinite, a fact we are seeing displayed today in the facing of the WTO appellate court.

Speaking on the day his successor, Christine Lagarde, presided over her first European Central Bank monetary policymaking meeting, Mr Draghi said the WTO problems throw into sharp relief why the European project is so unique and important. He didnt mention Mr Trump in the speech.

The difference between the EU and global bodies is that the unions institutions represent a genuine sharing of sovereignty in which all countries, small and large, have the same rights, Mr Draghi said, adding that when challenges arrive gradual improvements are made.

Mr Draghi said that the euro itself was created to prevent competitive devaluations that undermine open trade, while banking union was set in motion in the wake of the financial crisis.

The challenge for Europe is to extend this logic to completing economic and monetary union more broadly, in particular finishing banking union and deepening fiscal union, he said.

Progress will inevitably be slow and hotly debated. But the evolution from single market to single currency to single banking and fiscal union is, in reality, a logical extension of the aspiration in Europe to make openness among nations sustainable.

EU trade commissioner Phil Hogan said on Thursday the union would toughen its own laws in response to the loss of the WTOs appellate board. His proposal would allow the EU to impose sanctions against countries that illegally restrict commerce and simultaneously block the WTOs dispute-settlement process.

Its unacceptable that the EU cannot enforce its rights through adjudication, Mr Hogan said at a press conference in Brussels. Our actions today are fully compatible with international public law.

The EU is asserting itself more in a bid to prevent Mr Trumps America-First agenda and protectionism from undermining the rules-based global order to which Europe is committed.

Over the past three years, Mr Trump has angered Europe by hitting its steel and aluminium with tariffs based on controversial national-security grounds, dangled the threat of similar levies on foreign cars and drawn up plans to target French goods with levies as retaliation over a digital tax in France.

Meanwhile, Mr Trump tweeted on Thursday saying a deal with China to pause the trade war between the worlds two largest economies was very close. The statement comes just days before the US is due to impose another round of tariffs on Chinese goods. Additional reporting, Bloomberg

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Draghi says Europe must pull together as Trump targets WTO - The Irish Times

The election result is projected onto the Broadcasting House in London on Friday. Reuters

Other European stock markets although lagging buoyant London, which rose over two per cent at one point also powered ahead.

Wall Street opened with a slightly softer tone.

Investors might have two early Christmas presents this week: a phase one trade deal between the US and China, and Brexit getting done, said Jasper Lawler, head of research at trading firm London Capital Group.

Johnson, whose governing Conservative Party swept to a decisive win, will now push ahead with Britains scheduled exit from the European Union on January 31 as he seeks to dispel three years of uncertainty and political deadlock, with a post-Brexit, probably expansionary, budget planned in March.

The UK general election has provided a clearer path towards a resolution to Brexit and looser fiscal policy, which should boost economic activity and push up sterling, UK equities, and Gilt yields, said Hubert de Barochez, an economist with Capital Economics.

But he also warned that as long as there remains the possibility of something like a no deal, those gains ought to be limited.

European leaders welcomed also what appeared to be an end to Brexit paralysis, but also warned Britain against becoming unfair competitor.

The sheer scale of Thursdays victory the biggest Conservative majority since Margaret Thatchers heyday in the 1980s sent the pound soaring to an 18-month dollar peak and to highs against the euro not seen since the June 2016 Brexit referendum.

Investors expressed relief that Johnson roundly defeated main opposition leader Jeremy Corbyns Labour Party which had vowed to renationalise formerly state-owned companies.

The threat to businesses from the Labour policies has been removed and there has been a collective sigh of relief, said Maurice Pomery, founder of trading group Strategic Alpha.

The pound held at elevated levels on Friday but pulled back somewhat from the multi-month peaks forged overnight.

Meanwhile, British business on Friday urged Prime Minister Boris Johnson to provide clarity and assurances on his Brexit deal, while stimulating the stalled UK economy, after his Conservative partys emphatic election victory.

After three years of (political) gridlock, the prime minister has a clear mandate to govern, Carolyn Fairbairn, director general of the Confederation of British Industry (CBI), said in a statement.

Businesses across the UK urge him to use it to rebuild confidence in our economy and break the cycle of uncertainty. Fairbairn said early reassurance on Brexit will be vital, noting that firms will continue to do all they can to prepare for Brexit, but will want to know they wont face another no deal cliff-edge next year.

Britain is set to depart the EU by a deadline of January 31 thanks to Johnsons decisive victory in Thursdays general election.

But he still has to negotiate a new economic partnership with the bloc that remains Britains biggest trading partner.

Catherine McGuinness, policy chair at the City of London Corporation, a local government authority for the capitals powerful financial district, pointed to a long road ahead on Brexit with Britain having to negotiate trade deals also with non-EU nations.

For the City, it is vital that the future framework agreement recognises the enormous contribution of the services sector, securing maximum market access and developing a structure for the UK economy to prosper in the years ahead, she added.

Johnson, whose general election campaign message was Get Brexit done, has promised to forge a Canada-style free trade agreement with the European Union, handing Britain greater freedom from EU rules but would involve more barriers and costs to trade.

British companies... are eager for some clarity now, Jonathan Geldart, director general of the Institute of Directors, said on Friday.

For directors, Get Brexit done will only have meaning once the details of our long-term future relationship with the EU are clear. Geldart added: The prime minister must resist the urge for arbitrary negotiating deadlines, and should commit to a proper adjustment period that starts when businesses know the full detail of what changes they may be facing. - Skilled workforce - On the domestic front, business leaders on Friday urged the new government to be mindful of shaking up Britains immigration, noting the need for skilled workers to help grow Britains stalled economy.

The UKs future success depends on attracting, retaining and developing high quality talent, said McGuinness.

A critical first step is creating an effective and efficient visa system to meet demand for talented individuals. But the government also needs to look closer to home to supercharge our own skills agenda. Concerns about mass immigration from the EU was one of the drivers of the Brexit referendum in 2016.

Agencies

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UK stocks and pound surge on Johnson's election triumph - Gulf Today

Economists at the World Bank and International Monetary Fund must feel pretty lucky these days. They work for just about the only institutions set up in the aftermath of World War II that aren't in the middle of an identity crisis. From Turtle Bay to Brussels, from Washington to Vienna, the decay of the economic and security infrastructure of the postwar world has accelerated in recent weeks. The bad news: As the legacy of the twentieth century recedes into the past, the only twenty-first century alternatives are offered from an authoritarian surveillance state.

The pressure is both external and internal. Revisionist powers such as China, Russia, Iran, and North Korea undermine the foundations of global governance and hijack institutions to the detriment of the liberal international order. The institutions themselves lack the self-confidence necessary to further the cause of human freedom. Meanwhile, the most powerful nation in the world has turned inward. Its foreign policy is haphazard and improvisational, contradictory and equivocal. The confusion and zigzagging contribute to the erosion of legitimacy. It delays the emergence of new forms of international organization.

The breakdown was visible at last week's NATO summit in London. Remarkably, the source of the immediate ruckus wasn't President Trump. It was French president Emmanuel Macron, who doubled down on his criticism of the Atlantic alliance that he'd expressed in a recent interview with the Economist. Trump disagreed with Macron's description of NATO as "brain dead." He and other allies didn't back Macron's call for rapprochement with Russia and China and renewed focus on terrorism.

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Macron wasn't the only troublemaker. Turkey's autocratic leader, Recep Tayyip Erdogan, who recently tested his Russian S-400 air defense systems against his American F-16s, said he would block a Balkan defense plan unless NATO designates the Kurdish YPG a terrorist group. The summit ended with a leaked video of Macron, Justin Trudeau, Boris Johnson, and Dutch prime minister Mark Rutte sharing a laugh at Trump's expense. Haughty euro-elites mocking the American president is always an affront, but it is especially counterproductive now when the alliance is under attack from prominent voices within the United States.

When it was founded, NATO was one part of a strategy whose goal was the prevention of another global war. Security guarantees and the forward deployment of conventional forces bound America to Europe and the Europeans to each other. Another part of the strategy led to the EU. It integrates the economies of nations that unleashed the two most devastating conflicts in human history. It was thought that trade relations contribute to peace and nationalities can be submerged under a continent-sized umbrella. What the architects of Europe didn't anticipate was popular resentment of bureaucratic administration, the imbalances and fiscal consequences of monetary union without political union, and the reassertion of national identity that results from large-scale immigration.

Today the politics of every major European country is a mess. I write these words on the day of a British election that will determine whether the United Kingdom leaves the EU and whether an anti-Semitic socialist lives in 10 Downing Street. Germany flirts with recession, its chancellor is a lame duck, the grand coalition hosts an SPD under far-left leadership, and the largest opposition party is the Alternative for Germany. Macron might want to spend more time on domestic politics: His approval rating is around 30 percent, striking workers have paralyzed France, and 13 French soldiers were killed in Mali.

National populism has transformed Hungary, Poland, and the Czech Republic and plays a significant role in Germany, France, Austria, and Sweden. No longer deputy prime minister of Italy, Matteo Salvini remains the most significant political figure in his country. "Recent opinion polls indicate that if elections were held tomorrow, Mr. Salvini would not only easily become prime minister, but that a coalition of the League, the post-fascist Brothers of Italy and the remainder of Mr. [former prime minister Silvio] Berlusconi's Forza Italia would command an absolute majority in parliament," writes Miles Johnson of the Financial Times. The European leaders who fear Salvini are nonetheless ambivalent about the threat posed by Vladimir Putin and by Ayatollah Khamenei. They are happy to advance the Nord Stream 2 and TurkStream pipelines andcircumvent U.S. sanctions against Iran.

Frenetic institution building accompanied victory in World War II. The Allies created organizations devoted to international security, diplomacy, health, and economics. The first to go was the Bretton Woods agreement on international finance, which ended when Richard Nixon took America off the gold standard in 1971. The next was the United Nations, which revealed its corruption and domination by dictatorships in its resolution equating Zionism and racism in 1975. The Iraqi nuclear facility at Osirak (fortunately destroyed by the Israeli Air Force in 1981) was evidence that the Non-Proliferation Treaty is only as good as the regimes that sign it. NATO and the EU survived the Cold War and flourished in the two decades after the dissolution of the Soviet Union but both have run up against the limits of expansion. Both have lost sight of their historic function to preserve the peace.

Sometimes changing circumstances render institutions powerless. That is happening to the World Trade Organization. The WTO, endowed in 1995, was built for a unipolar world. When China joined in 2001, its GDP was one-tenth the size of America's. Now it's more than half and China has emerged as a military, industrial, and technological rival. But the WTO still designates China as a "developing" country, which entitles it to certain advantages. President Trump's campaign against this exorbitant privilege reached an impasse December 10, when his administration blocked judicial appointments to the organization's dispute-resolution court. It no longer has the capacity to arbitrate. The WTO is toothless. Hollowed out. What will replace it? Nothing has been proposed.

The motive power behind all of these institutions was American commitment. What upheld the structure was our willingness to sustain the costs of international security and global defense of democracy. That engagement began to wane after the Cold War. By 2008 it was practically nonexistent. The president's disinterest in foreign affairs is a reflection of his countrymen's. His administration, to its credit, has proposed great power competition as the basis for a renewed American grand strategy. The follow-through has been difficult.

That has left us with entropy. The international scene is filled with decayed institutions and unpalatable choices. On one hand is the status quo. On the other is China's Belt and Road Initiative and Made in China 2025. "The crisis consists precisely in the fact that the old is dying and the new cannot be born," wrote philosopher Antonio Gramsci. "In this interregnum, a great variety of morbid symptoms appear." And no one has a cure.

Matthew Continetti is a resident fellow at the American Enterprise Institute and founding editor of the Washington Free Beacon. The author of The K Street Gang: The Rise and Fall of the Republican Machine (Doubleday, 2006) and The Persecution of Sarah Palin: How the Elite Media Tried to Bring Down a Rising Star (Sentinel, 2009), his articles and reviews have appeared in the New York Times, Atlantic, and Wall Street Journal. He lives in Virginia.

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Present at the Demolition - Washington Free Beacon

Political risks weigh especially on countries with weaker fiscal capacities

While electoral periods have often been the source of political risks, we have recently seen unrest and violence spreading across large parts of emerging markets with hot spots in South America and the Middle East.

The roots often lie in perceived corruption, social injustice and political freedom but it is impossible to capture all elements. The chart below compares countries in emerging markets on political stability and perception of corruption, and we find that many of the recent high profile protests take place in countries with weaker scores on both (highlighted in bold). Chile is an exception, considered as strong on both dimensions and yet facing prolonged unrest. To assess governments capacity to deal with dissent (often via social spending), we included government debt as a 3rd element (bubble size). Lebanons fiscal position is undeniably stretched while Chile and Peru have the most comfortable positions.

Link:

Electoral calendar and political risks in emerging markets in 2020 - ING Think