Economics and Policy

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Economics and Policy

• 8802, Lesson 2

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Lesson 1 Points to remember

• Definition of strategy
• Elements of national power
• Uses of military force
• Factors influencing national security policy
• Grand strategy as means and ways to ends
• Future uses of force
• Effect of international influences

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Objectives

• Spending decisions and the national economy
• The influence of fiscal policy on national
  decision making, especially in regard to national
  security
• Trade and global monetary policies.

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Overview

• Basic assumption
• The Federal Budget
• The trend
• Global economy

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National power

• Elements
• Diplomatic
• Informational
• Military
• Economic

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Economics

• An art and a science
• Links

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Defense spending debate

• Conflicting demands
• Budgetary process
• Strategic resources
• Political environment

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Strategy

• Role
• Clarify
• Relate
• Conceptualize
• Answers the question
• What plan will best achieve the ends of national
  policy, given scarcer resources for defense?

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Complications

• The decision-making process
• Deficit
• National Debt and interest payments
• Political programs
• Limited options

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National Security Policy

• Influenced by
• Domestic influences
• International influences

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National Security Policy

• Influenced by domestic influences
• Structure of US government
• Domestic political factors
• Societal factors
• American values
• Our self-image
• Traditional policy debates

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National Security Policy

• Influenced by
• International influences
• Threats
• Economic imperatives
• Ideological and cultural forces
• Demographic trends
• Environmental conditions

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The Federal Budget

• Accounts
• Mandatory Entitlements
• Discretionary domestic, defense and
  international spending
• Pattern

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Entitlements

• Examples
• Cash insurance programs 50
• Government health programs
• Government pensions
• Means-tested programs for the poor
• Pattern

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The Economic Environment

• Pattern
• Global and regional integration
• Often conflicting and competing
• Increasing interdependence

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The Cold War

• During the Cold War
• After the Cold War
• Since the Cold War

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Alternatives

• Reduce
• Shift
• Convert

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Congressional Budget Resolution
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Policy Defense Authorization
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The Defense Budget

• Choices
• Constraints
• Mismatch

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Under Funding

• Choices
• Reduce demands
• Reallocate from non-defense
• Reduce force structure

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Constraints

• Federal budget deficits
• Caps on discretionary spending
• Continued growth of entitlements
• Prescription drugs

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Under Funding

• Consequences
• Readiness
• Force Structure
• Modernization
• Sustainability

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1999 Strategic Environment

• Requirements
• Responses to trans-national threats
• Countering proliferation
• Hedging a peer

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Strategic Assessment, 1999

• Strategic goals
• High level of preparedness
• More turbulent global security
• Rapidly changing environment
• Debate
• Old how to get the most out of
• New How to increase and allocate the increase

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Economic Globalization

• Definition
• Forms
• Problems
• US approach

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Issues for Consideration

• Domestic and Military Spending
• Cuts in Defense Spending
• Budget Deficits
• Globalization

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Domestic and Military Spending

• The link between
• Domestic and
• Military spending

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Cuts in Defense Spending

• Possible Effects?

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Budget Deficits

• Effect of a deficit on economic problems?

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Globalization

• Meaning
• Significance of NAFTA?

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Points to Remember

• Historical experience in absence of a threat
• Globalization
• 1999 Strategic requirements

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Next Week

• When to meet?
• Intelligence and Policy