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Barney Frank - Great Decisions

Barney Frank

Frank Barney

Barney Frank is a Democratic congressman representing the Fourth Congressional District of Massachusetts in the United States House of Representative. He is the former Chairman of the Financial Services Committee.

Transcript

In an era of austerity and asymmetric threats, where can we potentially save defense dollars?

I want to begin by responding…you used the phrase ‘asymmetric threat.’ I think we ought to be clear what the asymmetric is. The asymmetry right now is that we have a great disparity between what we need to physically defend ourselves, and the threat.

You know, the terrorists are terrible people. They are vicious, murderous people, and I am eager to combat them. But they are not the existential threat to our ability to exist as a free society that we got first from the Nazis and then from the Communists. Nuclear submarines are irrelevant in the fight against terrorists. I wish they weren’t; then we would have won a long time ago because we have a lot and they don’t have any at all.

What we have is a hangover — really cultural lag — in America. For fifty years, from 1940-1990, we were threatened, I think in a diminished way, obviously, towards the end. But there was always at least a theoretical threat from very powerful, heavily armed bad people. There was no question that the Communist regime was a regime illegitimate by the values I care about. And we had to defend ourselves.

With the collapse of the Soviet Union in the early part of the ’90s decade, that disappeared. So we have some problems now, but there is no threat to our existence. And we continue to act as if there was.

We also have this self-imposed duty to be the policeman of the world. And the answer is: we can substantially reduce American military expenditures. As I spoke here in June, we are talking about 650 billion dollars. We can reduce that by well over a hundred billion a year. I believe, frankly, by, not in the first year, but by a couple years from now, by 150 billion a year, and still be far safer than we’ve been and without any potential threat to our ability to exist.

As I said, it’s kind of a cultural lag that stops it, plus the view of some that America must go all over the world. As to that I would say: if I thought American could be the positive force people talk about, I would probably be for it. But I don’t think that the best armed and the best-trained young Americans can bring democracy to Afghanistan, can solve deep-rooted religious and ethnic tensions in Iraq.

We have a superb military. They are well equipped. They are excellent people. They are very good at doing what a military can do, which is to stop bad things from happening. But they can’t go into a culture very different than our own and make good things happen.

So I believe if we look simply at what we need to do to protect ourselves and to protect those nations, which may be very vulnerable-in the Middle East; I want to keep a presence, but I think we can withdraw from Western Europe and the Mediterranean. I think we should be clear that we are not going to get involved in any massive, major land boards in Asia and we can substantially reduce.

So how does the U.S. know when to intervene for humanitarian reasons?

The criteria of intervention are hard to be exact about, but we can set some general rules. First of all, the likelihood of success is a valid measure. You know, it translates to an individual. If you pass a burning building and there’s someone in there and you decide whether you’re going to go in-if the fire is raging to the point where your entering the building would mean you would die and you wouldn’t help anybody, then you don’t go in. We always calculate the possibility of success. There has to be at least some possibility of success to justify it.

I say that because we are too often are told: “Let’s go in there and let’s see if we can make Afghanistan a society without corruption, without some of the war, etc.” And I don’t think we can.

I’d say it is a situation; well first of all, the easiest criteria is a particular nation being threatened by another nation. I’ll give you an example of where I think I was wrong, I’m sure I was wrong. When the first George Bush went into Kuwait to kick the Iraqis out of Kuwait, he was right. I voted against that because I was afraid, ironically, that George Bush the father would act the way George Bush the son did, and go too far.

If I had known how disciplined, ironically, Dick Cheney, Secretary of Defense, was going to be; I would have supported it. That was the right one; a bigger country run by a bad guy invades a smaller country. We went in and said, “No, you get out of here, you leave them alone.” That’s an important one.

A tougher case is if you have a situation where there is a ruler who’s doing terrible things to his or her own people. At some point, I think, if there is a mass genocide, you step in; that can be difficult. As we sit here today we’re worrying about Syria where Assad is doing terrible things and I would like to stop it. I don’t think America is the one to do that. I wish the Arab league would get together. But if America sent its troops into Syria, as terrible as this idea is — given that we had war in Afghanistan, the war in Iraq; given the ease with which this could be turned into a “Muslim vs. West” — that would be doing Assad a favor. So, that’s again the criterion for success.

And the third is something I just talked about. Are we trying to prevent bad things from happening, or make good things happen? It is a lot easier and cleaner to prevent bad things from happening with military force than it is to bring about good things.

You had mentioned that, in some sense, we’re geared up to fight yesterday’s war. Is there any risk that while we’re patrolling the seas with carrier groups, that fast developing nations can ‘leap-frog’ us and focus on tomorrow’s technologies?

When I talk about our continuing the capacity to fight the older world, that doesn’t mean that I feel we’re not evolved in a new capacity. In fact, it’s almost the opposite. I’ve been critical of excessive spending. One very high ranked guy in the Pentagon, he had been a chairman of one of the staffs, said to a friend, “Tell Frank, he’s right. Our problem is that once we have accomplished something militarily we don’t stop. We keep doing that as we do other things.”

In other words, we’re still ready to fight — as of June today — an all out thermonuclear war with the non-existent Soviet Union. We’re still ready to have missiles and submarines and aircrafts deliver thermo-nuclear weapons. Now the problem is not that we’re doing that instead of the new stuff; it’s that we do that in addition to the new stuff.

So no, I don’t think anybody is leapfrogging us. In fact, every year our technological and physical superiority over everybody, including China, increases. It is that once we have finished a mission, we ought to be able to scale back on that and go forward.

And why is it that other nation’s economies, specifically Europe,  affect us so much; why do they affect the average American?

The EU economies affect us in two ways fundamentally. Most importantly, they affect us the way sub-prime mortgage deals in America in the first part of this century affected them. We have a totally interconnected financial community. You know, we hear people talk about how the crisis of 2008 was as bad as the Great Depression, or almost as bad. In some ways it could have been worse, because during the Great Depression you have trouble here, but people could function over there.

We have now made the world one continuous grid. If there is a failure anywhere it kind of transmits everywhere. So, in our financial system, our banks, our investment houses, our whole financial infrastructure, the way in which we finance things; they’re totally interconnected with Europe. It’s also the case that the confidence of people of the land is important. If there would been a serious meltdown in the European financial system, as we sit here in June 20th of 2012, I don’t think that’s likely but nobody can rule it out. Then that will have negative consequences on us. So that’s the most important thing it does.

Secondly, we sell to Europe. Europeans are among the consumers of the American goods. And as their economy slows down-we sell them less. But I think it is more of the financial inter-connectedness and the fear that people have. And it’s been a very frustrating pattern for the economy, for President Obama.

For three years in a row we’ve had what looked like very good economic growth and for almost the same period in the winter months. And then Europe becomes problematic and it slows us down. And it has to do with this, not has to do with it, is because of the complete interconnectedness of the financial situation.

And what policy tools do we have at our disposal? Because of this interconnectedness and the threat that other economies pose to ours, what policy tools do we have at our disposal?

With regard to the interconnectedness; one, we can make sure that our financial institutions are alert to those dangers, monitor things. And we’ve seen some of that. For example, money market funds in America, a year ago, were much more heavily invested in European financial institutions than they are today. With enough warning they have been able to slow that down, when you do it right away, you caused the problem.

So we can have better financial information, better monitoring, we can have better risk controls imposed on our financial institutions. Part of what we did in the financial reform bill was to insist on this. And that appears to be working. We’ve been able to kind of push, pull down some of the direct American involvement there. Although, we can’t avoid a crisis if things really blow up there.

Secondly, we can as a country to try and help them. And this is interesting. Again, over the last few months, as we’re here in June 2012, the Republican Party has been scandalously irresponsible. Whenever we have tried to respond and make a blow up in Europe less likely, with the Federal Reserve cooperating with the European Central Bank to get funding to the banks at no cost for the Federal Reserve; when we encouraged the International Monetary Fund to get involved, the Republicans have kind of illogical isolation and have objected to that.

So our tools are to cooperate with the financial authorities in Europe to try to keep the money flowing, to prevent these runs on the banks and etc. Our Federal Reserve did a swap with the European Central Bank and helped them make money available. It was very helpful in alleviating some of the pressures. Incredible to me was how the Republicans, I can’t understand why, saying: “Absolutely not, don’t do anything like it.”

It’s particularly intriguing to me that the financial community in America, which agrees that the Fed should be doing this and that we should be supportive of the International Monetary Fund, nonetheless is funding these Republicans who are behaving; it’s almost as if they don’t want Europe to succeed because they know that if Europe doesn’t succeed it’ll hurt America. I don’t think that’s their main motivation, although some of them won’t mind if we take it. It is this mindless opposition to any governmental involvement at all, which extends to them saying don’t help the Federal Reserve help in the financial crisis. And you have people who know better in America, business people, financial business people, supporting that because we hurt their feelings by saying they were irresponsible in the first part of the century.

And not that we have the final say, but should the U.S. be pushing Europeans toward austerity or toward investing to recover?

What we should be urging Europe to do and have been urging Europe to do through the Obama administration is what we should be doing ourselves. In the short term, dealing with the unemployment. Today we were talking about it — on June 20, I read an article in the New York Times about how we in America have lost 650,000 jobs in the state and local area. Fewer teachers, fewer social workers, fewer people to shovel the snow when it snows, fewer people to collect the garbage, to plant the trees; fewer cops and firefighters — and that has held down our employment figures.

The president spoke the other day; he said that the private economy is fine. No, it’s not fine. The point is that the private economy is doing much better than the public sector. It’s a reverse of the Republican argument, which is the public sector is stifling the private sector. We’ve gained, since we began the turnaround over four million private sector jobs. But that’s been offset some by the loss of 650,000 public sector jobs.

What we should be doing is in the short term providing some support for the economy within the context of a long-term deficit reduction. That’s why I talk about military spending cuts, about constraints elsewhere. And what we should be telling Europe today is – yes, commit to a longer-term debt reduction but in the short term don’t do things that are counter-productive. And there’s another reason. It’s not just bad economics, its impossible politics.

One of the things the world should’ve learned in the ’90s, when the International Monetary Fund was doing that: if you believe in democracy, if you believe that the people in the country have the right to vote, then there are limits on what you can force them to do. And saying, “look here’s what my economists say is the best thing to do” and try to jam it down people’s throats will backfire. It’s just not practical. So we ought to be doing better here and there, a short-term effort to stimulate the economy and cut back.

Ironically, by the way, when it comes to the military these sides reverse. My conservative colleagues do not believe that it helps when we hire cops, or when we build roads, or when we construct housing for the elderly, or when we do research into health – they don’t think these things can help the economy. But they believe that if we spend money on weapons somehow that does. So when we talk about reducing military spending over the years, they say: “Oh, that’ll be bad for the economy.” In fact, at a given level of expenditure there are a lot of ways that we can stimulate the economy with more bang for the buck than in the military area.

What threat does Iran pose to the U.S., or is there a larger picture?

The threat Iran poses; again, we’re sitting here in June, I hope that by the time this airs it will not be the case. But, Iran is run by people who are very bad in terms of their values. They are angry, repressive, religious fanatics, prepared to disregard other people’s rights. And if they have nuclear weapons, there are two threats — well there are three.

First of all, that the nuclear weapons will be given to other extremists. We have suicide bombers within the Islamic area. It’s not all of Islam by any means and it’s not only Islamic, but it is true; disproportionately, that’s an Islamic issue right now. It is possible that either the Iranian governments or the elements within the Iranian governments might arm some of these suicide bombers with nuclear weapons. There is a possibility that the Iranian regime itself will do it. I have no confidence in Ahmadinejad not doing things that are both evil and crazy.

And finally, it is destabilizing for the rest of the area. We’re not threatened by Iranian weapons but other countries are. People talk about Israel, Saudi Arabia is terrified of Iran having nuclear weapons. One of the ironic things that was a result of that Bush administration’s terrible mistake in war in Iraq was to strengthen the Iranians.

Because there had been an Iraq-Iran tension and we removed Iran’s biggest enemy in the Middle East by getting rid of Saddam Hussein. Now, I’m glad we got rid of him but the result was, is to help Iran. I think we probably should’ve not had intervened the way we did. So, you have the potential that other states in the Middle East will feel threatened by this. The possibility is that Turkey would feel threatened by this, Israel certainly, Saudi Arabia.

So, you have the problem of proliferation to terrorists from an irresponsible regime that has nuclear weapons. The other possibility is that they might use nuclear weapons themselves against an enemy. And then you have the understandable fear of others in the area: that the craziest regime and the most actively aggressive regime shouldn’t have these weapons, and we got to beef up because of it.