Mr. Trump And The Empire Of Trust

by: Kevin Wilson

Summary

President-elect Trump’s proposed re-structuring of the American defense posture, expanding our military in general but cutting back on some of our major overseas commitments, is likely to be expensive.

He would like to opt out of the defense sequester agreement (Budget Control Act); he would also like to expand the military at a cost of $150-$300 billion.

There is also concern over the cost and ineffectiveness of our military interventions, and the weakness of many of our allies; Mr. Trump may decide to realign our global alliances.

Through this all, Mr. Trump will be dealing with the role of America in keeping world peace; surprisingly, the Romans had the same problems in their "empire of trust."

Like the Romans, America has gotten an empire accidentally; this has worked because we are trusted; Mr. Trump will need to maintain that; buy RTN, BA, HON, COL.

Ruins of the Roman Forum

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Source: Destination360.com

The election of Donald J. Trump as the next president of the United States is potentially a major turning point on a number of fronts. I have already written about the potential impact of Mr. Trump's proposed trade policies in another posting. Here I will discuss in some detail the implications of President-elect Trump's proposed re-structuring of the American defense posture, and the implications of his plans to expand our military in general, but cut back on some of our major overseas military commitments. Mr. Trump has noted that the Army is at the lowest troop strength since 1940, the Navy is at its lowest ship strength since 1915, and the Air Force is at its lowest aircraft strength since 1947. The US Army has dropped by 74,000 troops since 2009, and now stands at 479,000 soldiers; this is considered an inadequate number given the many overseas deployments of recent years, and the multiple threats that may have to be dealt with. In 1988, we had 592 ships in the US Navy, but now there are only 276 ships, which the Pentagon says is an inadequate number to do its job. The average age of the planes in the US Air Force is 27 years, and fighter jet numbers have fallen below the amount needed for the Air Force to do its assigned tasks.

Mr. Trump's plans will undoubtedly change somewhat once he assumes office and has his own defense secretary, and then hears top secret Pentagon and CIA briefings on a range of topics. But we know in a general sort of way what he would like to do if circumstances permit. He would like to opt out of the defense sequester agreement (Budget Control Act) engineered by the Obama Administration and Congress in 2013; this is scheduled to cut the Pentagon's budget by $33 billion in 2018 alone, and by a prospective $107 billion in total by 2021. It has already cut a cumulative $350 billion from the defense budget since 2012. Repeal of the Budget Control Act seems very likely to pass, according to some observers in Congress (Anthony Capaccio, 2016; Bloomberg.com). President Obama's planned budget of $582 billion for 2018 would presumably jump to about $615 billion as a result of this change.

Navy Destroyer Test Firing a Missile

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Source: The National Interest

President-elect Trump has also stated repeatedly that he would like to increase the Army's strength to 540,000 soldiers, which should cost about $50 billion over four years. He would also like to expand the Navy back up to around 350 ships, which would cost another $15 billion over four years, and about $75 billion in total over about ten years (Mackenzie Eaglen and Rick Berger, 2016; War On The Rocks). Under Mr. Trump's expansion plans, the Air Force would end up with 1,200 fighter jets, which would likely cost another $30 billion over four years. Finally, the Marine Corps would be expanded to around 200,000 troops at an estimated cost of about $12 billion over four years. Adding in smaller programs and greatly improved readiness, plus a new missile defense system, and a new push in the war against ISIS, the total rises sharply, and we could see an expansion of the defense budget by at least $150 billion, and possibly as much as $300 billion over four years. So the obvious question is, where will all of that money come from?

F-35 Fighter Jet Is the Most Expensive Tactical Plane Ever

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Source: Investor's Business Daily

President-elect Trump believes that there is much waste in the Defense Department budget, just as there is elsewhere in the federal government. It is hard to disagree. He has vowed to root out much of this waste via a full audit of defense expenditures, and thus save many billions of dollars. For example, the Pentagon has added some 70,000 new positions to its workforce since 1990, according to Dov Zakheim, who was a comptroller in the Pentagon under President George W. Bush (Capaccio, op. cit.). It is unlikely that these have added to efficiency. But cutting the waste in the defense budget has been the goal of many presidents, starting with Ronald Reagan; however, the Pentagon bureaucracy has always been able to fend off efficiency and accounting attacks from the White House or Congress. It is far more likely that Mr. Trump will find the money to fund his programs by looking elsewhere in the federal budget.

For example, in a speech during the election campaign (Matthew Boyle, 2016; Breitbart), President-elect Trump pointed out that improper government payments due to fraud and inefficiency are estimated to total a whopping $135 billion per year. Unpaid taxes add up to an additional $385 billion (!) per year. Congress even spent $320 billion (!) in the 2015 fiscal year on 256 different expired laws; in other words, these expenditures were not even authorized to occur. This massive waste and fraud can surely be reduced a bit, in spite of the risk of goring sacred cows in the bureaucracy. In fact, if Mr. Trump and Congress can cut the waste and fraud by as little as 5% going forward, that would save about $200 billion over ten years. Mr. Trump also plans to pressure some of our allies to contribute more to the support of our alliances, including NATO. He rightly points out that only five NATO countries currently meet their funding obligations, which involve spending 2% of GDP on defense.

In addition, Mr. Trump expects to ask specific allies like Germany, Japan, South Korea, and Saudi Arabia to pay much more in exchange for the huge commitment in resources the US has made to their security. I'm not sure what arguments would actually sway these governments to act. It is possible that Mr. Trump could simply reduce the level of personnel or weapons we supply to these countries to get them to increase their financial contributions to their own security. There are perhaps solid arguments to be made in favor of cutting back on some of our other overseas deployments as well. Finally, Mr. Trump has vowed to review our future potential defense commitments and cut down on the number and size of our interventions in hot spots like the Middle East and North Africa.

Here we start to see a potential problem. Mr. Trump is trying to resolve a dilemma for which voters and taxpayers have long sought a solution. We have been at war since 9/11/2001, but many feel that this has gone on too long and achieved far less than advertised. Mr. Trump claims that our military actions in the Middle East and Africa have cost us $6 trillion since 2001, and of course it has cost thousands of lives, and left us with tens of thousands of injured service members. An academic report in 2011 (Brown University; as reported by Daniel Trotta of Reuters) estimated the cost of the war on terror at $3.7 trillion then, with an estimated long-term cost of $5.4 trillion, so Mr. Trump's claim appears to be in the ballpark. Yet, we do not appear to be more secure than we were in the beginning. Surely, part of that impression derives from the very nature of Middle Eastern conflicts: they are interminable. But another part derives from the fact that after much expenditure of blood and money, the security of our allies and ourselves continues to be eroded by the attacks of terrorists around the world. The spread of terror attacks has evolved in ways that are harder to combat now, and the military answer in one conflict zone may not have direct applications elsewhere.

The massive invasions of Afghanistan and Iraq have not ultimately resolved the terror crisis, and it is not clear what will. We also face a growing military threat from China in the South China Sea, and an increasingly adventurous Russian military. Our problems with Iran are long term and vexing in their complexity. President-elect Trump questions whether our strategy has been the right one in places like Iran, Libya and Syria, and also whether that strategy has been properly executed elsewhere in recent years. He wants to confront the Chinese and Russians but also wants to negotiate with them on other issues. He ultimately plans to shake things up at the Pentagon to try to reset and re-orient our defense posture in the world.

As Mr. Trump starts down this road, he will soon discover, if he hasn't already, that not only is American defense policy based on a complex interwoven fabric of global alliances with many countries; it is also based on the concept of an "empire of trust." I don't know whether people in government call it that, but I do know that our policy has been consistent with this concept for many decades. The term derives from a book written by famous historian Thomas F. Madden (2009; Empires of Trust: How Rome Built - and America Is Building - a New World; New York, Penguin Group (Dutton), 336p.). In his book Madden points out that the superpower status of the Americans now is exactly equivalent to that of the Roman Empire during its republican era (510 BC - 27 BC). Each in effect built an empire, but not the kind we usually think of based on the later history of the Roman emperors. Madden points out that there are in fact three kinds of empire: an empire of conquest, such as Genghis Khan's or Napoleon's; an empire of commerce, such as the British Empire before 1947; and an empire of trust, such as republican Rome and modern America.

Roman Empire in 15 BC

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Source: YouTube

Movies have long presented the Romans as an empire of conquest, but Madden begs to differ. That may be what the Roman Empire became once the era of the emperors began, but before that (510 BC-27 BC), during the era of republican rule, he argues that the Romans expanded their empire by building alliances and defending their allies from outside attacks. They actually had no interest in building an empire, which is ironically how they ended up with one: They could be trusted.

The same thing has happened to the United States. Madden points out many very interesting facts and anecdotes to support his argument that, before the rise of the emperors, Rome was actually something that might be termed an empire of trust. Rome desired to "secure the horizon," i.e., fight its battles far from home. This was because the Gauls (tribes in the region of modern-day France) had attacked Rome and sacked it in 390 BC, and from that experience, the Romans vowed "never again." This is similar to our Pearl Harbor legacy. From then on, Roman policy was to form new and stronger alliances and to defend all of their allies at their respective, far distant borders. This solidified their alliances and brought in new allies, because each defeated enemy was invited into the alliance. The parallel with the American Marshall Plan after World War II, and the strong alliances built since then with our defeated enemies Germany, Italy, and Japan, is uncanny.

Interestingly, the Romans eventually ended up protecting the older Greek culture after they sought Roman help in a war; Rome always protected them as allies for hundreds of years after that. But just as in the instance of a younger America protecting an older Europe, the younger culture (Rome) was constantly criticized and sneered at by the older culture (Greece). Nevertheless, the Greeks knew that Rome would be there when needed, and would not oppress them or violate their rights. This is where the empire of trust comes in. Of course, this doesn't mean such oppressive acts never happened; however, the Roman Senate dealt quite severely with any of its generals or proconsuls who took too much liberty with the locals. Indeed, Cicero famously undertook the prosecution of Gaius Verres, the governor of Sicily, for extortion and other crimes against the locals in that province around 70 BC; the result was a huge victory for the Sicilians that forced Verres to forfeit millions and live in exile for the rest of his life. There are a number of other very similar events that occurred throughout the republican era of Roman history.

Roman Statesman Cicero

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Source: The Imaginative Conservative

Of relevance to the present argument that Mr. Trump has made about our allies not doing their fair share, it is interesting to note how the Roman alliances actually worked. Roman allies signed a formal treaty (foedera - where we get the word federal); thereafter they had to supply annual military support and could not remain neutral in wars. This system worked for the preservation of Rome and its allies for hundreds of years, even after the end of the republican era (the Pax Romana). NATO, in contrast, cannot rely on all of its current members to support the military budget annually, nor can it count on all members helping out by providing actual armies in the field in the case of war. The same can be said about a number of our other allies. I don't know whether Mr. Trump is aware of this parallel with the Romans, but if he were, it would no doubt concern him in his present deliberations about the defense budget and the proper role of the United States in world affairs.

As he moves towards new budget decisions and revised defense strategies, Mr. Trump will be constrained to a great degree by the fact that virtually everyone in the defense establishment believes in the American version of the empire of trust. To the degree that President-elect Trump attempts to change our mix of allies, or our level of commitment to our current allies, or our troop deployments overseas, he will likely run into serious arguments from the US defense establishment against changing anything big. Thus his idea that Japan and South Korea should obtain their own nuclear weapons, because the US may want to withdraw major forces from the region, will fall on deaf ears at the Pentagon. He will have the power to overrule the generals and admirals, but in so doing, he might risk upsetting the global Pax Americana in a substantial way. If a mistake is made and our presence is needed but unavailable, bad things could happen. Power vacuums are always filled by either the global hegemon (the UK in the 1700s-1800s; the US after 1945), or the biggest bully on the block (Germany in Europe, 1933-1945; Japan in Asia, 1937-1945).

US Special Forces Training and Combat Operations Are Global

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Source: ZeroHedge

We have perhaps taken the empire of trust concept to a ridiculous extreme in recent years, and we have certainly had a disturbing tendency to take on new regional wars. If we beef up the military, but cut back on the number of regional wars we are willing to fight, it is possible that our strategic goals will be met in full, and our major opponents will respect us enough to avoid military adventures. This excludes the terrorists of course. Here, the Romans have yet another story that we could learn from. In 44-69 AD, Jewish nationalists tormented the Roman governors in Judea with numerous riots, uprisings, and attacks against Romans and their local allies.

Governors who tried to reason with the zealots were driven out or killed. An army sent to deal with this was massacred to the last man after surrendering to a rebel leader named Eleazar. The outrage in Rome was tremendous, and a new legion was sent in to deal with the insurgency. A general (later emperor) named Vespasian moved his troops into Judea to finish the fight. He was then recalled to Rome, but his son Titus took over and put Jerusalem under siege in 69 AD. In the end, he destroyed the insurgents, and also much of the city of Jerusalem. The entire Jewish insurgency disappeared shortly afterward. The Arch of Titus in the Roman Forum commemorates this brutal victory.

The Arch of Titus (81 AD), Rome

Source: ProProfs

Returning to the problems Mr. Trump may have to deal with, there is no requirement that we continue to tolerate bad behavior by a number of our allies, and it may be that Mr. Trump, by suggesting an American withdrawal, is simply laying the groundwork for a meaningful negotiation. It may in fact be both prudent and necessary for the US to trim some of its commitments because our military is obviously over-extended. Striking the right balance on this will be a delicate undertaking, but if the American empire of trust is to continue, it will have to be done. I believe that we can simultaneously cut back on some of our commitments, strengthen the US and NATO military, improve readiness, and reassure our allies, as long as we have a clear vision of what we are trying to get done, and who our friends are. We obviously need the cooperation of our major allies. Costs must also be carefully monitored and controlled.

Finding the limits to power when one is the global superpower, and yet not throwing out the foundations of the current empire of trust, should be challenging for Mr. Trump, but its achievement will provide him with a legacy. Defense stocks may do well going forward, but I am wary of the stocks (Lockheed Martin (NYSE:LMT), General Dynamics (NYSE:GD), Northrop Grumman (NYSE:NOC)) that are associated with very large weapons programs with big cost over-runs. I think Mr. Trump will be cutting back on many of these expensive programs in the near future. More economical weapons systems may be preferred, which suggests that standard equipment suppliers (Raytheon (NYSE:RTN), Boeing (NYSE:BA), Honeywell (NYSE:HON), Rockwell Collins (NYSE:COL), etc.) will do better than those supplying various extremely expensive weapons systems like the F-35 fighter, which Mr. Trump has criticized. Builders of certain very expensive Navy ships may do well simply because so many specialized ships are apparently needed, but again, Mr. Trump may have a sharp pencil in hand when he looks at these programs.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Disclaimer: This article is intended to provide information to interested parties. As I have no knowledge of individual investor circumstances, goals, and/or portfolio concentration or diversification, readers are expected to complete their own due diligence before purchasing any stocks or other securities mentioned or recommended. This post is illustrative and educational and is not a specific recommendation or an offer of products or services. Past performance is not an indicator of future performance.