Updated on February 20, 2025, at 7:29 pm EST
Acting Deputy Secretary of Defense Robert G. Salesses said in a statement on Wednesday night that Secretary of Defense Pete Hegseth has ordered a review of Pentagon spending to realign spending to fund priorities of the Trump administration.
The statement from Salesses came after a report from The Washington Post said that Hegseth ordered a plan to cut Pentagon spending by 8% each year over the next five years. But according to the statement from Salesses, the idea is to redirect spending and not actually make cuts to the budget.
“Secretary Hegseth has directed a review to identify offsets from the Biden Administration’s FY26 budget that could be realigned from low-impact and low-priority Biden-legacy programs to align with President Trump’s America First priorities for our national defense,” Salesses said.
“The Department will develop a list of potential offsets that could be used to fund these priorities, as well as to refocus the Department on its core mission of deterring and winning wars. The offsets are targeted at 8% of the Biden Administration’s FY26 budget, totaling around $50 billion, which will then be spent on programs aligned with President Trump’s priorities,” he added.
On Thursday, Hegseth said that the Trump administration would be taking $50 billion away from “woke Biden-era non-lethal programs and instead spend that money on President Trump’s America First, peace through strength priorities.”
Hegseth criticized The Washington Post for reporting on misrepresenting his memo, which he said was “clear as a bell.” The Pentagon chief said he wanted the “biggest, most badass military on the planet.”
In his statement, Salesses said that through the Trump administration’s budget, the Pentagon “will once again resource warfighting and cease unnecessary spending that set our military back under the previous administration, including through so-called “climate change” and other woke programs, as well as excessive bureaucracy.”
Salesses said spending priorities from the Trump administration include the “Iron Dome for America,” referring to an order from the president to establish a major new missile defense system, a project that would be a boon for the weapons makers and likely start a new arms race. Trump has also backed a budget plan drawn up by House Republicans that would increase military spending by $100 billion.
According to Breaking Defense, the memo issued by Hegseth included 17 categories of spending that would be exempt from the offsets:
- Southwest Border Activities
- Combating Transnational Criminal Organizations in the Western Hemisphere
- Audit
- Nuclear Modernization (including NC3)
- Collaborative Combat Aircraft (CCAs)
- Virginia-class Submarines
- Executable Surface Ships
- Homeland Missile Defense
- One-Way Attack/Autonomous Systems
- Counter-small UAS Initiatives
- Priority Critical Cybersecurity
- Munitions
- Core Readiness, including full DRT funding
- Munitions and Energetics Organic Industrial Bases
- Executable INDOPACOM MILCON (military construction in the Asia Pacific)
- Combatant Command support agency funding for INDOPACOM, NORTHCOM, SPACECOM, STRATCOM, CYBERCOM, and TRANSCOM
- Medical Private-Sector Care
Did anyone really think differently? America first doesn't mean Americans first.
Trump is pulling billions back, identifying trillions wasted and lost, planning to return billions to the public, and your write some cheap smear like that.
You stumped me. If I had only known. When I read the headlines, I thought I saw "not make actual cuts".
if only………
Nailed it.
America First means:
– Wall Street first
– Pentagon second
– Wars third
– NSA & CIA fourth
– People fifth (perhaps)…!
Am I optimistic…?!
There is no acting secretary of defense. Hegseth is the secretary of defense. This article started out bad immediately.
Salesses, your fake defense secretary, has no say so.
re: There is no acting secretary of defense.
Correct, it's Salesses — Acting Deputy Secretary of Defense
Trump
Lets cut spending in places we don't like, say we did something, and then re spend it in things we DO like!
Are you going cry and whine for this entire 4 year trip? Where's your pacifier?
seems like youre the one whining
So every 4 to 8 years each side gets to spend on their pet projects anyway.
At least its balanced in that respect…!
“biggest, most badass military on the planet.”
Such eloquence };-)>
Wow, the shambling zombie corpse of Ronnie Raygun's 'Star Wars' rises from the tomb yet again.
Israel's 'Iron Dome' has turned out to be tissue paper when put up against something more than a terrorist group with homemade missiles cobbled out of spar parts. Israel and Ukraine have conclusively demonstrated two things;
1) The best air defense systems on the planet crumble under a saturation attack, and there's no foreseeable work-around.
2) There is no defense possible against hyper-sonic missiles. The warhead creates a plasma cloud around it, which makes it invisible to radar and pretty much any other targeting system.
Russia has been taught that as well
Israel got 72 % effectiveness according to milenium 7
(The warhead creates a plasma cloud around it, which makes it invisible to radar and pretty much any other targeting system.)
What you are saying is false. The plasma cloud gives an infra red signiture . The US tracked the space shuttle when it came down.
Futhermore the plasma cloud works both ways as it makes it hard for the missile to get radar signals and to target moving targets.
So according to some YouTube blogger with vague credentials Israel was able to shoot down 72% of Hamas’s missiles. That’s **NOT** impressive, the things don’t even have a guidance system and are considerably more primitive than the V2.
A big infrared blob is utterly inadequate for targeting. It was fine for the Space Shuttle, it didn’t maneuver and they weren’t trying to hit it with an impactor.
Milenium 7 has a good reputation
Correction Israel shot down 72 % of Irans much more powerful missiles.
Anyone who is credulous enough to believe the IDF (because that’s their number) is not someone that I would put much trust in. It’s about believable 40 beheaded babie.
nothing to do with the IDF
Milenium 7 did his own analysis
So he has access to the IDF/Pentagon radar track recordings? Because people who do said the IDF’s claims were utter crap, and even though Israel estimates that it spent a billion dollars defending against that one relatively small attack (and the US/France/Jordan/US spent at least that much) and they drained their ready reserves of ammunition the system was still saturated by only (IIRC) 190 targets. Iran has thousands more that they could have launched.
If Iran had launched a second wave of missiles Israel would have been almost defenseless. Air defense systems generally have tubes loaded and one or two more salvos-worth of reloads on hand. Then they have to bring more from whatever depot is closest. The reason for this is to prevent chain reaction explosions that would take out the entire system and its crews in the case of a near miss or a malfunction, while depots are (normally) designed to prevent this from occurring. Once Israel had used up its ready reserve defending against the first wave there would have been a delay before they could reload.
Knew something fishy and scam-full about all this…!
Trump and the Musketeer want to reduce government spendings… Not realizing is that the Pentagon annual budget is the largest wasteful government expenditure of the history of the US and the world…!
Certainly the most inefficient military budget currently on planet.
And congress wants 100 billion more to waste on bombs and missiles.
… If that money is actually spent…! Since there’s no audit that $100 billion may transfer directly from the Treasury department to mic elite Swiss accounts…!
It’s patriotic to trust “us.”
Patriotism had died in US a long time ago when US idiotic wars started and failed …! It’s only visible in DC establishment…!
Actually, many in my family follow most whatever the leadership says. There are people like that. Followers.
Patriotism is the national religion.
It's hard to blame them.
The old bait and switch.
Haven't we citizens had enough of this?
Didn't more than 50% of you suckers vote for this dumdum?
No. Trump received votes from 49.8% of voters, comprising 23.3% of the population.
Oh
Good enough to smoke Biden and Kamalala azzes! The end of open borders and an azz kicking for globalization, victory is sweet!
Did I say how Trump will be ending the Ukraine war, alright!
Good enought to barely eak out a win against Harris.
It's POSSIBLE that THIS time he'll be more "closed borders" than Obama and Biden (he wasn't in his first term). If so that will be a bad thing.
It's also POSSIBLE that he'll pursue his trade war BS even harder than the first time around. If so, your economic life will get worst unless you own a "protected" steel company or whatever.
I doubt that he'll be ending the Ukraine war, though.
Didn't you Trump freaks think that Drumpf would end the war in 24 hours
Hoped, indeed.
FU buddy! Ukraine and Zman will soon be history and made to eat s### in the "peace" negotiations.
Senator cotton, the "Christian zio" war monger will decide to become a dual citizen and take over for nutonyahoo.
Ukraine is a country and Ukrainians are a people. You Russian imperialists will eventually come to terms with the fact that Putin is a dictator
And if Putin disappeared tomorrow, the Russian Federation would immediately withdraw from all of Ukraine's land and issue a blanket apology. /s
Why should the US be involved?
Identity group A battles identity group B… I’m in neither.
Many identity groups lack nation states.
Whom would you prefer? Zelensky?
Yes
At this point, if anyone actually expected..the Pentagon, a Bipartisan Gravy Train to be stopped by Musk or CoPresident, you're either very young or very Gullible.
It sounds to me that you need to grow a set and stop wimping out so easily. 🙁
Oohhh..Random Ad Hominem & it’s Homoerotic.
Way to let everyone know that you have no reply& think about Testicles, often.
The only thing maga freaks know on this website is ad hominem and gaslighting
I previously humiliated that Incest& his lil six still hurts apparently.
Lol
You rarely say anything. You just call people freaks and occasionally suggest that Ukraine should be supported.
Fym “rarely”
lol
Take a look at Brian Bixby's comment — he nailed it. I was going to write on it but he did a better job.
Collaborative combat aircraft (CCA) is a US program for unmanned combat air vehicles (UCAVs) that is considered broadly equivalent to a loyal wingman to manned combat planes, which would include F-35s . . .Also the combat commands are safe. . .Double Damn.
Trump is sure performing his business deception into his politics trying to Con the US public even his own base…!
Everyone knows that even Conventional Rockets can overwhelm 'Iron Dome' style Air Defense.
The new, Hypersonic Oreshnik Class have friggin PLASMA around the Warheads, making them IMPOSSIBLE to Target.
You are going to need low IQ/not very well Educated people to Vote for this.
I am sure Russia is working on the ICBM version of Oreshnik with nuclear and non-nuclear war heads…! However, until US comes up with similar weapon or anti-weapon, Russia won't strike US territory pre-emptively with nuclear Oreshnik…!
Yes, but that doesn't mean it won't turn into a Money Pit.
Logic doesn't apply when spending money is the goal instead of protecting citizens
4:05
4:05
Defence is better than offence.
You funding war crimes and crimes against humanity is wrong even if its the usa supporting it? Thats unamerican to complain about it https://uploads.disquscdn.com/images/13e06912961ab6d5f94eed0937091e8576826491a39f41d137036be7c3a7f4b4.jpg
https://uploads.disquscdn.com/images/02da188fd4348aad8d52b1061aaa98a7fb5e6b2e7e391a5c0341b3f693d1ddde.jpg So is trump the antichrist, archie bunker or just another perpetually lying narcissistic lunatic???
U must mean Joe Bidet, he left office a few weeks ago, we now have a Prez. who is kicking azz big time. 🙂
Wasn't long ago, days perhaps, when you were badmouthing Trump.
He’s kicking your ass and robbing you to feed the feed the rich if you’d bother to open your closed eyes closed heart and tighter than a drum mind. But just keep on mooing as your hereded…Hear that bell? Go jump and salivate!
Trump is the best charming showman with all the glitz and sizzle. Everything ahs to be a show and the audience loves it – best con artist ever. He produces magic and most children like magicians. The stuff they produce is not real, but it looks real and out of this world fantastic.
But in order to perform his tricks he is breaking a lot of things, exposing the overall corruption adn rot in our system gone bad – and that is a positive thing. So now it will take someone else than him to get to work with the help of all the public to develop a better, fairer system.
Univers25
psychopath
sociopath
down a path
to a shitshow
With a chainsaw
gasoline
and a match
watch the dumpster fire
as these morons rob the store
Remember
without elon
you wouldn’t get [f]elon
and were all screwed
to high heaven
or is it hell
is there any difference
yin yang
mthfrs
“You Maniacs!
You blew it up!
Ah, damn you!
God damn you all to hell!”
It actually looks like he’s trying to bring positive change. What he actually does might be good or bad, but he’s not just performing tricks.
What a shocker….
The CCP has a debt to GDP ratio of 90% of GDP this is expected to blow past 100% of GDP by 2027
Also this is not the only debt the CCP has , finally the and most seriously CCP has a demographic problem .
This means the US can beat the CCP in an arms race
Next up is Russia the US beat Russia before . We can do it again.
After the CCP and Russia are down is there any nation up to challenging the US ? Nope I didn't think so either.
Remember all – the last time the US was in an arms race Russia went down.
Join up so you can get in on the war action you seem so sure of and are a cheer leader for, or maybe you are just a p#### expecting others to do the dirty work? I think that is it. 🙂
Boots on the ground as we saw in Iraq only means US forces are hostages.
It is better to use airpower. Anyway I spoke of the US winning arms races and boy did you get upset
China is more impressive than was the old Soviet Union.
SEE BELOW
### **The CCP’s Clock Is Ticking**
2030. That’s the year the Chinese Communist Party (CCP) hits the wall. It’s not because of a trade war or a military defeat—it’s something far more inevitable: demographics. The CCP’s disastrous one-child policy gutted its future workforce, and now the consequences are coming home to roost.
They’re running out of workers, consumers, and options. And if anyone thinks BRICS is their lifeline, let’s clear that up right now.
—
### **The BRICS Illusion**
BRICS is supposed to be Beijing’s big plan to replace Western-led global trade. Let’s break it down:
– **Brazil:** With a per capita GDP of just $7,500, they’re more interested in soybeans and samba than propping up China.
– **Russia:** Collapsing from within. Demographic freefall, a hollowed-out economy, and a government fighting fires on every front.
– **India:** Border clashes and historic distrust mean they’re *not* signing up for CCP leadership. India would rather light its own economy on fire than help Beijing.
– **South Africa:** On a good day, they get 18 hours of power. They also lead the world in rape statistics—not exactly a stable economic partner.
– **China:** The BRICS ringleader is a nation on the verge of a demographic and economic collapse.
BRICS isn’t an economic bloc—it’s a support group for struggling nations. And it’s not saving the CCP.
—
### **China’s Shrinking Rolodex**
With BRICS floundering, where else can Beijing turn?
– **Belt and Road Countries:** Pakistan and Lebanon can’t even pay their bills without IMF loans. Broke clients don’t boost exports.
– **Venezuela:** The world’s greatest economic failure. Oil-rich, but somehow unable to turn a profit.
– **Cuba:** They’re *importing sugar*. Enough said.
China’s domestic market isn’t much better. A per capita GDP of $12,800 doesn’t create a nation of shoppers. And with an aging population, consumption is set to plummet.
—
### **Demographics: The CCP’s Fatal Flaw**
Demographics always win. Thanks to decades of the one-child policy, the CCP has gutted its future. Tens of millions of baby girls were aborted, leaving China with:
– A massive bride shortage.
– Fewer workers.
– Fewer entrepreneurs.
– Fewer consumers.
The most active spenders (20s-40s) and top investors (40s-50s) are disappearing. Even rural China is aging out of relevance.
Can AI or robots save them? No. Robots don’t buy goods or pay taxes.
What about reversing the one-child policy? Too late. The women born under that policy are already in their 40s. There’s no reversing decades of bad math.
—
### **Meanwhile, in the U.S…**
Here’s the thing: America doesn’t need China.
– **87% of U.S. GDP** comes from domestic consumption.
– **7%** is trade with Canada and Mexico.
– **3%** is energy imports—but the U.S. is energy independent.
Our $25 trillion economy is built on stable demographics, robust domestic markets, and strategic partnerships. We trade with nations we trust—Japan, South Korea, Australia, Israel, and soon, the UK.
And unlike China, the U.S. attracts the world’s best talent. When we need engineers, we get them from India (which, by the way, *hates* the CCP).
—
### **Why the CCP Is Doomed**
China’s future isn’t about military strength or trade wars—it’s basic economics and demographics:
1. **Shrinking Consumption:**
Fewer people = fewer buyers. Companies lose profits. Governments lose revenue.
2. **Export Markets Drying Up:**
The EU’s demographic collapse means fewer customers. Belt and Road nations are broke. BRICS is a non-starter.
3. **A Collapsing CCP:**
Lower consumption → weaker economy → shrinking tax base → reduced military budgets. The CCP loses both economic power and political legitimacy.
—
### **2030: The Year of Reckoning**
Picture this: you run a dumpling shop. Your regulars? They’re aging out or eating less. New customers? They don’t exist. Revenue tanks, and your shop closes.
That’s China in a nutshell. Shrinking populations, dwindling demand, and no backup plan.
2030 will be the year the CCP hits the wall. The workforce will shrink, the population will age, and global demand for Chinese goods will collapse.
**The United States doesn’t just survivse this and more . Meanwhile, the CCP is learning what it’s like to live in “interesting times.”** They deserve it
You whole analysis seems to assume zero change in any major factor.
But change is possible. If the Chinese regime reduces state economic controls and opens its borders, things get better. If not, things continue to get worse.
The US faces the same choice.
Lets say you got a dumpling shop
Lets say you got 10% less customers and the customers are older ( older customers eat less) will business be better or worse. Bad business > Bad economy > Less tax revenue > less money for the People's Liberation Army.
In 1989 Japan had a per capita GDP of 40 000 per person
In 1989 The US had a per capita GDP of 24 000 dollars per person
In 2024 Japan had a per capita GDP of 36 000
In 2024 the US had a per captia GDP of 70 000 dollars per person
( This does not reflect living standards at all , but it is a good reflection of national power)
The CCP can not export their way out of this either Russia and Europe are facing demographic collapse and BRICS countries don't have money.
I didn’t say anything about “exporting their way out of this.”
“Lets say you got 10% less customers and the customers are older ( older customers eat less) will business be better or worse.”
That depends on nine bazillion other factors in addition to the two you mention. A few:
* You’re spending less on ingredients.
* You’re spending less on labor.
* You’re renting less floor space.
* You’re using less electricity.
* If your customers are becoming more prosperous and you’re able to cater to their upscale-changing tastes you may be able to run higher profit margins on what you sell now versus what you used to sell.
The fantasy of “under-population” or “demographic implosion” is no more inherently valid than the prior fantasy of “over-population.”
**Spending Less on Labor**
Doesn’t that mean workers will have less money to spend? Now we’re getting somewhere. Agree or disagree?
**Spending Less on Electricity**
Yes, the CCP already provides free electricity to its companies. But as you know, “free electricity” isn’t really free—someone has to pay for it somehow.
**Spending Less on Floor Space**
Yes, the CCP property market has crashed. Agree or disagree?
**Spending Less on Ingredients**
Yes, this is happening more and more in the CCP.
see below
—–
**Spending Less on Labor**
Doesn’t that mean workers will have less money to spend?
—–
In every past historical case, lower labor costs have resulted in increased prosperity.
In the past, that’s been due to the lower labor costs lowering prices, increasing demand, resulting in more sales and thus less unemployment and higher wages.
This time looks like it may be different for two reasons:
– Automation is reaching the technological point where it can replace labor as such in many areas rather than just reducing it in one key job (such as the automated looms the Luddites tried to destroy because they thought those looms would cost them their jobs — but 20 years later five times as many people were working in textiles and formerly expensive clothing was cheap).
– With population starting to come down instead of go up, there will be less of a labor supply competing for the remaining jobs.
Does that create new issues? Absolutely.
Does it mean some kind of inevitable doom? Nope.
While I’m not a fan of “Universal Basic Income,” it’s entirely possible that that’s what we’re going to see. An at least partially post-scarcity society. “Fully Automated Luxury Communism,” which will certainly be less rosy than the utopian theory of that name.
Or it might go some other way. But “OMG, we’re not reproducing as fast as we used to” simply isn’t the end of humanity.
—–
**Spending Less on Electricity**
Yes, the CCP already provides free electricity to its companies. But as you know, “free electricity” isn’t really free—someone has to pay for it somehow.
—–
I’m not talking about subsidy effects on point of sale costs. I’m talking about “using less energy” meaning lower costs at whatever level those costs are handled. And the point is that a gourmet restaurant probably uses less electricity than a McDonald’s — while serving a smaller clientele better, more expensive food.
—–
**Spending Less on Floor Space**
Yes, the CCP property market has crashed. Agree or disagree?
—–
So I’ve heard. And that’s good news for anyone in the market to rent or buy real estate.
—–
**Spending Less on Ingredients**
Yes, this is happening more and more in the CCP.
—–
It’s happening more everywhere, and has been happening since the beginning of the Industrial Revolution, but I was speaking specifically to “if you’re serving 10 expensive meals, you’ll be spending less on ingredients than if you were serving 100 cheap meals.” Outside of THAT context, it’s worth pointing out that automation and other technological advancements are the reason regular people can afford to eat more, more varied, and often better food now than they could 300 years ago.
Population reductions will present issues, but they’re also a sign of prosperity. Parents don’t need ten kids to help them work the dirt farm anymore (in my mother’s case it was actually 11 kids, including her, during and after the Great Depression). It takes fewer people to do more things now.
### **How the Chinese Communist Party Keeps Wages Low—at the Cost of Its Own Economy**
If you want to understand China’s economy, don’t look at GDP numbers—look at the workers. The Chinese Communist Party (CCP) has spent decades engineering a system that keeps wages low and exports high. The result? A country that produces more than almost anyone but consumes far less than it should. Here’s how they made it happen.
### **Step 1: Slashing Business Costs—at Workers’ and the Environment’s Expense**
The CCP does everything possible to lower business costs, no matter what it means for ordinary people.
– **Corporate taxes?** Slashed.
– **Unemployment benefits, pensions, social security?** Gutted.
– **Public services for the poor?** Barely exist.
China’s workers are effectively locked out of the social safety net. Healthcare? Underfunded and unreliable. Unemployment benefits? Good luck qualifying. The government spends the little tax revenue it collects on infrastructure and the military, not on helping citizens.
And if cutting social benefits isn’t enough? **You could stop enforcing environmental regulations.** Cleaner air and water might sound nice, but they don’t help keep exports cheap. Factories can run faster and cheaper when they don’t have to worry about pollution controls. The air turns toxic, rivers fill with industrial waste, but businesses stay competitive.
Labor unions? Crushed. Worker protections? Minimal. Because allowing workers to organize or demanding better conditions would mean higher costs—and the CCP’s priority is keeping factories running, not improving people’s lives.
### **Step 2: Rigging the Currency to Boost Exports—at the Cost of Domestic Spending**
China ensures its currency stays weak, making exports cheaper abroad while making foreign goods expensive at home. This fuels global trade but **cripples domestic consumption.**
When workers earn low wages, have no benefits, and lack financial security, what do they do? **They don’t spend—they save.**
– In the U.S., people save around **19%** of their income.
– The French save **23%**.
– Canadians? **24%**.
– But in China? Workers save nearly **half** of their earnings.
Why? Because they have no choice. With no reliable pensions, weak unemployment benefits, and out-of-pocket healthcare costs, Chinese families **must** prepare for financial disaster. Instead of spending on TVs, cars, restaurants, or travel, they hoard money for medical emergencies, layoffs, or retirement.
**The result? China produces more than ever—but its own people can’t afford to buy much of anything.**
### **The Big Picture: An Economy That Can’t Sustain Itself**
For decades, the CCP’s gamble paid off. Cheap labor fueled exports, and China became the world’s factory. But now, the cracks are showing.
– The workforce is **shrinking** as birth rates plummet.
– Decades of neglecting social services are **catching up** with the government.
– Without strong domestic consumption, China remains **dependent on foreign buyers** to sustain growth.
The CCP built an economic machine that runs on squeezing its workforce and sacrificing its environment. The real question is: **What happens when there aren’t enough workers left—or when they decide they’ve had enough?**
Or even more imporantly what happens when foreign buyers have had enough or even when they are not there.
Globalization is over and the and the US does not trust the CCP.
How do you make money if you less customers and will continue to have less customers forever?
The same customers of the dumpling shop will not become more prosperous as they are suffering from the effects of demographic collapse both at home and abroad . They have less customers too.
As I said Europe and Russia are also facing demographic collapse. So the CCP can not expect sales to them to them to bail them out.
Demographics ARE destiny, see Japan or now we can also see Germany and South Korea who are also facing the effects of deglobalization and demographic collapse.
This is the script of POLYMATTER TRADE WAR
China has a problem: its groceries are too cheap.
In fact, nearly everything, from milk to televisions, vacations, and clothes, is becoming more and more affordable by the day.
To make matters worse, it’s selling a record number of (increasingly sophisticated) exports to satisfied consumers around the globe.
And one more thing: its bridges are too sturdy, its high-speed trains too fast, and its airports far too clean.
Now, to a New Yorker, San Franciscan, or Seattle-ite—with our “crumbling” infrastructure, diminished manufacturing, and “sky-high” inflation—all this may sound downright absurd.
But, believe it or not, all of these trends—appealing as they may sound—are actually symptoms of a much larger economic problem.
…One China may soon attempt to solve by launching a trade war.
A Chinese worker, employed by a Chinese company in a Chinese factory, manufactures a bicycle.
That bike is then exported to the United States, where it ends up on the shelves of a sporting goods store in Columbus, Ohio.
It stands to reason that this sequence of events could only be a good thing for China.
Economics 101 seems to confirm this intuition: exports are one of the four components of GDP.
More bikes, more economic growth.
And, in any “normal” country, this would be true.
But China—in ways both good and bad—is not a “normal” country.
Because of this, that bicycle has a hidden economic cost.
To see why, we need to ask a simple question: Why was it produced in China, and not, say, Brazil, or India, or Slovenia?
One reason, of course, is its low cost of labor.
As we know, China was, until recently, the most populous nation on Earth.
Its millions upon millions of rural-to-urban migrants provided its factories with a steady stream of cheap workers.
Another reason is subsidies.
There’s nothing subtle about this: with the stroke of a pen, Beijing unleashes a wave of cheap loans, tax credits, deductions, rebates, and discounts.
And when it considers the industry “strategic,” this wave becomes more of a tsunami.
As Pittsburgh knows all too well, it happened to the Chinese steel industry.
As Ohio knows, it happened to Chinese solar panels.
And as Detroit is about to find out, it happened, most recently, to electric vehicles.
For a sense of just how massive these subsidies can be, Chinese buyers could at one point save sixteen thousand dollars on a new EV—effectively a 50% discount on their $33,000 average price.
The Chinese bike is cheaper than the Brazilian, Slovenian, or Indian bike in part because its factories are showered with generous government support.
The Party is unapologetic—indeed proud—of its role as director of the Chinese economy.
But this is just the tip of the iceberg.
Perhaps because those sixteen thousand dollar subsidies—the tax credits, low-interest loans, and rebates—are so brazen, we miss the vastly more numerous, more subtle, and ultimately, far more insidious subsidies—the ones we don’t even think of as subsidies.
To spot them, imagine your only goal was to decrease the cost of doing business.
What things could you do—or not do—what corners could you cut, what laws could you pass, to make producing bicycles cheaper?
Well, for starters, you could lower the corporate tax rate by cutting down on unemployment, social security, pensions, and disability benefits.
Then, what few taxes you did collect, you could spend constructing roads, bridges, ports, and pipelines for the benefit of private corporations.
You could stop enforcing environmental regulations.
You could ban the formation of labor unions.
You could systematically exclude the most impoverished workers from public services.
You could make energy and water dirt cheap.
You could hand out loans with no questions asked.
And if you were feeling really creative, you could even depreciate the currency—making your exports cheaper for foreign consumers while making imported goods more expensive for your own consumers.
Follow these steps precisely, and you’d end up with a country that looks a whole lot like China.
Explaining all the ways labor is used and abused in the country would take up an entire video on its own—and likely will at some point—but suffice it to say for now: all the above is true.
If you think the American government is pro-business and anti-worker—sure, and also—try smelting iron in Hebei or farming cotton in Xinjiang.
Each of these things—from the under-enforced regulations to the abundance of roads on which to transport commodities—are, functionally, corporate “subsidies.”
Now, our goal here is not to judge whether these “subsidies” are fair to foreign competitors, fair to impose on Chinese workers, or whether these are technically violations of free-trade rules—we’ll save these questions for that future video.
The point, for now, is that—right or wrong—all these things lower the cost of making a bicycle.
To see why this matters, let’s compare that Chinese bike to, say, a bottle of French wine.
Both are exports.
And both grow their country’s economy.
But, there’s a crucial difference.
The wine was produced in France because of its natural advantages.
By converting free sunshine and superior soil into high-margin champagne, the French farmer creates profit out of thin air.
This is a textbook, albeit oversimplified, example of what an economist would call “comparative advantage.”
Whereas, the bike was produced in China thanks in large part to all those subsidies—both direct, like tax credits, and indirect, like a depreciated currency.
Of course, China has advantages too.
With or without subsidies, it would surely produce some fantastic tea, rice, and porcelain.
But it’s no coincidence that this one country produces the world’s cheapest bikes, televisions, toys, and clothes—and it’s not just its hourly wage.
Now, you might be thinking, so what?
If we’re setting aside fairness, ethics, and rules, why does any of this matter?
“Natural” or “artificial,” these exports have clearly made China a far richer country over the past thirty years just the same.
Well, the problem, as the Peking University professor of finance Michael Pettis has repeatedly emphasized, is that these subsidies aren’t free.
While both the wine and bike increase their country’s exports, the latter also decreases China’s consumption, another component of GDP, in the process—this is that “hidden” cost.
That’s because ultimately, Chinese workers pay for all these shortcuts, rebates, credits, and other pro-business policies.
First and most obviously, they pay in the form of lower effective wages.
They work longer hours, they get paid less, and they have fewer benefits.
In other words, they have less money to spend, decreasing domestic consumption.
But it’s much worse than it looks…
Of the tiny wages Chinese workers do earn, they also can’t spend as much of it.
With such meager pensions, weak unemployment benefits, and difficult-to-access public healthcare, Chinese workers have no choice but to save for a rainy day.
Americans stash away about 19% of their paychecks.
The French, 23%.
And Canadians, 24%.
Chinese, on the other hand, save almost half.
Rather than buy more TVs, cars, or computers, Chinese families do what anyone would do in their shoes, knowing they’re on their own: save in case they get laid off, sick, or — gasp — retire!
Again, sacrificing lower consumption for higher exports was a deliberate tradeoff made by Beijing.
And make no mistake: it paid off handsomely.
Just look at this incredible growth.
There is, however, a catch.
Not all growth is created equal.
Being the “world’s factory” is a great gig when you have willing and able customers.
But customers aren’t always able.
During the Great Recession, millions of Americans were laid off, demand for goods collapsed, and Chinese factories were left sitting idle.
Nor are customers always willing.
As we’ll see, the United States increasingly sees a strategic interest in limiting its trade with China — even though its goods may be cheaper.
Put differently: with exports, it takes two to tango.
Whereas domestic consumption is much easier to control.
And China sure does love control.
By shifting its emphasis from these fluctuating, unpredictable, and politically fraught exports over to domestic consumption, China’s economy would be much stronger and more resilient.
None of this is rocket science.
Beijing has known what it needs to do for decades.
And it was well on its way to transitioning away from exports — seen declining here between about 2005 and 15 — and toward consumption — seen gradually rising here over that same period.
Then, a pandemic happened.
Americans, stuck inside with nothing to do and thousands of dollars worth of stimulus checks, indulged in some retail therapy.
We bought new chairs, computers, video games, yoga mats, dumbbells, and bikes.
Thus, after over a decade of slow decline, China’s factories started working overtime, reversing years of progress away from manufacturing.
Still, surely this was only a brief diversion — a momentary setback under exceptional circumstances.
Three years and many lockdowns later, Beijing opened the floodgates — very suddenly and very dramatically easing restrictions.
After well over a thousand days of bottled-up pressure, China finally unleashed its 1.4 billion consumers into the world.
Having waited so long, surely they would spend with a vengeance — buying up property and flights, watches, and iPhones like never before …right?
As we now know, the answer was a resounding no.
That surge of demand simply never arrived.
In fact, quite the opposite…
While Chinese travelers went back to flying, they’re increasingly opting for economy over business.
And while its malls filled back up with shoppers, they’re more often leaving empty-handed.
It started becoming clear that something much more fundamental was going on.
For one, China’s population has begun to shrink.
The flow of cheap migrant labor is depleting and the country as a whole is rapidly growing older.
Second, middle-class China’s singular and once foolproof investment opportunity — housing — is finally declining in value.
And that’s where we’re at today.
Youth unemployment has reached a new high.
A third of Chinese office workers say their salaries have recently fallen.
And consumers are buying so little that companies from Apple to Tesla have started discounting their prices.
Now, economic growth is not as important to China as it once was — you can see that clearly here.
Still, factory workers need something to assemble.
Construction workers need something to build.
And at least some growth is needed for it to someday catch up to the U.S.
Normally, when in doubt, Beijing channels this surplus capital into building new roads, bridges, ports, factories, and trains — formally known as “investment.”
That’s what it did during the Great Recession, when its factories had nothing to make.
But, today, as you’ll recall, its bridges are already sturdy enough, its high-speed trains, already pretty darn fast, and its airports, already about as clean as can be.
Strange as this may sound, that’s a real problem because it does need somewhere to put this money.
So, how can China still grow its economy?
What options are left?
Well, there are basically two choices.
On one side of this fork in the road, is the “right” way but the “hard” way.
What Beijing should do is radically restructure its economy from top to bottom — replacing exports and investment with domestic consumption.
It could, for example, make families feel secure spending more of their paychecks by providing more of the public welfare you’d expect from an “upper-middle income” country.
But this path is every bit as complicated as it sounds.
It’s complicated ideologically because The Party is philosophically opposed to bottom-up stimulus.
It views consumption for its own sake as “wasteful” and government welfare as encouraging laziness.
It’s complicated politically, because this restructuring would shift the balance of power toward individual consumers.
And it’s complicated practically, because China would have to orchestrate a rise in consumption with an equal and simultaneous drop in exports.
This restructuring would eventually make its economy stronger and more resilient.
But it would require taking huge risks in the process.
Then, there’s the “easy” path — applying an economic band-aid rather than addressing the underlying disease.
In this world, China could dump its surplus capacity onto global consumers — taking the cars, TVs, and solar panels it can’t sell at home and shipping them overseas to Toronto, New York, and Paris.
Put differently, China could simply export its problem — handing it off like a hot potato.
And this, it seems, is exactly what it intends to do.
As you can see, when demand for real estate started to fall around 2020, China neatly replaced it with loans to companies producing batteries, solar panels, and especially, EVs.
It’s counting on these three industries to make up for lost growth.
And since Chinese consumers aren’t buying enough of them, it’s hoping French, Dutch, and German consumers can fill their shoes.
In other words, get ready for a sudden surge of Chinese cars in a city near you — particularly if you live in Europe.
China’s largest EV company, BYD, recently bought this giant cargo ship for the sole purpose of shipping its cars abroad.
And it plans on buying seven more over the next two years.
To appreciate the number of cars we’re talking about here, let’s do some quick math.
China has the ability to produce an estimated 40 million a year.
Chinese consumers typically buy “only” about 20-25 million, indicating a potential surplus of 15-20 million cars.
That’s as much excess capacity as Americans bought in total during the highest sales year in the country’s history.
And China is just getting started.
Of course, as you may have guessed, the Americans and Europeans aren’t too keen on letting this happen.
Both are already suspicious of “unfair” subsidized competition.
And this is not just any competition.
We’re talking about the incredibly important automotive industry.
If the world was upset by cheap Chinese steel, solar panels, and toys, imagine the backlash to a sudden avalanche of thirty, forty, fifty thousand dollar Chinese cars.
That puts China’s economic goals on a direct collision course with U.S. and European strategic goals.
Another trade war is brewing.
Summary: Anytime things change, DISASTER IS INEVITABLE SO LET’S PANIC.
Thing is, things are always changing.
China could have a rough time with the current changes.
It will have a rougher and less prosperous time the more it tries to control markets and migration.
It will have an easier and more prosperous time the less it tries to control markets and migration.
Winning the “arms race” and losing the home front. You and Senator zio Cotton would make great bedfellows.
If the US beats the CCP then we win.
“beats”……I guess that says it all about Mr. Stern.
Scott Horton versus Peter Zeihan
(Zeihan won)
https://www.mauldineconomics.com/frontlinethoughts/broken-china
And what does winning look like?
Not much. The US **winning** is like having your favorite team win the Superbowl . You feel good but it does not change you life so much. To be fair the CCP will not give you a better deal if they win. If fact if the CCP were to win it would be worse. That is the choice ** nothing** or **worse than nothing**. Sometimes no harm is the best result possible.
If one side "wins" we all lose.
Really ? I will go an root for the US . Better they win and better their enemies lose. It is the best deal for me. Also I think the US is less bad than anyone else.
One side won't "win" without war. I think we have them penciled in for 2026.
The US can win by weaponizing demographics and letting the CCP suffer lost decades
Means the CCP is smart and we are stupid wanting to continue on the forever war path adn weapon creation.
The CCP spends as much as they can
https://www.youtube.com/watch?v=N8JrW6fatpU&t=336s
Umm.. We have both those problems& more severely than China.
We can't afford a new Arms race with a dwindling USD & China..has a few more people than we do.
We need Immigrants, Migrants, people who will have CHILDREN.
(Net Migration is DOWN & has been down every single year for nearly a Decade)
If the US were to merge with Canada and Mexico, which is an old dream of the imperialists who passed NAFTA, the US would have those people.
But why pursue dominance?
The Prisoner
Anyone who is further to the left than Hitler MUST be a socialist
It’s probably positive to reduce corruption and waste. If there’s less profit and less “lost,” then there’s less of a motive to take the US to war.
https://en.wikipedia.org/wiki/GBU-57A/B_MOP
If the B-2 Spirit is located outside or over Iran, the Iranians will know what it's carrying. Let's hope the Americans don't drop this mega bomb on Iran.
A nearly 14-ton bomb coupled with the plane's fuel would light up the sky when struck by AD.
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The US has B-2 Spirit bombers stationed at Whiteman Air Force Base in Missouri, and they are also deployed to other locations around the world.
Stationed at Whiteman Air Force Base
Whiteman Air Force Base is the only operational base for the B-2 Spirit bomber.
The base is located just south of Knob Noster, Missouri.
The 509th Bomb Wing is based at Whiteman Air Force Base.
Deployed to other locations
B-2s have been deployed to Iceland, Hawaii, Diego Garcia, and Australia.
B-2s have been deployed to the U.K. to support the RAF Fairford as a forward operating location for bombers.
B-2s have been deployed to Hawaii in support of the USSTRATCOM bomber task force mission.
B-2s have been deployed to Diego Garcia in support of the Pacific Air Forces' Bomber Task Force (BTF) missions.
B-2s have been deployed to Australia in support of the Pacific Air Forces' training efforts with allies, partners, and joint forces.
B-2s are strategic bombers that can operate in the Indo-Pacific region from a broad array of overseas and continental U.S. locations.
B-2 Spirit > Whiteman Air Force Base > Display
The first B-2 was publicly displayed on Nov. 22, 1988, when it was rolled out of its hangar at Air Force Plant 42, Palmdale, Calif…
Whiteman AFB
B-2 bombers deploy to Hawaii – U.S. Strategic Command
Previous. B-2 bombers deploy to Hawaii. A B-2 Spirit bomber deployed from Whiteman Air Force Base, Missouri, is parked on the flig…
U.S. Strategic Command
B2 Spirit Stealth Bombers deploy to Diego Garcia in support of Bomber Task Force > U.S. Indo-Pacific Command > 2015
PACOM
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Generative AI is experimental.
If US doesn't want to cut on military spending… the steady state would continue… And military threat would still exist in the world… Other governmental cuts which are minuscule would be worthless in comparison to the money that goes to Pentagon…! Why does US need lots of weapons in Peace Time…?!
They are OXYMORONS, they know only war can bring peace turning the blue planet into a total Gaza. They believe in confrontation to end the war. They want to rule even if rubble is all that is left of the blue planet, to them it is winning, even rubble, they still are the victors, that is all that counts.
Survey shows 65% of Ukrainians trust Zelenskyy, but even more trust former Commander-in-Chief Zaluzhnyi
Valerii Zaluzhnyi is trusted by 76% of respondents, and 16% do not trust him.
Serhii Prytula – 34% trust, 51% do not trust.
Petro Poroshenko – 22% trust, 76% do not trust.
Dmytro Razumkov – 19% trust, 41% do not trust.
Yuliia Tymoshenko – 11% trust, 86% do not trust
-Ukrainska Pravda
And you believe that? Then Zelenskyy should demand an election, that might save his life if he would lose to Zaluzhnyi, he would have a chance to enjoy the loot he made.
i do believe it
Why do you not
Ukrainska Pravda is not credible to start out.
Normal, common sense people would not vote for one of the two, what for? Of course gullible people could believe and vote, but not enough. There is no reason to believe that 65% of Ukrainians trust Zelensky, if they do they are crazy or simply stupid.
Thats a logic fallacy
The first cut is the deepest!…
Trump/Musk and their cabinet are oxymoronic confrontational peace makers/war mongers no better than Biden and company. They destroy the economies of their allies and then demand they pay for it and their help to destroy China.
They hate and envy China and Russia because they are smarter and build economies and alliances while the American ruling billionaire elite bombs their allies' real estate and shreds their economies and demands their help to destroy China and Russia.
Western democracies are being ruled by a bunch of greedy insane criminals, represented by the co-presidency of Musk/Trump and neocon warmongers.
https://americanaffairsjournal.org/2025/02/americas-national-security-wonderland/