奧巴馬連任的戰場

5月初，基地組織領袖拉登在美軍突襲行動中遇難，象徵反恐戰告一段落。當時，美國大選預測市場的數據顯示，奧巴馬連任成功的機率瞬間提高10個百分點以上。不過，這個利好消息只屬短暫，短短幾日，預測市場交易的連任價格就回落到起漲點。

在國內，奧巴馬要面對的問題不少。共和黨利用債務上限提高的談判，試圖削弱奧巴馬的管治威信。不斷創下新高的財政赤字、貿易赤字、通脹和失業的痛苦指數，都是奧巴馬的頭痛問題。盡快結束海外反恐戰場，重新回到國內經濟戰場，才是他順利連任的關鍵戰略。

成也蕭何敗也蕭何

奧巴馬以72歲的帕內塔取代67歲蓋茲為國防部長，代表減赤的一大決心。奧巴馬希望削減國防預算8000億美元，蓋茲卻屢次認為僅能縮減4000億美元。奧巴馬上任時宣布計劃2011年中開始撤軍進程，保守派卻認為此舉乃是對恐怖分子妥協。

現任中央情報局長的帕內塔，曾任克林頓時期的白宮預算辦公室主任，當時就以控制預算和省錢著稱。他上任後將有助奧巴馬執行撤軍計劃，縮減龐大國防預算，從而控制聯邦政府債務規模。減赤之餘，奧巴馬還必須對通脹宣戰。而擋在其中的大石頭，可能就是他所任命的聯儲局主席貝南奇。

奧巴馬能夠比多數人預期更早成為第一位非洲裔美國總統，得利於反恐戰爭拖累美國運勢，也得利於聯儲局協助製造的信貸泡沫在2008年形成金融海嘯。當年，美國選民在高失業率的經濟環境下，還要面對每加侖4美元以上的油價，注定了共和黨的氣數已盡，美國需要改變。

奧巴馬在金融海嘯之後上任，聯儲局的貨幣政策化解了金融市場崩潰的危機，貝南奇該記一功。然而，貝南奇繼續沈溺於非常規的量化寬鬆政策，在去年11月開始的第二輪量化寬鬆（QE2）政策，為金融市場直接間接注入驚人的熱錢。

股票市場漲了，貝南奇自居其功，認為能夠為經濟創造財富效果，刺激消費及GDP增長，但商品市場漲得確實離譜，他卻推說原因是新興市場的需求，辯稱通脹僅是暫時的。

貝南奇拯救市場有功，但奧巴馬提名他續任聯儲局主席時，大概沒想到「錯把藥品當補品」的貝南奇，正在一步步讓他疏遠過去支持他的草根選民。

絕大多數美國人並未參與股市，因此股市上漲的效益有限。所有美國人在超市和加油站時，都面對着食品和能源漲價的痛苦。每加侖4美元以上的油價，比起QE2前的3美元，讓美國人在其他消費支出上，每天須相應減少3.8億美元，一年接近1400億美元。

量化寬鬆讓富人得利，商品炒作卻惡化中下階層的可支配所得。消費信心調查很明顯反應財富差距惡化：高收入美國人的消費信心接近90，不斷創下新高，而中低收入者的消費信心卻接近破底，不到70。奢侈品牌的股價不斷挑戰高點，平價量販商的股價卻沒有跟隨大市上漲。金融市場向好真的刺激了消費嗎？

奧巴馬在就職宣言中說：A nation cannot prosper when it favors only the prosperous.（只幫助有錢人的國家無法永遠強大。）然而，在通脹超過2%，而且還在攀升的同時，聯儲局卻仍堅持零利率。

負利率環境鼓勵熱錢炒作，任食品和能源不斷侵蝕人們的消費能力，消費不振，經濟萎糜，失業率焉有可能下滑？零利率在刺激通脹的同時，也破壞美國金融中介功能，間接傷害了就業市場的復蘇。

金融體系功能無法發揮，貸款增長受到抑制，龐大規模資金不流動，貨幣乘數跌破金融海嘯時0.8至0.9的低點，最新讀數只有0.739。

美國九成以上的企業員工人數在20人以下，這些就業市場最核心的中小企業，卻在2年多的經濟復蘇中被忽略。他們貸款困難，近半數的利潤甚至不如海嘯前，金融市場的復蘇並沒有為他們帶來財富效應。2年以來的財政刺激方案也未創造就業，在兩位學者Conley和Dupor的最近論文中發現，2009年的《美國復蘇與再投資法案》（American Recovery and Reinvestment Act）拯救了45萬政府部門的職位，卻摧毀／遏阻了100萬民間部門的就業。

零利率副作用呈現

1994年民主黨在中期選舉敗陣，克林頓又出現私德問題，但1996年競選連任的克林頓卻能夠輕鬆過關。民意的高支持其實來自於暢旺的勞動市場，以及高增長低通脹的經濟環境。

奧巴馬所剩的時間不多，過去兩年半來，他的執政團隊所推動的貨幣寬鬆和財政刺激，並沒有為美國人民帶來希望和幸福。

奧巴馬必須認清，美國經濟所需要的是真正意義上的信貸寬鬆，而不是貝南奇主導的量化寬鬆。零利率是藥品而非補品，而這藥品的副作用正使美國經濟的實力一點一滴的流失。如不力挽狂瀾，奧巴馬不但使自己連任的資本快速流失，還會令美國經濟受到漫長沈痛的代價。

政壇老薑「創見」：聯儲局毀掉國債！

畢者推介

‧內地樓市頂部已成，跌勢漸現，但仍有死硬派認為樓價「無可能跌」，理據之一是都市化支持樓市上揚，之二是政府有力令樓市橫行不跌。羅耕在35 頁「財經DNA」駁斥兩大謬誤，並預測樓價將跌六成。

‧人行加息，內地股市今天恐怕要捱沽。論者不時把股市升跌與人行貨幣政策的鬆緊扯上關係，研究部在25 頁綜合回購利率、上海同業拆息及人行公債孳息等數據，創製「內地銀根鬆緊綜合指標」，以預測內地股市的走勢。

‧內地最大基金公司華夏放售51%股權，其中一成股權鐵定售予外資。雖然華夏的估值相當於管理資產7.2%，比西方基金公司的作價高出一兩倍，但「過江龍」應把握這次進軍中國的好機會。詳見36 頁「THE LEX COLUMN」。

7月6日，周三。2007年，高齡七十一的德州共和黨眾議員保羅（Ron Paul）宣布角逐總統候選人提名，媒體的反應是：So what？大報中只有《華盛頓郵報》對此事作了寥寥數行的報道，餘者提也懶提，足證這位以弘揚小政府大市場見著的政壇老薑，在當時引不起美國主流選民的注意。那是2007年。

「領正牌」轟貝公

2011年，保羅雄心不減，5月宣布將於明年捲土重來，角逐共和黨總統候選人提名。這次，公眾對他的興趣大得多了。這除了因為金融危機觸發美國人對財政債務問題的反思，主要還是拜保羅的「反聯儲局」（anti-Fed）立場所賜。隨着其訊息受到愈來愈多人重視，當了數十年國會議員的保羅，從未像今天般具「新聞價值」，非但以七十五之齡宣布參與總統候選人提名之爭，還當上專為監察聯儲局而設的眾議院金融服務委員會國內貨幣政策小組主席，「領正牌」向貝南奇發炮。

點解今日講Ron Paul？第一，此君近日就打破美國國債上限僵局提出一個極富「創意」的主張，驟聽之下猶如天方夜譚，惟仔細分析，卻又理據充分合乎情理；再加一點想像力，甚至可以從中爬梳出美國以至中國貨幣政策的肌理紋路，頗值得在人行年內第三度加息之日一提；第二，保羅之議雖「激」，惟非常時期用非常手段，中美歐誰不如此？昨天談評級機構標普突然「良心發現」，以法國提出的舊債換新債方案改變不了希臘賴債的事實，警告計劃一旦落實，可能把希臘列作「選擇性違約」（SD）。然而，即使標普坐言起行，只要歐洲央行願意一再降低向銀行「放水」的抵押品要求，評級機構縱敢於在太歲頭上動土，挑戰歐洲當局阻止成員國違約的安排，對大局亦不會構成實質影響。說到底，歐羅區若解體，歐洲央行亦沒有繼續存在的必要；你認為ECB會為了原則獨立性而不顧自身存亡嗎？

說得遠了。保羅對解決美國國債爭拗有何高見？他認為，最有效的方法莫過於把聯儲局持有的1.6萬億美元政府債券「毀掉」（destroy）！「這算什麼建議？」你當然會這樣說。別急，聽下去。

持債1.6萬億美元

聯儲局過去兩年半透過QE1、QE Lite和QE2，合共購入約1.6萬億美元政府債券；這筆未償債務，對美國國債突破14.3萬億美元上限大有「貢獻」，當然亦受到國債上限管束。可是，聯儲局並非退休基金、外國央行、保險公司或個人投資者，它是美國的中央銀行，乃花旗國政府的一個重要組成部分。以此而論，聯儲局的資產，實際上亦是政府的資產。在運作上，扣除營運開支後，聯儲局每年都要把來自所持資產的利息收入退還財政部，去年這筆錢就多達800億美元。這跟金管局將投資收益中的一定份額撥歸特區政府庫房，道理一樣。

名義上，聯儲局是債券投資者／債權人，而發債借錢的美國政府則是負債方／債務人。然而，正如前述，聯儲局所持資產，實際上屬於政府；從這個意義着眼，美國政府欠聯儲局錢，跟自己欠自己錢並無實質上的分別。

與「社保制度」（Social Security）有必要利用所持債券產生的現金流履行支付退休金等義務不同，聯儲局並沒有任何必須運用資產以完成的責任；換句話說，央行所持的1.6萬億美元債券即使一夜間消失，美國亦不會有人退休收入因此沒了着落。聯儲局將所持債券付諸一炬，也不過等於「燒」掉美國政府自己對自己的債務責任，還因此替受到14.3萬億美元上限管束的國債，騰出相當於1.6萬億美元的「空間」，為白宮與共和黨換來少則一年多則兩年的時間，重新展開削赤談判。

保羅之議獲當局接納的可能性自然微乎其微，惟從美國經濟與政策研究中心（Center for Economic and Policy Research）主任貝克（Dean Baker）如此具份量的論者，亦在《新共和》雜誌（The New Republic）撰文加以表揚，可見聯儲局將手上債務「一把火燒光」這個激進主張，在政策圈內不乏知音。

問題是，聯儲局當真狠下心腸燒毀國債，一旦美國復蘇加快通脹重臨，聯儲局便無法透過出售手上債券，收回量寬期間向銀行體系注入的大量流動性，令央行少了一個收緊貨幣政策的選擇。

然而，聯儲局要收回流動性限制借貸，不一定要靠出售資產，也不一定要加息，貝克就指出，一個最簡單直接的方法，是像中國央行那樣，提高銀行的存款準備金率（RRR）。在他看來，此法理論上可令聯儲局達到心目中任何借貸目標，比縮減銀行儲備規模，政策效用也許有過之而無不及，惟聯儲局過去極少採用此一手段。

金融海嘯前，聯儲局不會購入按揭抵押證券和長期國債，過去兩年卻一買再買。貝克想說的是，在非常時期要用非常手段，激進措施如聯儲局毀掉政府債券以打破國債上限僵局，又或在通脹重臨時像中國那樣提高銀行存款準備金率，都值得考慮。

Threat of $100bn hit if US top rating lost

Investors in the US government bond market could face losses of up to $100bn if the largest economy loses its triple A rating, according to a research arm of McGraw-Hill, the parent of Standard & Poor’s.

A ratings downgrade that results in higher bond yields and lower prices could also mean the US Treasury paying $2.3bn-$3.75bn a year more in interest on financing a $1,000bn annual budget deficit.

More

ON THIS STORY

• Setback for government bonds
• Flight from money market funds exposed to EU banks
• On Wall Street Banks lose out
• Treasury yields signal deflation risk
• In depth US budget

“If Standard & Poor’s or any of the other major rating agencies downgrade the US, Treasuries would likely drop in value, possibly by as much as $100bn,” said analysts at S&P Valuation and Risk Strategies, a research team separate from the agency.

Currently, Treasury yields do not reflect concern about the US losing its top rating. The yield on 10-year Treasury notes fell to 2.85 per cent on Friday, a low for the year. Investors are concerned about a weaker economy and financial contagion from the euro debt crisis. Yields on four-week Treasury bills have been driven below zero.

While the threat of a US downgrade is remote, it remains a possibility given the projections of large long-term deficits and the impasse over raising the $14,300bn Treasury debt ceiling.

In April, S&P affirmed its US rating but revised its outlook to negative because of the deficit and the risk that it will not be cut meaningfully by 2013.

Moody’s has said it could place the US government on review for downgrade if there is no resolution of the impasse over raising the Treasury debt ceiling before the August 2 deadline.

Many in the bond market say it is unthinkable that the US would actually default over the debt ceiling and expect a deal before the deadline.

But prominent bond investors such as Bill Gross at Pimco have warned about the US’s long term fiscal position for some time. Earlier this year, Mr Gross eliminated Treasury holdings in the total return fund that he manages.

Michael Thompson, managing director at S&P Valuation and Risk Strategies and one of the three authors of the report, said the analysis is based on the debt ceiling being resolved and focuses on whether Congress addresses the long term fiscal outlook.

The S&P analysis calculates a reduction in the rating to double A or single A would spark a decline of 2 per cent and 3.2 per cent respectively in the price of the 10-year Treasury note, sending yields higher.

The price of the 30-year bond would drop by 3.9 per cent and 6.3 per cent under these scenarios. The analysis focuses on Treasury debt with a maturity longer than two years as this sector is least affected by the Federal Reserve’s near zero interest rate policy. As such, the estimate of costs associated with a downgrade is considered conservative.

A ratings downgrade applied across all Treasury maturities could raise the cost of financing an annual budget deficit of $1,000bn by an additional $20bn

釋油儲一箭三鵰 中美歐同坐一船

6月26日，周日。星期六，老畢寫國際能源組織（IEA）協調成員國釋放六千萬桶戰略油儲，讀者tigeri君在《信壇》留言賜教，提出「美國唔出QE3，明年又有總統競選，要吊住美國經濟條命，再加上滯脹陰霾，於是放少少石油出來試試水溫」。讀者還建議老畢探討政府救市於國於民是利是弊。

這個話題，好嚴肅。然而，放眼世界，美國固然不斷印鈔力挽狂瀾，無法再印便改弦更張干預油市；歐洲無視規例原則，一再注資打救弱國；中國對內以鼓勵建設保障房消弭外需放緩，對外則買完「歐豬」再買匈牙利國債，總理溫家寶更親自披甲，在《金融時報》高調宣揚北京控制通脹有心有力，於世界經濟亂象紛陳中還能騰出手來，為全球穩定出一分力。

由此可見，中美歐三者俱「大到不能倒」，任何一方垮下，都會為另外兩方帶來災難，政府救市（救人自救皆然），不是「應不應」的問題，而是民主大國如歐美、一黨專政如中國，坐的實乃同一條船的問題。

改變炒家心理預期

回說釋放戰略油儲一事，個人認為，美國意在「一箭三鵰」：①以今年首季數字為準，油價上漲對美國經濟產生的「加稅」效應（額外能源支出對消費和投資構成的負面影響），按高盛估算達1180億美元，與美國去年12月減稅協議規模相若。換句話說，通過減稅放回消費者口袋的錢，已被油價上升「榨乾榨淨」，令減稅促進增長的作用消失於無形。油價在政府干預中回落（假設效果並非曇花一現），對經濟的刺激效用不言而喻。

②IEA由耗油國組成，本身並無產油之力，其龐大儲備來自日積月累的採購。然而，日子有功，歐美亞戰略油儲數以億桶計，IEA此番出手，開宗明義為了壓價，那等於說，在貨真價實的「油市央行」沙地阿拉伯無力阻止油組成員國分歧惡化下，產油的「辦事不力」，那麼耗油的就親自操刀，向炒家發出強烈訊息，以改變投機者對油價「單邊上市」的預期。

③此點在某程度上也許能回應讀者tigeri的問題。老畢在6月24日〈神州夢英雄塚　通脹升QE停〉一文中提到，美國經過兩輪量寬後，通縮壓力已消、通脹壓力重燃。這非但見於包括食品和能源在內的消費物價指數（CPI，5月按年升幅達3.6％），撇除食品能源的核心CPI，上月按年反彈幅度亦為1983年以來最大。在當前環境中，聯儲局不會冒通脹失控之險，硬推QE3。然而，這不等於說，量寬政策歷史任務已完，此後不會捲土重來。倘若好嘅唔靈醜嘅靈，美國經濟進一步放緩甚至面臨雙底衰退，又或股市一沉不起，聯儲局無選擇下，也許得再祭出QE這道「救命符」。情況若朝這個方向發展，你認為油價每桶100美元推QE3阻力大，還是80美元阻力大？

動用戰略儲備壓油價，既有變相刺激經濟之效，又有助扭轉炒家對油市的心理預期，最重要的是此舉為經濟一旦急轉直下推QE3創造有利環境。不過，這亦等於說，不管美國、中國還是歐洲，有形之手一「縮」，經濟即「死」，一輪又一輪干預於國於民是利是弊，老畢智慧有限，不懂回答，但可以肯定的是，政府唔會畀經濟死。

研究部主管莊志雄君早前放假歐遊，老畢有好一陣子沒見過他。上周碰到充夠電的莊君，容光煥發不在話下，還曬得一身古銅膚色，驟看之下，不遜Gucci御用男模，羨煞老畢。

6月24日，莊兄傳來他為電視節目準備的一份草稿，既談中港股市內地政策，又論恒指估值板塊行業。有看莊兄節目的讀者，對其見解應比我清楚；就24日草稿所見，老畢覺得較「新」而值得特別注意的，是奧巴馬近日宣布從阿富汗撤軍三萬一事。美國自2001年10月出兵阿富汗至今，於當地戰事上耗逾4000億美元，莊兄認為，撤軍決定相信有助美元回穩甚或短暫回揚。

美元強股市好？

周末讀了一些文獻，對莊兄在草稿中所說，「奧巴馬為求連任，後着陸續有來」這句話的可信性，也許能提供一些指引。說起滯脹，許多人第一時間想到的是「花生總統」卡達執政的二十世紀七十年代末。不過，於1987年推出、為揭聯儲局神秘面紗而寫的Secrets of the Temple（作者William Greider）一書提到，卡達主政期間，美國GDP實質增長並非一般人想像般疲弱。以Greider之見，在美國戰後歷任總統中，卡達比上不足，比下有餘。

為證此說，老畢在網上找來嘉圖學社（Cato Institute）一份發表於1996年的研究報告，雖「年深日久」，且主要論述「列根經濟學」（Reaganomics）的功過，惟報告以列根為分水嶺，對美國經濟在「前列根時代」和「後列根時代」的表現作了不少對比，有益有建設性之餘，對上任後美元弱勢變本加厲、財赤債務日趨失控的奧巴馬，更具特殊意義。

從【圖1】可見，卡達年代美國內憂外患兼通脹肆虐，但實質GDP年均增長仍達2.5％，雖遜於列根時代的3.2％，惟比之口碑不弱的克林頓（2.6%），僅以些微之差落後。

然而，以股市回報看，高低卻立判。卡達執政四年，標普500指數僅升24％；克林頓在位八年，標普500指數升幅達208％！不用開計算機，也知兩者年均回報相差甚遠。

這是否跟美元【圖2】、通脹、財赤債務等因素有關，值得投資者注意。奧巴馬釋油儲撤軍雙管齊下，是否看到卡達當年在汽油價格飛升美元一厥不振下失盡民心，試圖藉壓油價振美元謀求連任？

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The oil market The IEA opens the taps

THE International Energy Agency (IEA) rarely intervenes in oil markets. The rich-country energy club keeps its vast reserves of oil to tackle emergencies caused by unforeseen supply disruptions. Yet on June 23rd the IEA surprised oil markets by saying that it would release60m barrels of oil from its stockpile over a 30-day period to ensure a “soft landing for the world economy”. Oil prices duly obliged by tumbling.

Oil has been drawn from the emergency stockpile of 1.6 billion barrels only twice before—in the immediate aftermath of the invasion of Kuwait in 1999 and Hurricane Katrina in 2005. The disruption to supplies as a result of Libya’s internal conflict became apparent some time ago and the 1.4m barrels a day denied to world markets, which all together get through nearly 90m b/d, is hardly the sudden upheaval that the stocks are there to offset.

The IEA says that Libya is the reason for the decision to release stocks. Although its oil has disappeared from the market, the damage has not been fully felt yet, since the world consumes much more oil in the second half of the year as the northern hemisphere's “driving seasons” begin. The IEA reckons on a shortfall of 2m b/d as engines rev up around the globe and that a barrel of Brent crude (which slumped from around $115 to trade at $108 a barrel after the announcement) could climb even higher to wreak appalling damage on a fragile world economy.

Yet there are a couple of reasons to question the IEA’s decision. Firstly, evidence is mounting that the high price is having an effect on demand both in rich countries and even in oil-thirsty Asia and that prices might slip anyway. Second, despite acrimonious disagreement at the recent OPEC meeting between the haves and have nots of spare oil-production capacity, which meant that expected quota increases failed to materialise, Saudi Arabia has promised unilaterally to make up for most of the Libyan shortfall by pumping 1m b/d extra. The IEA says that its intervention (done with Saudi acquiescence, the agency hinted) is designed to plug the gap between now and when that oil might appear on the market.

Cynics are suggesting that Barack Obama is keener than most to tap the stockpiles—he has hinted that this is what he wants several times of late—to protect Americans from the ever more stiff cost of filling up. Indeed America, where the driving season is about to get under way, will contribute half the extra oil. Plugging a supply gap is all very well. But this sets an unfortunate precedent that the stockpiles are there to smooth the ups and downs of the oil price rather than to guard against genuine emergencies. Moreover, any interventions by the IEA cannot be sustained over the long term when (high) prices will be determined by voracious Asian demand and the difficulties of finding and extracting extra barrels from beneath the earth.

Overall, the best solution to a high oil price is a high oil price. Tinkering with that equation is rarely a good idea.

Libya, Europe and the future of NATO Always waiting for the US cavalry

It LOOKED, for a moment, like a return to the days of European interventionism. For the first time since Suez, Britain and France led an intervention in the Middle East. And unlike the disaster in Egypt in 1956, the action in Libya of 2011 was supported by America and by part of the Arab world too.

America was visibly reluctant to get involved, let alone lead the action. And, having helped to knock out Libya’s air defences and conduct some of the initial air-to-ground strikes, it pulled back from the front-line operations. But America's role remains essential, not least in providing air-to-air refuelling, as well as intelligence and reconnaissance for the European allies.

The war in Libya, far from heralding a new era of European activism, has once again highlighted the limits of Europe’s military power, as Robert Gates pointed out today in his valedictory speechin Brussels. He is not the first American defence secretary to complain about low, often declining, defence spending in Europe (The Economistrecently ran an interesting chart). Nor is it the first time Mr Gates himself has bemoaned the weakness of European allies. Last year he said the "pacification" of Europe, at first a great achievement, had gone too far and posed a threat to Western security. But his comments today were delivered with the sharpness of a man who knows he is at the end of his career and no longer needs to beg for favours. The speech is worth reading in full. But here is one passage that should make Europeans cringe.

To be sure, at the outset, the NATO Libya mission did meet its initial military objectives – grounding Qaddafi’s air force and degrading his ability to wage offensive war against his own citizens. And while the operation has exposed some shortcomings caused by underfunding, it has also shown the potential of NATO, with an operation where Europeans are taking the lead with American support. However, while every alliance member voted for Libya mission, less than half have participated at all, and fewer than a third have been willing to participate in the strike mission. Frankly, many of those allies sitting on the sidelines do so not because they do not want to participate, but simply because they can’t. The military capabilities simply aren’t there.

In particular, intelligence, surveillance, and reconnaissance assets are lacking that would allow more allies to be involved and make an impact. The most advanced fighter aircraft are little use if allies do not have the means to identify, process, and strike targets as part of an integrated campaign. To run the air campaign, the NATO air operations centre in Italy required a major augmentation of targeting specialists, mainly from the US, to do the job – a “just in time” infusion of personnel that may not always be available in future contingencies. We have the spectacle of an air operations centre designed to handle more than 300 sorties a day struggling to launch about 150. Furthermore, the mightiest military alliance in history is only 11 weeks into an operation against a poorly armed regime in a sparsely populated country – yet many allies are beginning to run short of munitions, requiring the US, once more, to make up the difference.

As well as a paucity of European military resources, NATO faces two other dangers, Mr Gates said. One is the passing of his generation of American leaders, like himself, for whom the security of Europe was the over-riding pre-occupation of their careers. The second is that America, itself under pressure to cut defence spending to curb high deficits and debt, might soon give up on Europe: if the European taxpayers do not want to pay to preserve their own security, why should Americans shoulder the burden? Only five of the 28 NATO allies meet NATO’s recommendation that countries should spend at least 2% of GDP on defence: America, Britain, France, Greece and Albania. Today America’s key security interests are in the Middle East and in Asia. Europe will be the obvious place for America to cut expensive overseas commitments.

Europe has more soldiers than America, but can deploy far fewer of them on overseas operations. This is partly the result of history: in the cold war European armies were built to hold the line in Europe, while awaiting reinforcement by American forces which, by definition, had to be designed for expeditionary warfare. Another is that “Europe” is not a sovereign state, but a collection of small- and medium-sized countries. Its considerable defence spending is hoplessly fragmented among a multitude of armies, air forces and navies.

Specialisation, pooling and sharing equipment is the obvious way forward. Defence experts across Europe have known this for a long time and, here and there, countries have embarked on some important experiments. A recent paper by the Centre for European Reform, and think-tank in London, makes some sensible recommendations ( PDF). But what is rational in terms of defence accounting too often falls foul of political and operational reality. Many smaller countries have little interest in international commitments. And the bigger states that still retain some kind of global vision, like Britain and France, do not want to be dependent on smaller states for their military capability.

Poland, which takes over the presidency of the European Union next month, plans to make a renewed attempt to boost European defence co-operation. It is also pushing for a bigger EU autonomous military headquarters, though the need for this is unclear, given that even the NATO air operations centre had to be reinforced by American experts, as Mr Gates noted acidly. Moreover, Poland is among those countries singled out by Mr Gates for failing to do enough in Libya.

That said, Mr Gates did pick out some allies for praise in carrying out a disproportionate share of the bombing campaign in Libya: Norway, Denmark, Belgium and Canada. Why have they stepped forward when so many have not? Perhaps, suggests one American officials, it is because the action in Libya is seen by them not as an act of big-power bullying, or as part of an endless and ill-defined "war on terrorism", but as a humanitarian action: the first test of the UN's new doctrine of “responsibility to protect”. It is not just the fate of Libyans that is in the balance in the war against Muammar Qaddafi, but the commitment of Europeans to maintain - and, when necessary, deploy - serious military forces. Responsibility to protect requires, first and foremost, the means to protect.

Military spending

Defence costs

The biggest military spenders

ON JUNE 8th China's top military brass confirmed that the country's first aircraft carrier, a refurbishment of an old Russian carrier, will be ready shortly. Only a handful of nations operate carriers, which are costly to build and maintain. Indeed, Britain has recently decommissioned its sole carrier because of budget pressures. China's defence spending has risen by nearly 200% since 2001 to reach an estimated $119 billion in 2010—though it has remained fairly constant in terms of its share of GDP. America's own budget crisis is prompting tough discussions about its defence spending, which, at nearly $700 billion, is bigger than that of the next 17 countries combined.

Running in the red: Among GOP, anti-tax orthodoxy runs deep

The Republican Party once had a home for the thinking of Tom Coburn, Mike Crapo and Saxby Chambliss. But that party is long gone.

The three U.S. senators banded together a few months ago in support of higher tax revenue as a means of balancing the federal budget. Even with drastic spending cuts, they concluded, Washington could not vanquish its soaring $14.3 trillion debt without additional income.

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Congressional Republicans and Democrats have waged a long fight in trying to agree on a budget plan to slash federal spending and avert a government shutdown.

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Motion graphic: A guide to understanding the federal debt

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• Among GOP, anti-tax orthodoxy runs deep
• PHOTOS: Evolution of GOP tax policy
• VIDEO: Coburn says talks may spur budget
• Budget and debt ceiling glossary: A guide to understanding the debate

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Running in the red

Part 1: How the U.S. detoured to massive debt

Such reasoning was common in the GOP circa 1963, when Republicans denounced tax cuts proposed by President John F. Kennedy as a road to red ink and rampant inflation. But today’s GOP adheres to a “no new taxes” orthodoxy that has proved far more powerful than the desire to balance the budget. As House Speaker John A. Boehner has said: Raising taxes is “unacceptable and a non-starter.”

This orthodoxy is now woven so deeply into the party’s identity that all but 13 of 288 GOP lawmakers in Congress have signed a formal pledge not to raise taxes. The strategist who invented the pledge, Grover G. Norquist, compares it to a brand, like Coca-Cola, built on “quality control” so that Republican voters know they will get “the same thing every time.”

Loyalty to the brand is so strong that no Republican has voted for a major federal tax increase since 1991, Norquist says. It is so widespread that more than a dozen governors and hundreds of state legislators now count themselves as adherents. And it is so well defended that its followers are constantly patrolling at both the state and federal levels for new forms of trespass.

In California, the pledge is interpreted to prohibit state lawmakers from asking voters to decide whether certain existing taxes should be extended. In Pennsylvania, the pledge is cited as a barrier to imposing an “impact” fee on the environmentally questionable business of extracting gas from underground shale.

On Capitol Hill, Norquist has admonished Coburn (Okla.), Crapo (Idaho) and Chambliss (Ga.) for suggesting a tax option for tackling the debt: reducing credits and deductions worth an estimated $1 trillion a year. Although most of the cash would be used to lower tax rates for everyone, a portion would be dedicated to restoring national solvency.

No good, says Norquist’s group, Americans for Tax Reform. Under the pledge, raising revenue in any way requires an equal tax cut elsewhere to avoid expanding the size of government. And, yes, that sometimes means protecting tax breaks that Republicans view as bad public policy, Norquist and his supporters say.

The GOP’s three-decade-old campaign against taxes has clearly had a significant impact. Neither major party would advocate a return to the 1970s, when people earning more than $200,000 a year faced a top rate of 70 percent. But the top rate is now half that and, partly because of the recent recession, tax collections have fallen to their lowest level as a share of the economy in 60 years.

“Grover’s not realistic,” said former senator Judd Gregg of New Hampshire, a self-described “Reagan robot” elected to Congress in 1980. Gregg retired last year after serving with Coburn and Crapo on the bipartisan fiscal commission that recommended stabilizing borrowing by trimming tax breaks and sharply cutting spending.

With the number of people on Medicare and Social Security set to double, Gregg said, “your government is inevitably going to grow. And you’re either going to have to finance that, or you’re going to end up running the country into the ditch.”

Gallery

Congressional Republicans and Democrats have waged a long fight in trying to agree on a budget plan to slash federal spending and avert a government shutdown.

Graphic

prominent Republicans have urged a more flexible approach to taxes. Former Federal Reserve chairman Alan Greenspan joined the chorus Friday, dropping his support for the 2001 George W. Bush tax cuts. Greenspan told CNBC he’s so “scared” by the debt that he now favors a return to the higher rates of the Clinton administration.

Motion graphic: A guide to understanding the federal debt

Part 1: How the U.S. detoured to massive debt

Martin Feldstein, a Harvard economist who served as chief economic adviser in the Reagan White House, supports the commission’s approach to raising money by ending tax breaks.

“When the government gives a tax credit to homeowners who buy solar energy panels, it’s just like giving them a cash subsidy to buy those panels,” Feldstein wrote last week in the conservative Weekly Standard magazine, suggesting that the value of deductions and credits be capped at 2 percent of adjusted income.

“Although government accounting rules treat the end of a tax credit or the limit of a tax deduction as a revenue increase, the economic effect is the same as a cut in spending,” Feldstein wrote. “Anyone who favors less government spending should also favor cutting tax expenditures.”

But Norquist argues that equating tax breaks with spending “is a threat to the modern Republican Party’s worldview,” which calls for a vastly smaller government and “dramatically reducing the tax drag on the economy.”

That worldview supports eliminating tax breaks, Norquist said, but only if all the proceeds are used to push tax rates “down as far as possible.” The work of reducing the national debt must be done entirely by shrinking government, he said. Any compromise that includes taxes would hinder that goal and taint the Republican brand.

Norquist compared Coburn, the most outspoken of the Senate trio, to a “malignant” cell in the body politic. “So,” Norquist said, “we use chemo and radiation to protect all the healthy cells around it, so it doesn’t grow and metastasize.”

Rewriting doctrine

The germ of the pledge came to Norquist, he said, when he was 14 and thinking about a teacher’s comment that no one knows who his or her congressman is. If Republicans were known as the party that never raised taxes, he recalls thinking, they would be spared spending “millions of dollars explaining to you who they are and what they stand for.” They could just “stand up and say, ‘I’m the Republican.’ And you go: ‘He won’t raise my taxes and he won’t steal my guns. Got it.’ ”

At the time, Richard M. Nixon had just been elected president, and Republicans had a reputation as the party of fiscal responsibility: Dwight Eisenhower maintained wartime tax rates throughout his eight-year presidency, dramatically reducing the national debt. Congressional Republicans objected to Kennedy’s tax cut, arguing that any reduction in revenue should be pared with spending cuts to avoid ballooning deficits. Nixon supported extending a surtax to pay for the Vietnam War. And his successor, Gerald R. Ford, opposed a permanent tax cut in 1974, fearing budget deficits, according to historian Bruce Bartlett, a “lapsed Republican” who has written extensively about GOP fiscal policy.

Three factors helped rewrite the party’s economic doctrine, Bartlett said: In the late 1970s, key Republicans concluded that lower tax rates would boost the flagging economy. The new theory of supply-side economics held that such a tax cut would spur so much growth that it would actually generate more revenue. And the Proposition 13 tax revolt hit California, demonstrating the power of tax cuts as a political issue.

Ronald Reagan capitalized on growing anti-tax sentiment in his campaign for president and quickly pushed a tax package that slashed rates, a move credited with energizing the long-sluggish economy. Reagan went back to Congress in 1986 with a sweeping overhaul of the tax code that pushed the top rate down to 28 percent. At Reagan’s request, Norquist founded Americans for Tax Reform and the pledge was born.

Gallery

Congressional Republicans and Democrats have waged a long fight in trying to agree on a budget plan to slash federal spending and avert a government shutdown.

Graphic

Motion graphic: A guide to understanding the federal debt

More On This Story

• Among GOP, anti-tax orthodoxy runs deep
• PHOTOS: Evolution of GOP tax policy
• VIDEO: Coburn says talks may spur budget
• Budget and debt ceiling glossary: A guide to understanding the debate

View all Items in this Story

Running in the red

Part 1: How the U.S. detoured to massive debt

In his race to succeed Reagan, George H.W. Bush famously embraced the pledge, saying “read my lips, no new taxes.” But as president, he raised tax rates as part of a balanced-budget deal with Democrats. Bush’s loss to Bill Clinton in 1992 “proved for all time, that even though tax increases may be justified economically, they are never justified politically if you’re a Republican,” Bartlett said.

“Since then it’s been Republican dogma that deficits don’t matter and the only thing that matters for the economy is cutting taxes,” he said. “And Grover Norquist has become the enforcer of this dogma.”

‘Impure thoughts’

The rise of the anti-tax tea party movement in 2008 further hardened the party’s stance against taxes. How is the pledge enforced? Typically, Republican candidates sign the pledge to avoid attack in the primary. Once in office, violators might find that Norquist has contacted Republican voters in their state or district to inform them that their senator or representative is having “impure thoughts,” as he put it.

Norquist has “these amazing mailing lists. Just tens of millions of people,” said Gregg, who has been a target.

At the state level, a vast network of foot soldiers stands ready to discipline local politicians who fail to walk the no-tax line. One of the most high-profile battles is being waged in Sacramento, where Gov. Jerry Brown (D) is trying to persuade GOP lawmakers to join Democrats in extending the largest tax increase in state history, which is set to expire this month.

Last month, Norquist spent several days in the state, urging Republicans to stand firm. His argument is likely to be pretty compelling: In 2009, after enacting deep spending cuts, six GOP lawmakers helped then-Gov. Arnold Schwarzenegger (R) raise sales, income and auto taxes to close a $42 billion budget gap.

All six paid a price. The Republican leaders in both the House and Senate were deposed. The other four either retired or lost bids for higher office.

Senate Republicans dumped Dave Cogdill as their leader in a midnight coup before the tax deal was even approved. “They were hearing from their constituents and Grover Norquist, saying, ‘You got to do everything you can to fight this thing,’ ” Cogdill said in an interview.

Cogdill later retired from the Senate. He now serves as county tax assessor in his hometown of Modesto. He said he wishes he had been able to keep the pledge, but he didn’t see any alternative to raising taxes, given the state’s alarming financial condition.

Although he agrees with Norquist that taxes are too high in California, he’s not sure he would sign the pledge again. Pledges, he said, make it hard to respond to changing circumstances.

Republicans “have lost the art of compromise,” Cogdill said. “If we don’t get everything we want, then we let the whole thing burn.”

This story is part of The Post’s continuing examination of the origins and consequences of the federal debt and the debate over what to do about it.

Major tax cuts in 2001 and 2003 also contributed to the decline in revenue — and helped drive up budget deficits. Today, the spiraling debt ranks well ahead of too-high taxes on the list of economic concerns. And the GOP’s hard line on the issue stands, alongside Democratic resistance to cutting federal retirement benefits, as the biggest obstacle to a bipartisan agreement to tackle that problem.