“A billion here—a billion there. Pretty soon, we’re taking about real money!”
—Senator Everett Dirksen

America’s Budgetary Challenge

“What’s in your wallet???”

It’s of little wonder that the most elaborately produced TV commercials in years feature Nordic barbarians, swords slashing, drawn to their quarry by the mere scent of excessive spending.

“If they don’t start focusing on the 800 pound gorilla, they’ll never be able to get control of the budget,” said Robert Bixby, executive director of the Concord Coalition.

This was said after recent budget legislation had failed to touch the largest and fastest-growing side of the budget—Social Security, Medicare and other benefits paid automatically without Congress having to vote on them.

Of this year’s $2.4 trillion budget, only about one-third will be spent on federal programs that Congress must approve every year, items like U.S. troops body armor or USDA meat inspection; programs that will total about $822 billion this year; but which do not include the $100 billion that may be required for wars in Iraq and Afghanistan and worldwide actions against terror—perhaps for some time to come.

In fact, portions of this part of the budget for defense and domestic security are items that are largely untouchable.

Therefore, it is barely one-sixth of the overall budget that gets the bulk of legislative attention—all aimed at ways to save money, anything to address what was, last year alone, a $413 billion deficit. Nordic barbarians do not visit Congress. That would be a commercial worth filming.

Texas Republican Pete Sessions promised no wild spending sprees. However, Sessions of Texas is a different kind of sessions than sessions of Congress, those most reluctant to slow the growth of entitlement programs. Social Security and Medicare will lead the entitlement growth from $1.5 trillion this year to $2.5 trillion by 2014, with no prospect of diminishing or even slowing.

76 million baby-boomers will lead a barbarian charge in 2008, each screaming wildly “What’s in your wallet?” The relentless attack on Medicare will come three years later. Rapid advances in medical technology and pharmaceuticals drive the ever-rising cost of health care. Government calculates that health care costs jumped by 9.3% in 2002, the latest data available. The official prediction for the foreseeable future is of 7+% increases annually. Joseph Antos, a health policy analyst at American Enterprise Institute, summed it this way: “In the end, it’s the entitlements that are the real threat to deficits!”

The Congressional Budget Office was prompted by such data to warn: “Unless taxation reaches levels that are unprecedented in the United States, current spending policies will probably be financially unsustainable over the next 50 years!” Unless the dictionary is wrong, unsustainable is a call for finding new revenues.

Congress has shown no taste to take on senior citizens, veterans and others who rely on federal benefits. (And who can blame them?) One might add that these beneficiary categories are, for the most part, law-abiding citizens, a subtle distinction we will come back to later in this paper.

Also to be noted and remembered is that President Bush and Congress created Medicare prescription drug coverage in 2003, estimated to cost $400 billion over the next decade. For the sake of simplified math for later argument, let’s say at a cost of $40 billion per year.

President Bush has consistently expressed his desire to revamp Social Security. The incoming chairman of the Senate Budget Committee, Senator Judd Gregg, (R-NH) has declared himself ready for that task. Nonetheless, Mr. Bush and others have just as forcefully promised that Social Security recipients will not face benefit cuts, a stance not taken by budget realists. Is there a solution?

In my 2002 book, (“Birthright of Freedom”) with CPA David Wigfield, we outline a Social Security proposal to address the current and future crisis via a cash grant of $8000 at either birth or at naturalization for every new citizen. (4 million new persons per year) No further deposits are required. Therefore, these persons may also contribute payroll taxes to fund existing government pension obligations, (debt already in the system, an estimated 45-47 trillion dollars.) This $8000 birthright sum, invested conservatively till retirement age 65, is projected as sufficient to pay for today’s Social Security pension, adjusted into the future, and with extra cash or income to spare. In addition, each new account, for both male and female participants, is inheritable private property.

Another recent book, “The Coming Generational Storm,” by economist Laurence Kotlikoff and journalist Scott Burns, spells out clearly what kind of rational investment vehicles might be appropriate, both for safeguarding such pension funding and for separating it from government control or manipulation.

We now ask you to put this train of thought aside for future use. We do ask you to note that the cost of this potential solution, given current demographic projections, is $32 billion dollars (adjusted for inflation) annually. If you now also recall that the cost of the previously enacted new prescription drugs plan is $40 billion dollars annually, it will be clear that together the sums add up to $72 billion dollars annually. For the moment, it’s this $72 billion annually I want you to remember. I want you to think of these future entitlement beneficiaries as law-abiding citizens.

Found Money

There is little likelihood that you have not heard the saying: “There’s no such thing as a free lunch.” In case you might want to put ‘found money’ into the class of free lunches or perpetual-motion machines, please reserve your judgment.

That is because I am going to show you how we can pay for the $72 billion dollars annually that I have already earmarked for Social Security and Medicare and, for as many years into the future as you care to calculate. Secondly, I am going to show you how to have a budget surplus of an additional $50-60 billions of dollars annually to devote to other purposes, again for as long into the future as you care to calculate. A ‘budgetary barbarian defense-shield,‘ if you will.

Even better, I will show you how we can get those who are not law abiding citizens to pay for it, and all to their own betterment rather than detriment. Moreover, the solution is easy to implement.

Narcotics Policy Reform as Catalyst to Budget Reform (Finding the Money)

According to the official U.S. narcotics policy document—issued annually by ONDCP, the Office of Narcotics and Drug Control Policy, the present annual cost to America of narcotics is $160 billion annually.

The use and abuse of only two drugs, heroin and cocaine, makes up the bulk of this expense, perhaps as much as $122 billion of that total.

Only recently has it been officially acknowledged that narcotics are the principal funding vehicle of worldwide terrorism, a logical and renewable source of revenue for both terrorist and criminal organizations. The 9/11 Commission Report also makes this connection.

We argue that the present cost estimates are too low. Given the fact that the costs of 9/11, and attendant and associated new costs of both homeland security and the worldwide response to terror are not included in the ONDCP narcotic costs total, one might easily speculate a one time 9/11 related cost of $300 billion and an additional annual cost of $100 billion for the foreseeable future. Since narcotics cannot finance 100% of terror, however, and for the sake of this paper I am attributing an additional $20 billion dollars annually to America’s true cost of narcotics. There will be some, of course, who will disagree, some prone to claim a higher or lower number, but suffice it to say that the figure also cannot be zero, as even the 9/11 Commission report makes the unmistakable connection between narcotics and terror financing. If terror financed wholly or in part by narcotics occurs, there is a cost to it. Only the number chosen is subject to debate.

For the sake of current discussion we are now talking about $180 billion dollars annually, as the US cost of narcotics, again with an adjusted figure of $132 billions of that sum attributable to two plant derived narcotics—heroin and its derivatives and cocaine and its derivatives.

Therefore, at a minimum, we could find $132 billions of new money annually if we could eliminate future cultivation of only two narcotics producing plants.

The previously mentioned $72 billion annual costs related to Social Security reform and Medicare prescription funding will now be subtracted from the $132 billion figure. This subtraction of spending creates an additional annual budgetary surplus of $60 billion dollars annually. At this juncture, this is available to Congress for discretionary spending.

The “Law Abiding” Distinction Defined

For the sake of this discussion, and for the most part, I hope you will agree that the old and the ill are not out robbing and creating crimes of violence or other illegal acts. Therefore, by-and-large, these are stand-up Americans, even realizing that some current or future entitlement recipients will not be law abiding in the absolute.

By the same token, narcotics cultivators, traffickers, users and dealers of narcotics are engaging illegal acts—pretty much uniformly defined as such, whether or not the country involved is the U.S., Colombia, Afghanistan, Mexico, Myanmar or North Korea.

When it is possible to create public policy that rewards the law abiding instead of the law-breaking, doing so is a desirable goal.

According to the United Nations, there are currently 191 represented nations. Of these, only 30 are what we would call developed or industrial nations. These 30 belong to OCED, Organization for Economic Cooperation and Development.

More rather than less, these more economically developed are also the law-abiding nations, furthering the economic premise that those who benefit from each other economically are less prone to fight. They are also nations where rule of law tends to be strongest.

The Many Budget Beneficiaries

For lack of a better yardstick, allow me to use these 30 OECD nations as my primary grouping in this discussion of budgetary beneficiaries. They are what Thomas P.M. Barnett calls “Core Nations” in his influential book, The Pentagon’s New Map: War and Peace in the Twenty-First Century. What smacks you more forcefully than stepping on a rake is that just 30 of 191 nations account for over 30 trillion dollars of annual GNP! And the bulk of this is shared between the United States and the EU nations.

These 30 are the ‘Core’ nations because they are the furthest along toward economic globalization—far and away.

Conversely, those nations furthest away from the benefits of globalization are those that Barnett calls: The Gap.

Among the nations recently rebuked by President Bush for involvement as either narcotics producers or transit nations are: Afghanistan, the Bahamas, Bolivia, Brazil, China, Colombia, Dominican Republic, Ecuador, Guatemala, Haiti, India, Jamaica, Laos, Mexico, Myanmar, Nigeria, Pakistan, Panama, Paraguay, Peru, Venezuela, and Vietnam. Most of these are among the Gap nations, those less prosperous as ranked by per-capita-income.

In other words, although Mexico is an OECD nation, these are nations for whom globalization will be hardest. Not only are they more easily characterized by their economic rankings but also by their propensity to be dependent upon or not in control of--narcotics production..

Reducing and eliminating that dependency is essential so that developing nations can more quickly enlist both their human and financial resources toward developing more long-term, sustainable (and legal) sources of growth. It is also a vital component that law-abiding citizens are needed for rule of law nations. One cannot depend on illegal activity to sustain economic or moral well-being.

Without narcotics, however, how can poor nation’s peasant farmers sustain themselves, even in the short term? That pointed question is the one most frequently repeated, despite the known attendant facts regarding both societal and environmental degradation.

Too often, the answer is that peasants are not farmers, but merely criminals producing an illegal product—persons following an illegal occupation--callous predators on more affluent others. A common response is: “Let them get another job! “

It is not that easy. In many poor countries the actual cultivators are essentially slaves to drug barons and terror organizations, conscripted child and adult labor,, For such persons, can there be a more humane, hopeful and healthful response?

Money for Human and Economic Development and Change

The answer is yes! Globalizations largest beneficiaries are also the affluent others whose money (for the most part) purchases narcotics. The primary user nations are also well defined as the OECD members. (Unfortunately, the poor nations are also becoming user nations.)

Narcotics are such a significant problem, that it costs the Core nations (on average) at least 1.5% of their GNP, as their societal cost of narcotics. I have already said that in the United States alone that figure is estimated at over 160 billions of dollars annually, and with an adjustment for the counter-terror component included, $180 billion.

Based on the 1.5% percent noted, the cost to OECD nations cumulatively would exceed $450 billions of dollars annually in narcotics costs. (Based on the total GNP of $30 trillion) Adding the equivalent ‘narcotics cost of terror’ component, would raise the total to $563 billions annually.. This figure includes the United States.

Obviously, were these dollars otherwise available they are most likely to produce a positive return on investment. The $563 billions may be too small a number, for when killers bombs, weapons of mass destruction and governmental corruption are included as a part of the narcotics equation, it becomes difficult to estimate what the total negative costs may be. For example, if narcotics funded the 9/11 terrorists, even in part, the real costs worldwide are monumental.

It is necessary to remind readers again that the two major narcotics crops are opium poppies and coca leaves. They account for over 70% of the worldwide costs of narcotics. For the sake of this conversation, think that as 70% of $563 billion, or $394 billion that can be better utilized once we assure that one day neither plant is sold as a narcotic,

Since the $394 billion includes America’s share, we must subtract the amount attributed to heroin and cocaine in our share from the OECD total. This requires subtracting the $132 billion US total from the $394 OECD total. The result. $262 billion, is the annual amount attributable to the two major drugs throughout the remaining 29 OECD member nations. Once again, the more wealthy of which are the EU nations.

Under the conditions outlined, the resulting $262 billion annually is found money to the recipient nations. If America provides both the means, the diplomacy and the seed monies to curtail cultivation of the two major narcotics producing plants, the $262 billion annually becomes an outright gift to its recipients. What responsibilities, if any, should recipients be willing to take on in return for such a large ‘narcotics dividend?’

Responsibility Related to a Narcotics ‘Dividend’

One possible exercise of responsibility would be using narcotics dividend monies to shrink the Gap while increasing the Core.

Consider two opportunities only: Afghanistan and Colombia.

Afghanistan produces 75% of the world’s opium derived narcotics. Colombia produces 70% of the world’s cocaine derived narcotics (and almost 100% of the heroin used in the United States.).

Consider now, eliminating narcotics plant cultivation in one Gap nation, Colombia. This would produce a narcotics budgetary dividend of approximately $132 billion to one nation, the United States. That is because virtually all of our cocaine and heroin come from Colombia.

Were the US to enjoy a narcotics dividend of $132 billion annually from just one donor, what would America be willing to offer in return, given that they had already appropriated $72 billion annually for their own Social Security and Medicare needs? After all, there is still $60 billion annually that is not yet appropriated.

Obviously, moral as well as economic issues will need consideration.

Self-interest vs. Greed

From the OECD vantage point, considering Afghanistan along with Columbia would produce a dividend to the non-US OECD nations, primarily the EU, of 70% of their relative cocaine costs and 75% of the heroin costs, or as much as $183 billion annually. (70% x $262 billion), Without either plant, therefore, and using just those two producer countries, with both hoping to one day join the Core, the dividend receiving nations would have substantial monies with which to help. Why should narcotics dividend receiving nations, primarily Europeans, do so?

Were the European Core nations generous to the two nations for giving up the cultivation of narcotics, they would have a combined savings of $183 billion annually to do so.

One must step back also to factor the vast differential between cultivation cost and street value of plant-derived narcotics.

For example, the 2004 monetary return to the Afghan economy of this year’s crop of opium poppies is estimated at $2.8 billion. That is 60% of the Afghan GNP. Although that is a lion’s share of the Afghan economy, the street value of Afghanistan’s 75% of the world heroin crop is probably in excess of $230 billion.

In other words, the heroin cost users pay all the accumulated middlemen in the distribution chain is 70+ times greater than the amount generated as GNP to the producer nation. The bulk of the profits do not go to those who grow the plants, but to real criminals: warlords, druglords traffickers, dealers and terrorists. And we needn’t be feeling generous toward this latter group of societal lepers or worry whether or not they are compensated fairly for the loss of the opportunity to exploit others.

What’s the bottom line?

The bottom line is that even if other OECD nations are not generous at all with their $183 billion annual narcotics dividend toward helping Gap nations join the Core, America alone still saves $132 billion annually just from Colombia.

And since the bulk of Middle-Eastern terrorist financing comes from Afghan heroin, we would strike a mighty blow in favor of reducing the means to finance terror against us. Put whatever $ amount you want to this benefit.

We can afford to be both very creative (and generous) in helping poor producer nations to globalize given a found narcotics dividend in the magnitudes discussed. This is found money in spades!

We have already mentioned having $60 billion annually after spending for Social Security reform and the Medicare prescription plan recently enacted.

The best argument we can make is that we offer the Gap producer countries more toward their GNP than they now get for narcotics cultivation. We place ourselves in the best position to accomplish our ends by diplomacy and cooperation rather than by forced eradication. Compensation in place of cultivation allows the producer nation time in order to readjust over a period of years. Since we can make the offer sweeter for not growing narcotic plants the recipient can realize for their cultivation, we strengthen our argument that those in opposition are not the grower side of the equation, but the criminal element.

For example, we might provide support to Colombian and Afghan globalization at $10 billion a year for 10 years and then reduce the grant by $1 billion each year for the next 10 years. That would mean we had supported economic development in each nation to the tune of $155 billion over 20 years. Thereby, Colombia and Afghanistan would have a full generation to become weaned from narcotics. I am not trying to suggest an actual policy decision, but merely to suggest the kind of thinking that might be considered in reaching one. The real bottom line reflects the reality that dividend recipient nations should be forced to face an insurmountable moral dilemma by any refusal to share a part of their largesse with those who produced it.

Coalitions of the Decent

Perhaps ‘coalitions of the decent’ are a better functioning diplomatic umbrella than coalitions of the willing? The United States has been recently subjected to harsh criticism abroad, both in the media and the halls of government. Particularly in the EU, it has been alleged that America thinks only of itself. France has gone so far as saying that America “can’t be depended upon to return a favor.” This is an excellent opportunity to put that accusation to the acid test, to pose the question as to who is willing or not to return favors. That premise has to be put in proper context by defining who best uses the narcotics dividend favor granted them by Americans. We will be able to judge them fairly on this issue by observing how generous they are toward helping narcotics producer nations to become members of a healthy economic world. Decency is a great force in the hands of the decent, but reveals the truth about those who lack virtue. It’s time for the boo-birds to be called to roost.

By offering other nations a narcotics dividend they realize though our favors to them, they can hardly condone behavior that would exclude them from joining a coalition of the decent. This initiative can be the creative genius of our own new diplomacy. All they have to do is support the mission philosophically and sit back and clip their dividend coupons. Even the French should find no disdain for such an unexpected windfall. The United States has a new Secretary of State. What better a defining mission than a world set on a better, more hopeful trajectory?

How can it happen?

Drilling for Oil

It is not a difficult stretch of imagination to note that narcotics producing nations are among the poorest of the poor. It is also generally a safe bet to assume that either such nations have few natural resources that can be extracted from the earth, or that the chaotic, corrupt political environments have not made it possible to utilize what resources are otherwise available. For example, Nigeria has significant oil opportunities, but is hampered by monumental corruption.

Let’s make use of this oil metaphor and suggest that narcotics have become the oil wells of the poor. With a minimum of effort they can extract the greatest potential return from the soil. We will reserve judgment as to whether what they extract is a benefit to humankind. They use their often barren soils to cultivate what can bring the greatest extractive return, exchanging the higher rate of return offered for narcotics to take the place of resources not otherwise available.(or undeveloped) We can afford to give them an equivalent rate-of-return on their poor soils for not extracting their oil substitute. We can make more sustainable growth a reality for them in the future, along with education, better health practices and greater support for democratic institutions. They, in turn, will be providing the money from voluntary non-extraction practices to earn our support.

Carrying Water for the Thirsty—Drilling a New Well

Just how might we produce the narcotics dividend upon which this paper is built?

We will enrich the environment. Colleagues of mine have developed soil inoculants capable of preventing the cultivation of pre-selected narcotics producing plants. The opium poppy and coca shrub are among them. We have also overcome prior objections to consideration of their use: that they are detrimental to humans, animals, non-targeted plants and the environment.

How is this possible? Through the miracles of science we have, through both trial-and-error and rapid advances in both genetics and agricultural biotechnology, been able to satisfy the adverse claims, (mostly from non-scientists and non-biotechnologists) that soil inoculation with mycoherbicides is unproven technology. To the contrary, it holds many superior advantages over current aerial spraying of fields with glyphosate.

Some important distinctions are these: mycoherbicide soil inoculation against pre-selected organisms are somewhat like a child’s measles inoculation, in that it protects against an unwanted organism for an extended period of future time. In this case, soil inoculation does not have to take place on an annual basis, an important economic advantage. Second, mycoherbicides prevent cultivation of only the targeted organism, while glyphosate kills all emergent growth, including emergent food crops. In poor countries, this is a serious drawback, both economically and in terms of human well-being..

Glyphosate has become so politically difficult, for example, that although Afghan President Hamid Karzai repeatedly says fighting the booming opium trade is his top priority, (because of the threat of his nation becoming a narco-state) he also cites human heath risks as potential side effects as a reason to explain his opposition to spraying glyphosate on poppy fields. This concern is in a nation being destroyed by narcotics cultivation. Mycoherbicide soil inoculation is a human-friendly response.

Furthermore, Joshua Davis has recently reported in Wired.com, a narco-terror response,'The Mystery of the Coca Plant that Wouldn't Die,' the development of (RR) resistant coca, which in the future may render glyphosate ineffective against narcotics.

As an alternative, soil inoculation (ground or aerial) using safe mycoherbicides can eliminate present concerns, It can also provide a safe means to avoid reprisals against those engaged in hand eradication efforts. In the case of both Afghanistan and Colombia, humans are also put at risk by efforts at hand-eradication.

Farmers can receive vouchers in exchange for not planting designated areas. In theory, of course, one could receive a voucher in exchange for fallow fields, providing plantings were not moved elsewhere or planted despite prior agreements and/or vouchers. In order to keep intent consistent with results it seems that treating suitable fields in advance is the only way to guarantee compliance against the circumvention of intent.

The elimination of the Afghan poppy crop through soil inoculation would both clear the political path and create the financial means to provide hard-to-come-by development funds to cash strapped Afghanistan. The warlords, druglords and terror elements would object, of course, but they would object to any effective form of eradication, which is why they must be recognized as the major obstacles to democracy and rule of law that they are.

The EU narcotics dividend alone for opium is huge, as Afghan opium saturates their markets.

For America to decisively end the flow of terrorist funding from Afghan poppies would justify ongoing Afghan development funding in the magnitude of $10 billion dollars annually, which is three to four times the current US level of investment. Increased funding would be justified through Afghanistan’s own cooperative effort. It is an offer too hard to refuse. Congressman Tom Lantos (D-CA) has been a vocal supporter for the support of democratization with more American dollars. I agree. Here is a way to back that support in Congress.

The benefits to Afghanistan are huge, but reducing the death and destruction brought on by narcotics funded terror are a bonus plus to both Afghanistan and the United States.

Finally, this is a plan in which producer nations can recognize the incentive to cooperate. In terms of making more diplomatic efforts, we have a means to address both mutual concerns and mutual benefits in a way that promises both real results and real money.

As to implementing the actual soil inoculations, application can also be done cooperatively, even though the specific bio-herbicide inoculants have been developed by American scientists. Nonetheless, it can be applied quickly, safely and with the mutual participation of principals.

This is the best advice I have to offer as to how to make seeming barren soil productive—to turn poor land into found money. I have tried to show how such a policy implementation might be presented, who will benefit and how. I have tried to show the economic impact benefits. I am hoping that policymakers with both courage and vision will see enough by reading between the lines that they will earn their own way forward by crossing any uncrossed t’s and dotting the missing i’s.

Many people have cautioned me that those in government won’t respond or try to fill in the gaps if you haven’t thought of everything. I haven’t and they must. Even the most ungrateful politician should feel good about finding a few hundred billion dollars once thought lost. It doesn’t take alchemy, a free lunch, or a perpetual motion machine to find—just using tools and found money already at hand. After all, as Senator Dirksen said: “A billion here, a billion there. Pretty soon you’re talking about real money.”

Good luck. I’ll be willing to help in any way possible.

—Walton Cook is the author of the political thriller, Buzzword, a novel of biotechnology applied against the cultivation of narcotics producing plants.

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