China Relations Top 2014 US Concerns

New Year projections for 2014 conveyed, for the most part, pessimism. They seemed like a rerun of 2009's Annus Horribilis.

In the January issue of Newsmax, these were headlines on subsequent pages:

• China's Nuclear Cross Hairs Fixed on U.S. Coastal Cities
• Drastic Military Cuts Leave Us Vulnerable
• Why the Saudis Loathe the U.S.
• Obama's Deal With Iran Risks Nuclear Arms Race
• Underfunded Pension Plans Push States to the Brink

On the cover of Newsmax is "The People's Pope: Francis' popularity soars with a message of reform," then in red letters, "but traditionalists are worried."

"The Globalist," a widely read online liberal weekly, picked its way through a variety of sources, ranging from "Tax Policy Center" to Edward Kleinbard of the University of Southern California's School of Law and former chief of staff for Congress' Joint Committee on Taxation. Samples:

• The 400 people with the highest adjusted gross incomes made, on average $202 million each in 2009, according to IRS data.
• The top 400 paid an average U.S. federal tax rate of less than 20 percent, far lower than the top bracket's marginal income tax rate of 35 percent then in effect.
• They also paid a lower rate than the top 1 percent, which were people with adjusted gross incomes in 2009 of at least $344,000.
• The 1 percent — including affluent upper-middle-class taxpayers — paid on average just more than 24 percent of their adjusted gross income in federal tax.
• Even the top 0.01 percent, people earning at least $1.4 million, paid 24 percent.
• The 0.01 percent pays much lower average rates than their annual earnings might suggest because their income is dominated by capital gains and dividends.
• As long as these forms of income are taxed at a preferential rate, the rich are going to benefit the most.
• President Ronald Reagan championed taxing capital gains at the same rate as earned income, part of his 1986 tax reform, which lowered overall rates by broadening the tax base.
• Recently, Bill Gross, billionaire co-founder of investment management firm PIMCO wrote that, "The era of taxing capital at lower rates than labor should now end" because it is unfair.

Whether good or bad, "The Internet of Everything" is almost upon humanity. Cisco Systems says, "a whopping 50 billion devices will be wirelessly interconnected and communicating with each other by 2020, up from 10 billion today."

Motley Fool's Chief Investment Officer Andy Cross says: "A massive technological shift is about to go mainstream, one that will make futuristic-sounding ideas not only possible, but also normal.

"Like a pill you swallow that will email your doctor a complete assessment of your digestive tract; or a bridge that alerts your state's Department of Transportation when it has a pothole needing to be filled. Or even a milk carton that orders its own replacement when it's 75 percent empty."

Cisco Systems' President of Development Rob Lloyd says, the value at stake of the Internet of Everything is $14.4 trillion. 

Motley Fool cites one of the changes coming in the automobile industry: A dealer that financed a car could use a new device to disable the car if the owner missed a payment. Similarly, an insurance company could monitor the car's use to more accurately price the risk of insuring the driver.

The Harvard Business Review says, "We are witnessing something like the epic collision of two galaxies."

The brightest star in the U.S. military for the past quarter of a century was Greek-born retired U.S. Navy Adm. Dean James Stavridis, a former NATO and Eucom commander who speaks six languages and is now dean of the Fletcher School of Law and Diplomacy at Tufts University.

Asked what are the major challenges and opportunities for U.S. national security over the next 10 years, Stavridis didn't hesitate; it is China.

"But we cannot afford to drift into some kind of a Cold War model, where we're simply going to build walls between ourselves and the Chinese, which we did, unsuccessfully during the Cold War, with huge parts of the world," he said.

"I think the relationship with China is mature enough to ask, where the potential zones of cooperation are. With China in the international sphere, I think they range from humanitarian operations, partnering with the Chinese to do hospital ship work, to do response to epidemics." 

Stavridis says there is also a potential zone of Sino-U.S. cooperation in the "high North."

"China is keenly interested in the arctic, where it does not have a footprint but would like to be involved, and I think it's in the interests of all to see what will probably be the largest national economy by the middle of this century involved in very constructive ways as we manage a very challenging region," Stavridis says.

"The maritime sphere offers potential for cooperation with China, from deep sea-bed mining to undersea navigation and surveying to emplacement of fiber-optic cables et cetera. So the many maritime projects that I think have potential — and the salutary effect of that kind of work is obvious as a lot of the potential conflict with China also revolves around the maritime sphere."

"Traditional exchanges in the security dimension," said the polyglot admiral, "would be useful with China. For example war college to war college; language training back and forth; creating a committee to participate in each other's exercises."

To pre-empt those who think the admiral has gone soft on China's totalitarian regime, Stavridis added, "It's critically important that we maintain our higher moral standards, and thus continue to criticize China for its behavior, for example, as we have in standing up two new Air Defense Identification Zones, in their extremely poor record in human rights, in the environmental damage they create globally."

But long term, he added, "Do you get better results by simply building a wall and saying 'You're a pariah, we're not going to work with you, and we're going to put our military forces around your periphery until you do the right thing'? Is that good strategy? I don't think so."

Clearly, Admiral Stavridis and American conservatives have sharply different views on U.S. relations with China.