Epstein Estate Documents - Batch 7 / TEXT / 002 from House

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HOUSE_OVERSIGHT_033209
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https://www.dropbox.com/scl/fo/9bq6uj0p ... tracking=1

From: Lesley Groff___________________________
Sent: 12/20/2016 10:33:15 PM
To: Jefffrey Epstein [[email protected]]
Subject: Fwd: Cavett's guilt and horror..
Importance: High
Begin forwarded message:
From: Dick Cavett <
Subject: Cavett's guilt and horror..
Date: December 20, 2016 at 5:26:17 PM EST
To:
Dear Lesley,
HORRORS!
I have committed the (to me) unpardonable error of inflicting upon Jeffrie -- today on the phone - a false
anagram. Please spare him the pain of passing it on in its erroneous form.
Here is the correct version:
The letters in PRESIDENT TRUMP -- re-arranged -- spell: MR. PUTIN'S RED PET.
Thanks, Lesley. The chicken matter touches my heart. Dick C.
HOUSE OVERSIGHT 033209

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HOUSE_OVERSIGHT_033210
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https://www.dropbox.com/scl/fo/9bq6uj0p ... tracking=1

From: Nicholas Ribis____________________________________________
Sent: 1/3/2017 2:07:16 PM
To: 'jeffrey E.' [[email protected]]
Subject: Trump appears with mobster-affiliated felon at New Year's bash/Joe Cinque
Importance: High
Jeffrey --I thought you might be interested in this article-- Nick
Trump appears with mobster-affiliated felon at New Year's bash
President-elect Donald Trump rang in the new year together with Joseph "Joey No Socks" Cinque — a
convicted felon with ties to notorious Gambino crime family boss John Gotti, a recently released video has
revealed.
Cinque can be seen in a video obtained by the Palm Beach Daily News , cheering loudly as a tuxedo-clad
Trump runs through a number of campaign promises before the hundreds of guests attending the New Year's
Eve bash the President-elect threw at his Mar-a-Lago estate in Florida on Saturday.
"The taxes are coming down, regulations are coming off, we're going to get rid of Obamacare," Trump can be
heard saying as an exuberant Cinque stands next to him, pumping his fists into the air.
Cinque's Sunday appearance with Trump might raise some eyebrows.
Beyond a 1989 felony conviction for possessing nearly $100,000 worth of stolen artwork, Cinque "used to be
friends with John Gotti," according to a New York Magazine profile from 1995 .
Cinque was also "shot three times and left for dead" in a 1980 incident that authorities described as "a hit,"
according to the profile.
Further, Saturday's Mar-a-Lago party was far from the first time Cinque cheered on for Trump.
An Associated Press report from this spring showed that the American Academy of Hospitality Sciences, a
company owned and operated by Cinque, has awarded more than a dozen of Trump's golf courses, hotels,
casinos and private clubs with so-called "Star Diamond" awards "of true excellence in hospitality."
The same report also found that about half of the roughly 30 people listed as "trustees" to the company are
Trump friends or business associates.
Trump, meanwhile, was listed on the company's website as its "ambassador extraordinaire," and he even
appeared in a 2009 tribute video to Cinque in which he said, "There's nobody like him. He's a special guy."
But when asked by reporters about Cinque in May, Trump denied knowing anything about him or his criminal
past.
"If a guy's going to give you an award, you take it," the President-elect said at the time. "You don't tend to look
up his whole life story."
The Trump transition team did not immediately return a request for comment on how the President-elect knows
Cinque or why they appeared together Saturday.
While standing alongside Cinque, Trump also took a moment to address the terror attack that left scores of
nightclub revelers in Istanbul dead over the weekend — and how the bloodbath somehow necessitates a
Mexican border wall.
"We will build a wall, you know that. We will build a wall," the President-elect told the raucous crowd.
HOUSE OVERSIGHT 033210
"And speaking of walls," he continued. "In Turkey tonight — has anybody heard? Big disaster took place in
Turkey tonight. Many, many, many people killed...It's a horror show. So we're going to get things running
properly."
ISIS claimed responsibility for the Saturday attack , which left at least 39 people dead and dozens more
wounded, calling the lone gunman who carried out the massacre a "heroic soldier of the caliphate." The suspect
had yet to be named and located by Turkish authorities early Tuesday.
The President-elect made building a wall along the country's southern border one of his main campaign talking
points, frequently promising his supporters that it will be a "great" and "beautiful" wall.
But his pledge to construct a border barrier has gone under several renditions, with the President-elect admitting
in November that it might actually end up "part wall, part fence."

HOUSE OVERSIGHT 0332

Joe Cinque & Donald Trump — The “Awards” Kingpin Connection

Most people have never heard of Joe Cinque — yet his name appears quietly behind dozens of the luxury “awards” promoted by Donald Trump’s hotels and resorts over the past three decades. When the relationship is examined closely, it raises uncomfortable questions about image-laundering, credibility marketing, and Trump’s habitual tolerance for highly compromised associates.

Who Is Joe Cinque?

Joseph “Joey No Socks” Cinque is a New York figure long described in the press as:

• A small-time mob affiliate
• An art fence
• A con artist
• A man informally linked to the Gambino crime family

In 1980, Cinque was shot three times and left for dead. Officially labeled a robbery attempt by Cinque, law-enforcement sources described it as more consistent with a mafia execution attempt that failed.
In 1989, Cinque was convicted of felony possession of stolen artwork discovered in his Manhattan apartment — cementing his documented record as a serious criminal offender.

Yet shortly after that conviction, Cinque re-emerged not as a pariah — but as the CEO of a luxury-awards organization.
________________________________________
The “American Academy of Hospitality Sciences”

Cinque is the head of the American Academy of Hospitality Sciences (AAHS) — not a university or major professional body, but a for-profit awards outfit operating out of his New York apartment.

AAHS is known for producing the flashy but obscure:

⭐ Star Diamond Awards

These “prestige” certifications are given to hotels, resorts, restaurants, and cruise lines — with little transparency about inspections, criteria, or independence.

The Academy:

• Allows award recipients to sit on its own Board
• Collects membership and accreditation fees
• Issues awards that recipients then use for marketing

It is functionally a marketing service disguised as an honor society.

________________________________________
Trump’s Properties & Cinque’s Awards

No hospitality brand received more Star Diamond Awards from AAHS than Trump’s:

• Trump International Hotels
• Trump casinos
• Trump National golf resorts
• Mar-a-Lago

Trump properties used these awards repeatedly in advertising and branding for decades.

At various points:

• Trump executives sat on AAHS’s board
• Trump himself was named AAHS’s symbolic “ambassador extraordinaire”
• Awards were announced during Mar-a-Lago gala events

This meant the same circle:

• Controlled the “academy”
• Selected the award winners
• Benefited financially and reputationally from the awards

In any legitimate professional system, that relationship would be disqualifying.
Here, it was the business model.
________________________________________

Social & Personal Relationship

Cinque was not just an award-vendor — he was part of Trump’s inner social orbit.

He appeared at:

• Exclusive Mar-a-Lago events
• Trump New Year’s Eve galas
• Public ceremonies honoring Trump resorts

On New Year’s Eve 2016–2017, months after Trump’s election victory, Cinque stood onstage next to the President-elect at Mar-a-Lago during yet another Trump award ceremony.

Photographs of the convicted felon beside the incoming President sparked an embarrassment cycle across international media.

Trump had publicly described Cinque as:
“A special guy.”
________________________________________

The Domain & Branding Curiosity

Investigative reporters later found that Cinque or associated entities controlled a number of Trump-branded Asian domain names, linking him directly to Trump trademark management overseas — another sign of continuing branding proximity well beyond awards ceremonies.
________________________________________

Why This Matters

The issue isn’t merely that Trump knew a criminal — politicians attend mixed social events constantly.
The issue is that Trump built business relationships, branding systems, and long-term mutual promotion partnerships with a figure who:

• Had a well-documented organized crime background
• Held a felony conviction
• Ran a commercialized award mill
• Provided “prestige laundering” for Trump’s luxury brand

Cinque was:

✅ Credible enough for Trump to praise
✅ Embedded enough to share stages at Mar-a-Lago
✅ Trusted enough to hand Trump glowing awards used for marketing

But not credible enough for any legitimate hospitality academy to associate with.
________________________________________

The Pattern

Joe Cinque fits into a broader Trump pattern:

• Felons and mob-linked figures
• Financial opportunists
• Self-promoting award vendors
• “Prestige brokers” willing to rent honor

Trump does not merely tolerate compromised partners — he selects them when they:

• Provide media gloss
• Enhance branding optics
• Demand minimal ethical constraints
________________________________________

The Bottom Line

Joe Cinque was never a random acquaintance.

He was a key player in the image-laundering ecosystem that inflated Trump’s luxury brand prestige for decades:

• Awarding Trump properties honors
• Marketing Trump as hospitality royalty
• Publicly celebrating and partnering with Trump

All while carrying a background incompatible with the legitimacy he was selling.

The Cinque-Trump relationship is a case study in:

How status can be manufactured even when its architects are legally and ethically bankrupt.
________________________________________

Final Thought

When people ask:

“How did someone like Trump maintain the illusion of elite credibility for so long?”

Joe Cinque is part of the answer.

Not because Cinque was powerful —

but because Trump was comfortable building credibility on paper honors from deeply compromised sources, so long as it advanced his business persona.

-- Joe Cinque, by chatgpt, 12/4/25

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HOUSE_OVERSIGHT_033212
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https://www.dropbox.com/scl/fo/9bq6uj0p ... tracking=1

From:
Sent:
To:
Subject:
Attachments:
Nicholas Ribis_____________________________
1/6/2017 2:26:34 PM
'jeffrey E.' [[email protected]]
FW: CNN Article
image001.jpg
Importance: High
Jeffrey — I thought this article on Tom would interest u -- Nick
http://www.cnn.com/2017/01/06/politics/ ... index.html
Donald Trump's power broker
www.cnn.com
Tom Barrack is poised to wield enormous influence in
Donald Trump's Washington as the person perhaps closest
to the new president outside of his immediate family.
HOUSE OVERSIGHT 033212

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HOUSE_OVERSIGHT_033213
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https://www.dropbox.com/scl/fo/9bq6uj0p ... tracking=1

From: Richard Kahn______________________________
Sent: 1/11/2017 11:38:08 PM
To: Jeffrey Epstein [[email protected]]
Subject: Peter Thiel, Trump's Tech Pal, Explains Himself - NYTimes.com
Importance: High
https://mobile.nytimes.com/2017/01/11/f ... echnology-
gawker.html?referer=http://www.drudgereport.com/
Richard Kahn
HBRK Associates Inc.
575 Lexington Avenue, 4th Floor
New York, NY 10022
HOUSE OVERSIGHT 033213

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HOUSE_OVERSIGHT_033214
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https://www.dropbox.com/scl/fo/9bq6uj0p ... tracking=1

From: Mark L. Epstein
Sent: 1/12/2017 10:35:55 PM
To: 'jeffrey E.' [[email protected]]
Subject: your boy trump
Importance: High
I saw this post about Trump's difficulty in getting entertainers and cracked up:
It is rumored also that comrades Boris and Natasha and Fearless Leader have also offered performance at
tremendous inauguration of Moose and Squirrel.
HOUSE OVERSIGHT 033214

[admin]

HOUSE_OVERSIGHT_033215
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https://www.dropbox.com/scl/fo/9bq6uj0p ... tracking=1

From: Purevsuren Lundeg
Sent: 1/14/2017 1:13:48 PM
To: jeffrey E. [[email protected]]
Subject: Meeting in Europe
Importance: High
Dear Jeff,
Happy New Year! I could visit you in Paris on January 21st or 22nd or 23rd. Which day is convienent for you?
I will arrive noon time to see only you and after the meeting leave back. Early after noon time is suite for me.
warmest,
Purev
Sent from my iPad
On Dec 18, 2016, at 11:17 PM, jeffrey E. <[email protected]> wrote:
http ://www.nytimes. com/interactive/2016/11/29/us/politics/document-Trump-Inaugural-Benefit-
Packages .html?mtrref=www.nytimes.com&gwh=AA614B76E88085F22C999B2ACO241763&gwt=pay
please note
The information contained in this communication is
confidential, may be attorney-client privileged, may
constitute inside information, and is intended only for
the use of the addressee. It is the property of
JEE
Unauthorized use, disclosure or copying of this
communication or any part thereof is strictly prohibited
and may be unlawful. If you have received this
communication in error, please notify us immediately by
return e-mail or by e-mail to [email protected], and
destroy this communication and all copies thereof,
including all attachments. copyright -all rights reserved
HOUSE OVERSIGHT 033215

Purevsuren Lundeg — What We Actually Know

Purevsuren Lundeg (name often written in Western order as Lundeg Purevsuren) is a senior Mongolian diplomat and political figure who has spent more than three decades inside Mongolia’s foreign-policy establishment. Unlike flashy or controversial figures seen in other international stories, his public profile is notable for how conventional and professional it is — steady state service, high-level diplomacy, and almost no documented personal scandals.
________________________________________

Who He Is

• Full name: Lundeg Purevsuren (Purevsuren Lundeg)
• Born: December 24, 1964
• Birthplace: Govi-Altai Province, Mongolia
• Profession: Career diplomat, foreign-policy adviser, politician

From the outside, his background reads like a textbook résumé for a national foreign minister — education in Moscow, early MFA postings, European diplomatic work, followed by presidential advising and elevation to cabinet rank.
________________________________________

Education & Early Career

Purevsuren graduated from the prestigious Moscow State Institute of International Relations (MGIMO) in 1989, the training ground for many post-Soviet diplomats. That same year, he entered Mongolia’s Ministry of Foreign Affairs (MFA).

Throughout the 1990s and early 2000s he worked:

• As an MFA attaché
• As interpreter at the German Embassy in Ulaanbaatar
• In Mongolia’s Europe & Americas Department
• As Second and First Secretary at the Mongolian Embassy in Bonn, Germany

These roles focused heavily on European engagement and post-Cold War integration — the core skillset Mongolia needed while balancing Russia, China, and the “third neighbor” democracies.

________________________________________

Presidential Adviser

In 2009, he became Foreign Policy and National Security Adviser to President Tsakhiagiin Elbegdorj, one of Mongolia’s most Western-leaning leaders.

In this role, Purevsuren helped shape Mongolia’s commitment to:

• Democratic international alignment
• UN peacekeeping contributions
• Relations with NATO states, Japan, and the EU
• Mongolia’s “Third Neighbor Policy” — designed to prevent overdependence on either Russia or China by maintaining close strategic ties with the United States and Europe

He remained one of Elbegdorj’s principal advisers until his promotion to cabinet.
________________________________________

Minister of Foreign Affairs (2014–2016)

Purevsuren was appointed Minister of Foreign Affairs of Mongolia in late 2014.

During this period he:

• Led relations with Russia, China, the U.S., Japan, the EU, and ASEAN nations
• Coordinated Mongolia’s hosting of the 2016 Asia-Europe Meeting (ASEM) Summit in Ulaanbaatar — an event positioning Mongolia as a diplomatic bridge between Asia and Europe
• Conducted bilateral diplomacy at the highest levels, including meetings with:
o U.S. Secretary of State John Kerry
o Russian Foreign Minister Sergei Lavrov
• Represented Mongolia at multilateral forums such as:
o ASEAN Regional Forum
o OSCE dialogues
o European diplomatic summits

Public statements emphasized balancing Mongolia’s geopolitical position between its two powerful neighbors while leaning toward democratic alliances.

After elections reshuffled Mongolia’s cabinet in 2016, Purevsuren returned to a senior advisory role.
________________________________________

Ambassador & UN Representative (2018–Present)

In 2018, Purevsuren was appointed:

Ambassador Extraordinary and Plenipotentiary and Permanent Representative of Mongolia to the United Nations and international organizations in Geneva.

This Geneva role places him at the center of:

• UN Human Rights Council work
• World Trade Organization negotiations
• Interactions with WHO, ILO, and other UN agencies

On international programs — including WTO Forums — his name often appears in Western order as Purevsuren Lundeg, which causes periodic confusion but refers to the same individual.
________________________________________

Public Conduct & Incidents

Purevsuren has maintained a notably low-drama public profile.

One of the few widely reported personal incidents involved his complaint on behalf of Mongolians after remarks made by a Formula 1 figure he believed were insulting to his nationality — an action portrayed domestically as protective of national dignity rather than controversial.

Otherwise:

• No criminal allegations
• No corruption scandals in English-language sources
• No personal or financial controversies with traction in international media
Coverage portrays him as a rule-focused bureaucratic diplomat rather than a political showman.
________________________________________

Reputation

Across Mongolian and international reporting, his reputation is shaped by:

• Long institutional loyalty
• Mastery of European diplomatic channels
• Consistent support for Mongolia’s Third Neighbor diplomacy
• Avoidance of factional political spectacle

In short, he is seen not as a flamboyant or insurgent political figure, but as:

A steady, professional operator who represents continuity in Mongolian foreign policy.
________________________________________

What He Is Not

Based on publicly available reporting, Lundeg Purevsuren is NOT associated with:

• Criminal backgrounds
• Organized crime linkages
• Financial laundering schemes
• Political corruption prosecutions
• Intelligence scandals or covert operations accusations

Unlike the Joe Cinque story — which rests on felony records and mob affiliations — the Purevsuren profile is uneventful and institutional.
________________________________________

Bottom Line

Purevsuren Lundeg’s public history reflects a classic diplomatic career:

• Moscow-trained foreign service professional
• Presidential national security adviser
• Foreign minister during Mongolia’s most meaningful multilateral outreach phase
• Longtime UN representative

There is no credible evidence of scandal or serious controversy attached to him in available international documentation.

What stands out is not who he has clashed with — but how rarely he ever has.
________________________________________

Final Summary

Purevsuren Lundeg is best understood as a diplomatic functionary of the highest tier—
a man whose influence flows from continuity, relationships, and quiet statecraft rather than from political drama or notoriety.

-- Purevsuren Lundeg, by chatgpt, 12/4/25

[admin]

HOUSE_OVERSIGHT_033216
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https://www.dropbox.com/scl/fo/9bq6uj0p ... tracking=1

From: Richard Kahn_______________________________
Sent: 1/20/2017 3:25:48 PM
To: jeffrey E. [[email protected]]
Subject: Trump could tap tech entrepreneur Peter Thiel for Germany job: Report
Importance: High
http://www.cnbc.com/2017/01/20/trump-co ... -germany-j ob -rep ort.html
Richard Kahn
HBRK Associates Inc.
575 Lexington Avenue 4th Floor
New York, NY 10022
HOUSE OVERSIGHT 033216

[admin]

HOUSE_OVERSIGHT_033217
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https://www.dropbox.com/scl/fo/9bq6uj0p ... tracking=1

From: Kathy Ruemmler________________________________
Sent: 1/29/2017 1:44:28 PM
To: [email protected]
Subject: Kathy Ruemmler shared a link: Malevolence Tempered by Incompetence: Trump's Horrifying Executive Order on
Refugees and Visas - Lawfare
Importance: High
Malevolence Tempered by Incompetence: Trump's Horrifying Executive Order on Refugees and Visas -
Lawfare from John Heilemann's Tweet
Download the Twitter app
HOUSE OVERSIGHT 033217

[admin]

HOUSE_OVERSIGHT_033218
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https://www.dropbox.com/scl/fo/9bq6uj0p ... tracking=1

From: Larry Visoski
Sent: 2/1/2017 1:24:27 AM
To: Je vacation [[email protected]]
Subject: President PBI FYI
Jeffrey
Trump in PBI Fed 3rd thru 5th,. FYI„
When PresTrump is visiting MarLago PBI there will be flight restrictions flying in and out of palm beach„ due
to location of MarLago,.
There will be GateWay airports you have to depart from in order to land PBI„
Teterboro is a gateway departure airport, requires 24 hour notice just like our DCA program,
When Trump is in MarLago, we will be unable to land in Palm Bch departing from LSJ„ we can land Fort
Lauderdale Excutive airport, which isn't bad, they are offering $2.76 fuel price this weekend„
Same with departure from PBI, need 24 hour notice when President is in town„
See message from PBI Port:
Important Message: All Palm Beach County Airport Users
We are getting word and expecting a President of the United States (POTUS) visit to PBI / Mar-a-
Lago from Feb 3, 2017 (afternoon?) until Feb. 5, 2017. Times to be established.
Expect the FAA's Temporary Flight Restriction paperwork to be posted at least 72 hours prior to the POTUS
arrival.
The following two airports are in the inner core, inside lONM TFR.
PBI Airport; All General Aviation traffic into PBI must clear TSA designated "Gateways" for both arrival and
departures into and out of PBI. Departure Gateways - We expect the Gateways to be established at the multiple
locations at PBI with TSA operating from 0800-1700 and requires prior reservation (24hrs) with TSA. Arrival
Gateways — Expect Ft. Lauderdale International Airport (FLL) and Orlando Int'l (MCO). Also expecting
Teterboro, Dulles, and White Plains as additional gateways.
LNA Airport; As initially established by the USSS, the Palm Beach County Park Airport (LNA) in Lantana,
FL will be closed to all departures and flight training. Only arrivals into LNA that have gone through the TSA
Gateway program at one of the designated airports (FLL/MCO) may fly into LNA during the TFR.
The 30NM outer core will also be in effect and measures will be posted in the FAA NOTAM/TFR release.
Please share this advisory with all aviation users.
Regards,
Peter E. Labbe, Director
Operations & Security
Department of Airports
Palm Beach International Airport
HOUSE OVERSIGHT 033218
Sent from my iPhone
HOUSE OVERSIGHT 033219

[admin]

HOUSE_OVERSIGHT_033220
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https://www.dropbox.com/scl/fo/9bq6uj0p ... tracking=1

JAN 01.27.2017
ECONOMICS: US PERSPECTIVES
NATIONAL DEFENSE: IS ANOTHER SPENDING
BOOM ON THE HORIZON?
+ Joseph G. Carson, US Economist and Director—Global Economic Research, [email protected]
President Trump has promised to increase defense spending—and
there’s support from key members of Congress. If a large multiyear
plan is approved, it would represent a sharp reversal from what has
beentheweakesttrendindefensespendinginthepast50years.
And the timing and scale would have important implications for the
outlook on growth and inflation.
National Defense—The Trump Plan
President Trump has promised to deliver
an ambitious program to rebuild the US
military. It would include modernizing
US nuclear weapons systems, investing
more in cybersecurity, enlarging the navy’s
fleet and increasing the number of fighter
aircraft for the air force. Trump’s plan also
includes additional military personnel—well
over 100,000, according to some
estimates.
The details of Trump’s first Pentagon
budget will form part of the overall budget
he’ll submit to Congress in late February or
early March. The actual funding request for
the current fiscal year (which ends
September 30) must be completed by April
30—that’s when the current legislation
funding the military budget is set to expire.
More important, Trump’s blueprint for the
Pentagon budget could set the baseline
for defense spending for at least the next
four years. It’s also worth noting that
Trump’s military expenditures could be at
the low end of what some in Congress are
proposing.
For example, Senator John McCain, who
chairs the Senate Armed Services
Committee, recently released a white
paper on defense spending, Restoring
American Power. McCain argues that the
US has underinvested in the military for
several years, and that it is now vital for
the US to substantially increase funding for
the Pentagon. His plan calls for a $640
billion defense budget for fiscal year 2018,
which is $58 billion above the current
budget baseline. Moreover, the McCain
defense plan urges an additional $430
billion in military spending over the next
five fiscal years.
Defense Spending Patterns Are Unlike
Other Federal Programs
History shows that defense spending
programs are unusual in that they’re neither
cyclical nor countercyclical. Most often they
are based on military and political strategiesaswellasongoingreadinessto
respond to or engage in global encounters.
Based on historical gross domestic
product (GDP) data, there have been three
large defense-spending programs in the
past 50 years (Display 1). The first buildup
Display 1
Defense Spending Comes in Big Waves
YoY % Change
80
70
60
50
40
30
20
10
0
(10)
Nominal Defense Spending
Vietnam
War
Reagan
Buildup
Iraq
War
(20)
64 72 81 90 98 07 16
Trump?
Through September 30, 2016
Four-year moving average
Source: Bureau of Economic Analysis and Haver Analytics
occurred in the mid-1960s, during
President Lyndon Johnson’s term, and ran
for five years. That was tied to the military
engagement in Southeast Asia.
The second large defense-spending boom
occurred during the first four years of the
Reagan presidency. This buildup was part
of Reagan’s political and military strategy
to rebuild the military apparatus after what
he saw as years of neglect.
The third major increase started during the
first term of President George W. Bush.
This one was linked to events surrounding
9/11 and the following events in the
Middle East.
1
From a political and military standpoint, the
Trump defense plan parallels the goals and
objectives of President Reagan’s military
push. And with McCain’s more aggressive
plan aligned on the same premise of
modernizing and improving the readiness
of the US military, Trump will likely have the
backing of this influential member of the
Republican congressional leadership.
Today’s Economic Backdrop—
Similar to the 1960s
The economic and financial implications of
a large, multiyear defense-spending plan
must be weighed against the economic
environment at the time of implementation.
And from a historical context, today’s
conditions have more similarities to the
economic setting of the mid-1960s than
during the defense buildups of the early
1980s or early 2000s, which were either
in recession or the very early stages of
recovery.
Incontrast,theUSeconomyinthemid-
1960swasalreadyinitsfifthyearof
expansion, the jobless rate of 4.5% was
relatively low and inflation was tame
(roughly 1.5%). Nonetheless, the extra
defense spending boosted domestic
demand growth and added significant
pressure to labor costs, materials and
supplies, and product prices. So much so
that the acceleration in consumer price
inflation(from1%in1961tonear6%in
1970)fromthestarttotheendofthat
businesscyclewasoneofthelargestof
any economic growth cycle during the
postwar period.
Today’s economic backdrop looks similar in
many ways. The economy has been in
recovery for seven years, the jobless rate is
in the mid-4% range and inflation is stable
(at around 2%). While many domestic and
global factors are different now, we would
still expect a large multiyear defensespending
program to add to growth and
put upward pressure on labor costs and
inflation in the coming years. Keep in mind
that we’re coming off the weakest five-year
defense spending trend in the past 50
years, so Trump’s defense spending need
not match any of the prior three to have a
major impact.
Stay tuned for the unveiling of Trump’s
budget and pay close attention to the
defense spending request. A large
multi-year program would definitely lift
inflationary pressures. While we wouldn’t
expect an acceleration like that in the
1960s, a sustained rise of 100 to 200
basis points in general inflation would still
seem reasonable—and far above what the
Federal Reserve and financial markets are
currently expecting. n
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