Questions and Observations

Free Markets, Free People

Why Trump would be a disaster

I was going to append “as a candidate”, then “as President”, etc.  But I realized that “as a candidate” he’d never reach the presidency .  His mouth would never give him the opportunity.  And should he somehow (hey, Obama did it) reach the presidency, it would be an unmitigated disaster.  The fact that in some polls he is running a “strong second” among GOP supporters says more about the rest of the GOP presidential field than it does about the validity of a Trump candidacy.

Why would he be a disaster?  Because, for the most part, he’s an ignorant loudmouth who doesn’t think his way through anything. He blurts half formed ideas.  Here’s an example where he is talking about OPEC:

Trump: Look at what’s going on with your gasoline prices. They’re going to go to $5, $6, $7 and we don’t have anybody in Washington that calls OPEC and says, "Fellas, it’s time.  It’s over.  You’re not going to do it anymore."  I don’t know if you saw yesterday, Saudi Arabia came out and said very strongly there’s plenty of oil.  "We’re going to cut back."  You know what cutting back means?  They’re going to drive up the price even further.

Stephanopoulos: So, what would you do to back up that threat?

Trump: Oh, it’s so easy George.  It’s so easy.  It’s all about the messenger.  They wouldn’t even be there if it wasn’t for us.  If it weren’t for us, they wouldn’t be there.  These 12 guys sit around a table and they say, "Let’s just screw the United States."  And frankly, the rest of the world.

Stephanopoulos: And so finish this sentence.  "If you don’t produce more oil…"

Trump: Look. I’m going to look ‘em in the eye and say, "Fellas, you’ve had your fun.  Your fun is over."

Wow.  That’ll have ‘em shivering in their boots.  Of course the fact that we import the vast majority of our oil and still haven’t taken the steps necessary to exploit our own resources is the real reason we’re in that shape and at the mercy of cartels like OPEC.  But he doesn’t address that.  Instead his idea is to be confrontational and threatening.

I think everyone who reads this blog realizes that there’s plenty of oil and natural gas out there to keep using it as fuel for the foreseeable future.  It’s about where it is, not how much there is anymore.   And as long as the majority of that oil remains in the control of the OPEC cartel, we can “look ‘em in the eye” till doomsday and it won’t accomplish a thing.   Not unless we’re willing to do the unthinkable and take over their oil fields.

Oh?  Well that would be perfectly fine with President Trump:

Trump: George, let me explain something to you.  We go into Iraq.  We have spent thus far, $1.5 trillion.  We could have rebuilt half of the United States.  $1.5 trillion.  And we’re going to then leave.  So, in the old days, you know when you had a war, to the victor belong the spoils.  You go in.  You win the war and you take it.

Stephanopoulos: It would take hundreds of thousands of troops to secure the oil fields.

Trump: Excuse me.  No, it wouldn’t at all.

Stephanopoulos: So, we steal an oil field?

Trump: Excuse me.  You’re not stealing.  Excuse me.  You’re not stealing anything.  You’re taking– we’re reimbursing ourselves– at least, at a minimum, and I say more.  We’re taking back $1.5 trillion to reimburse ourselves.

We’re going to reimburse ourselves for doing something we chose to do?   Hey, would the same thing apply to Libya?  And how do we “reimburse” ourselves for Afghanistan – get in the opium trade?

This guy is entertaining as hell, and we all may appreciate and enjoy his willingness to say things out loud a lot of us think about certain issues and situations (like turning to the Ron Paul supporters at CPAC and saying, “you know your guy can’t win).    But he’s serious about this nonsense above and you have to understand that and understand what that means.  He’s as naïve about foreign affairs as is the present occupant in the White House.  The problem with Trump is he’s not only naïve, he’s confrontational by nature.   He’s the other side of the same coin as Obama when it comes to foreign affairs and we would find ourselves neck deep in conflict if the guy ever got within sniffing range of the Oval office.

~McQ

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Entitlements–the elephant in the room

As Republicans and Democrats jockey for political position in the upcoming budget fights, entitlements should loom large as programs that must be addressed and addressed quickly.

Instead, as we see so many times, the tendency to avoid the problem – to kick the can down the road- often becomes the chosen path.  Majority Leader Reid, for instance, has made it clear he doesn’t want to deal with Social Security at this time.

But, as we watch the deficit grow and debt pile up to unprecedented levels, most of us have come to realize there isn’t anymore road down which we can kick the can.  We’re at a dead end.  And the problem with entitlements still persists and has gotten worse.

Which brings me to the cite “elephant in the room” pertaining to entitlements.  Note the word – entitlement.  It connotes something which is owed without exception or change, something which is sacrosanct, something which can’t and shouldn’t be touched.

But Sal Bommarito at PolicyMic points out something which, despite all the rhetoric to the contrary, we should all realize:

Abrogation of existing entitlements is an arduous process as the roar of liberal lawmakers and civic leaders is much louder than the proponents of the fiscal conservatism side. Often, a sense of entitlement can overwhelm such debates. However, the most important thing to keep in mind is that an entitlement is only valid so long as it earns the approval of the people. Changing economic prospects could increase or decrease our nation’s propensity to be altruistic. In essence, entitlements are “people-given,” not “God-given”.

There is no “right” to “people-given” entitlements.  They are a privilege we choose to bestow when we can afford it.

Some will argue, rightly, that not all of the entitlements are bestowed.  That in fact, by legal mandate, we’re required to send Washington a portion of our income they demand for programs such as Social Security and Medicare.

But in reality, while that argument is valid, it isn’t valid for spending above and beyond what the programs take in.  The fact that government has badly mismanaged programs into which we’re legally obligated to pay doesn’t mean the programs should be left untouched.  Bommarito then addresses the elephant in the room, the argument those wanting entitlement reform to bring those programs to an affordable and sustainable level (or, elimination) should cite each and every time the subject is raised:

The legitimacy of the programs should not be based upon emotional responses to poverty — by Congress, society, and/or the media. If our government has the economic wherewithal, the effective transfer of money to those less fortunate should be law. However, the financial stability of our country is paramount even if this has become harder to achieve in recent years. And so, Congress and the president may have to rescind entitlements in response to bad times even if the beneficiaries will suffer greater hardships.

The absolute and primary priority for our national government should and must be the “financial stability of our country” – period.  That priority should never be held hostage to emotional appeals about the result of cutting or changing programs we obviously can’t afford.  We should never allow unsustainable spending on entitlements to threaten that top priority.

And of course the end state of 2 courses of action tell you why that priority should be paramount as Bommarito states.  Course A – do nothing.  We essentially bankrupt the nation with continued unsustainable spending and entitlements become null and void anyway.   Course B – we address the problem head on and do what is necessary to make entitlements viable and sustainable.   Some entitlements remain in force, even if at a lesser extent than before and we preserve the fiscal stability of the country.

President Obama, in his speech addressing the budget last week, essentially said we could have our cake and eat it too.  He declared that the other side’s claim that we couldn’t “afford” much of the welfare state was just pessimistic and wrong.  And of course, he then put forward a plan that would eventually raise taxes for everyone to pay for the profligacy of past (and present) government.

Bommarito has stated the primary reason entitlement reform must be a primary concern of the next budget cycle. Why not addressing those programs and doing what is necessary to reform them and make them sustainable or eliminate them is an abrogation of the primary priority for this government.  Entitlements are a “people-given” choice which should and must always be secondary to the overall financial stability of our country.

It is time we addressed this elephant in the room properly.

~McQ

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Egypt woos US foes

Egypt continues to make more and more moves indicating that it desires to distance itself from the US and that more instability in the region will probably result from its diplomatic moves.

After decades of no relations with certain countries in the region, with the full approval of the US (and one would assume the lack of such relations would be in the best interest of the US and peace in the region), Egypt has now decided to change that course.  They tie to moves to regaining their regional prestige:

Iran and Egypt’s new government signaled Monday they were moving quickly to thaw decades of frosty relations, worrying the U.S., Israel and Saudi Arabia that the overtures could upset the Mideast’s fragile balance of power.

Iran said it appointed an ambassador to Egypt for the first time since the two sides froze diplomatic relations more than three decades ago, the website of the Iranian government’s official English-language channel, Press TV, reported late Monday.

Also Monday, officials at Egypt’s Ministry of Foreign Affairs confirmed that new foreign minister Nabil Elaraby is considering a visit to the Gaza Strip—an area controlled by Hamas, a militant Palestinian Islamist group backed by Tehran and until now shunned by Cairo.

It would be pretty hard not to see where this could lead. 

Additionally, Egypt is reaching out to Syria:

Egypt’s outreach has also extended to Syria, a close ally of Iran. In early March, Egypt’s new intelligence chief, Murad Muwafi, chose Syria for his first foreign trip.

The result of our “hey, Hosni, get out of town” policy?

Amr Moussa, the former Secretary General of the Arab league, owes his front-runner status in Egyptian presidential elections later this year to his forceful statements against Israel when he was Egypt’s foreign minister during the 1990s. Islamist groups in particular have been empowered by Egypt’s abrupt shift to democracy, and analysts expect that Egypt’s next government will have to answer to growing calls that it break with U.S. foreign-policy objectives.

Some Islamist political voices within Egypt have already begun their own sort of diplomacy. Magdi Hussein, the chairman of the Islamist Al Amal (Labor) Party, met with Iranian foreign minister Ali Akbar Salehi earlier this week in Tehran. Both sides encouraged a quickening of the diplomatic thaw between the two countries.

Egypt appears to be following a foreign relations pattern set by Turkey in the past decade—a strong American ally whose foreign policy has nevertheless decoupled from American interests. Regardless of its final position on Iran, the country is likely to be significantly less beholden to U.S. interests, American officials said, if only because Egypt was such a reliable ally under Mr. Mubarak.

"It’s hard to imagine a change that would improve on what we had" with the previous Egyptian regime, one U.S. official said.

If there’s a “Doomsday clock” for Middle East war, it is quickly moving toward 1 minute to midnight.

Meanwhile in Libya, the “days, not weeks” war enters its 2nd month with no resolution in sight.

~McQ

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The cost of the regulatory state

One issue that deserves much more attention is the cost of the powers government exercises to regulate.  The Competitive Enterprise Institute has just issued a study that does exactly that – study the cost of the regulatory state and the impact it has on our economic viability.

You shouldn’t be surprised to learn that regulation is up and so is its cost (per the report, the cost of regulatory compliance in this country is about $1.75 trillion):

Among the report’s findings:

  • The Federal Register stands at an all-time record-high 81,405 pages.
  • In 2010, federal agencies issued 3,573 final rules.
  • While agencies issued 3,573 final rules, Congress passed and the president signed into law a comparatively “few” 217 bills. Considerable lawmaking power is delegated to unelected bureaucrats at agencies, an abuse addressed recently in proposals such as the REINS Act.
  • Alarmingly, proposed rules in the Federal Register have surged from 2,044 in 2009 to 2,439 in 2010, a jump of 19.3 percent.
  • Of the 4,225 rules now in the regulatory pipeline, 224 are “economically significant” meaning they wield at least $100 million in economic impact—this is an increase of 22 percent over 2009’s 184 rules.
  • Given 2010’s government spending (outlays) of $3.456 trillion, the regulatory “hidden tax” of $1.75 trillion stands at an unprecedented 50.7 percent of the level of federal spending itself.
  • Regulatory costs exceed all 2008 corporate pretax profits of $1.463 trillion.
  • Regulatory costs dwarf corporate income taxes of $157 billion.
  • Regulatory costs tower over the estimated 2010 individual income taxes of $936 billion by 87 percent—nearly double the level.
  • Regulatory costs of $1.75 trillion absorb 11.9 percent of the U.S. gross domestic product (GDP), estimated at $14.649 trillion in 2010.
  • Combining regulatory costs with federal FY 2010 outlays of $3.456 trillion reveals a federal government whose share of the entire economy now reaches 35.5 percent. 

The report urges reforms to make the regulatory costs more transparent and accountable to the people, including annual “report cards” on regulatory costs and benefits, and congressional votes on significant agency rules before they become binding.

Take a moment to absorb those numbers.  And ponder, for a moment that final percentage.  35.5% of what our economy produces now is related to government spending or compliance to a government regulatory regime.

Here’s a thought – if the government wants to spur economic growth, create jobs and, most likely, increase revenue for government, perhaps a serious – and I mean very serious- look ought to be taken (along with action, please) at the mountain of costly regulations now imposed by said government and a majority of them rolled back.  Over 81,000 pages of regulations, and I’m sure some bureaucrat out there believes everyone of them is necessary.

Sane people know better. Much of it is out of control or heading that way.  For instance:

Runaway regulation under the Clean Air Act.

In regulating greenhouse gas emissions, the Environmental Protection Agency (EPA) is trying to pick and choose which provisions of the Clean Air Act it wants to implement. But that is not how the Clean Air Act was set up. Under the Act, regulation under one section trips regulation under multiple other sections. Even if EPA tries to avoid this outcome,environmental pressure groups have already filed several lawsuits to compel the agency to begin regulating greenhouse gas emissions under other sections. Unless Congress intervenes, every building larger than a single-family dwelling likely will become subject to carbon controls in the near future.

Of course the next logical step after pulling in all structures other than “single-family” homes is to do what?  That’s right, pull in single family homes.

And:

EPA’s administrative cap-and-trade power grab.

The EPA plans to propose greenhouse gas emissions control technology standards for power plants in July2011 under the Clean Air Act. One of the primary options the EPA is reportedly considering is a cap-and-trade program. The fact that even the Democratic-controlled 111th Congress refused to enact a cap-and-trade program appears not to matter to Climate Czar Carol Browner or EPA Administrator Lisa Jackson. The EPA’s authority under the Clean Air Act requires clarification and the agency’s unilateral actions require investigation.

Can’t get it done by Congress (whose job it is, by the way).  Then do it by regulatory fiat.

Plus:

De facto moratorium on American oil and gas production.

Political decisions by Interior Secretary Ken Salazar and his appointees have led to a steep decline in domestic oil and gas production on federal lands and offshore areas. Production is already down and will almost certainly decline further. The extent of these cancellations is not fully apparent because they have been done piecemeal. An investigation is needed to put all the pieces together and thus show the damaged one and being done to America’s domestic oil and gas industry.Congress refused to enact a cap-and-trade program appears not to matter to Climate Czar Carol Browner or EPA Administrator Lisa Jackson. The EPA’s authority under the Clean Air Act requires clarification and the agency’s unilateral actions require investigation.

These are the types of regulatory abuse and over reach that are harming our economy, costing us jobs and making us less competitive.

Not only do we need to get government spending back under control, we badly need to get the regulatory state back under control as both spending and over regulation are eating up increasingly large parts of our GDP.

~McQ

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Egypt, predictably, begins to go the way of radical Islam

Damien McElroy in Cairo, reporting for the UK Telegraph, has the following observations:

The Muslim Brotherhood, Egypt’s largest Islamic movement and the founder of Hamas, has set up a network of political parties around the country that eclipse the following of the middle class activists that overthrew the regime. On the extreme fringe of the Brotherhood, Islamic groups linked to al-Qeada are organising from the mosques to fill the vacuum left by the collapse of the dictatorship.

The military-led government already faces accusations that it is bowing to the surge in support for the Muslim movements, something that David Cameron warned of in February when he said Egyptian democracy would be strongly Islamic.

{feigned surprise} Oh, my, who’d have thought that could happen?  Only the terminally naïve or those with no understanding of the area or human nature would have figured otherwise. 

Power vacuums produce opportunities for others to fill them.  The US helped create that vacuum by insisting Hosni Mubarak must step down. 

Usually, as we’ve mentioned here any number of times, the most organized and ruthless succeed in filling such power vacuums.  And that’s precisely the case in Egypt where Islam in general is as pervasive as the air breathed there and the Muslim Brotherhood, while never allowed to be in power previously, was the most organized of the groups with the potential to fill the power vacuum.

And that is coming to fruition.  Not just in an Islamic sense, but in an Islamist sense as well.  The Muslim factions are poised to take over and control any government voted in by the public and do it in a big way:

Mohammed Badie, the Muslim Brotherhood’s spiritual leader, last week predicted the group’s candidates would win 75 per cent of the seats it contested.

Fundamentalist factions have also emerged as parties. Gamaa al-Islamiya, an al-Qaeda linked group that promotes Salafist traditions has used its mosques as a political base for the first time since the 1970s.

Egypt attempted in the past – however oppressive that effort was – to keep a largely secular government, at least by Middle Eastern standards.  And that was to our benefit and certainly to the benefit of the region.  It produced the peace treaty with Israel and ushered in a few decades of relatively peaceful times in the Middle East.  That’s pretty much likely to go by the wayside soon.  This next government will be steeped in Islam if not a good measure of Islamism.  That has been ordained by the first “democratic” vote in Egypt:

A scare campaign that a No vote in last months referendum would eliminate Islamic law from the Egyptian constitution ensured a 77 per cent Yes result.

As for those who participated in the April 6th movement and want a more secular and democratic Egypt?  Well, again, the best organized is the most likely to succeed, right?  And they have little or no organization:

But the April 6th movement that spearheaded protests has no clear plan for party politics. Diplomats have warned the demonstrators are not well prepared for elections.

"The leadership of the protests was so focused on the street-by-street detail of the revolution, they have no clue what to do in a national election," said a US official involved in the demonstrations. "Now at dinner the protesters can tell me every Cairo street that was important in the revolution but not how they will take power in Egypt."

Entirely predictable and clearly not in the best interest of the US – which calls into question the administration’s decision not to back Mubarak but call for his ouster.  The result is an unintended consequence one assumes – we backed a faction that we knew little about, which has had little impact since and now we’re going to see results that we don’t want and are not in the best interests of the US or peace in the region.  The same could be said about Libya.

Finally, don’t be fooled by the “independent” status of Egyptian political candidates for the Presidency there.  Their independence is in name only as they must court the factions that are likely to hold power in any legislature that forms.

Although the leading contenders for Egypt’s presidency are independents, many have begun wooing the Muslim blocs. Front-runner Amr Moussa, the Arab League president, has conceded that its inevitable that Islamic factions will be the bedrock of the political system.

Of course they will and that means, inevitably, that Egypt will eventually revoke its treaty with Israel thereby setting the peace process back to square one.

Yes, this has been beautifully played by the President and the State Department.  If naiveté in foreign affairs was ever more  evident than now, I’m having difficulty remembering it (Jimmy Carter is as close as it comes, and they’re making even him look competent).

~McQ

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Quote of the Day–debt limit edition

Alan Greenspan to David Gregory on “Meet the Press” (via Politico):

"I have a more fundamental question. Why do we have a debt limit in the first place? We appropriate funds, we have tax law, and anyone reasonably adept at arithmetic can calculate what the debt change is going to be. … [T]here is a major problem in cutting spending. … [I]t is inconceivable to me that we’ve put ourselves in this position. Why we are continuously going back to the well to continuously up the debt limit when we already predetermined what that limit has to be, and so, consequently, they’re trying to abrogate what the Congress did?"

It is a pretty fundamental question.  What is the purpose of a debt limit – note the word, “limit” – if it only serves as a temporary point at which, when reached (again) Congress reconvenes and raises it almost automatically?   It makes no sense.  But then we’re talking about Congress and politicians here.

Greenspan’s point is dead on target.  What is its purpose if not to limit spending to that amount or less?  And what real purpose does it serve if it is continually raised?

The answer to the first is “political not policy” and the answer to the second, unfortunately, is “none.”

~McQ

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Observations: The QandO Podcast for 17 Apr 11

In this podcast, Bruce, Michael, and Dale discuss this week’s battles over the budget.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.

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Obama’s announced plan? 60% may be tax increases

Goldman Sachs attempted an apples to apples comparison of all the deficit and debt reduction proposals out there and found some unsurprising things about the Obama proposal:

proposals

 

Note too that the assessment is done over 10 years, not the 12 that Obama tried to use.

James Pethokoukis points out:

So of the 3.4 percentage points of savings, more than half — 1.9 points — comes from taxes. That’s 56 percent, not the one-third or one-quarter that Obama was talking about. And I am assuming that Goldman is using the White House’s rosier economic forecasts when evaluating Obama’s plan. (Ryan uses the gloomier ones from the Congressional Budget Office.) I think the Republicans will be pointing this out.

He further updates it with this:

UPDATE: Here is one more key bit from the Goldman Report:

Measured against the CBO alternative scenario, the President’s proposal relies more heavily on increased revenue than the other proposals. It assumes that the $1 trillion in proposed revenue increase (over 12 years) does not include the additional $700bn (over ten years) from allowing the upper-income tax provisions to expire; the President’s spending cut proposal is on the same general scale as the external commissions, though somewhat smaller, at around 1.5% of ten-year GDP.

To be clear, Obama is abolishing the Bush tax cuts for $250,000 and  an additional $1 trillion tax hike.

You’re not going to get that $1 trillion only from the richest (who are now in the middle of figuring out how to avoid higher taxation and will, should this be enacted, be in shape to legally avoid more taxes).

But, it should come as no surprise whatsoever that a Democratic president is again proposing to raise taxes to pay for his and his Democratic Congress’ profligacy.  You know that “shared responsibility” bit.  They’re responsible for spending it and you, dear taxpayer are responsible for coughing up the money when they spend way too much.

Again, it is possible at some point in the future that we may actually have to discuss an increase in taxes.  But we’re nowhere near that point right now.  The taxpayers should demand that not a single penny in increased taxes be levied until they as a whole are satisfied that every single spending cut possible has been made, waste, fraud and abuse have been ruthlessly rooted out, government has been downsized and streamlined and wasteful programs, bureaucracies and departments have been trimmed, shut down or eliminated.

We haven’t even begun that process yet.  So it is much to early in this process to be talking about tax increases.  Show us the progress – real progress, visible progress – and the reduced budgets with a real plan to balance the budget and pay down the debt and then and only then will we listen to any talk about tax increases (and may still reject them out of hand).

~McQ

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NATO running out of bombs in Libya

I‘d love to tell you this comes as a surprise, but it doesn’t:

Less than a month into the Libyan conflict, NATO is running short of precision bombs, highlighting the limitations of Britain, France and other European countries in sustaining even a relatively small military action over an extended period of time, according to senior NATO and U.S. officials.

The shortage of European munitions, along with the limited number of aircraft available, has raised doubts among some officials about whether the United States can continue to avoid returning to the air campaign if Libyan leader Moammar Gaddafi hangs on to power for several more months.

It helps you understand how incredibly dependent on the US Europe has become. 

A war – a small war – and they run out of precision munitions in a month?

No wonder they’re almost able to pay for socialism (yeah, that’s caught up with them too). 

Frankly, this is unacceptable.  And of course, it will likely mean one thing:

So far, the NATO commander has not requested their deployment. Several U.S. military officials said they anticipated being called back into the fight, although a senior administration official said he expected other countries to announce “in the next few days” that they would contribute aircraft equipped with the laser-guided munitions.

Why?  We have munitions we can give them, right?

Uh, some:

European arsenals of laser-guided bombs, the NATO weapon of choice in the Libyan campaign, have been quickly depleted, officials said. Although the United States has significant stockpiles, its munitions do not fit on the British- and French-made planes that have flown the bulk of the missions.

But:

Britain and France have each contributed about 20 strike aircraft to the campaign. Belgium, Norway, Denmark and Canada have each contributed six — all of them U.S.-manufactured and compatible with U.S. weaponry.

Given this little discovery, I’d guess NATO has some standardization to do?  You know, that’s why we have standard size rounds, artillery shells, etc.

You’d think they’d have thought of this before (and yes, before someone informs me, France is not a member of NATO), wouldn’t you?

~McQ

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Welcome Home

Probably one of the most heart warming and poignant,  yet heart wrenching homecoming pics you’ll see.  3 Battalion, 5th Marine Regiment returns home and those who just got back get to see those who were wounded on their tour for the first time.  If you’ve every wondered about the brotherhood and the bond combat infantrymen form, this picture tells you all you’ll ever need to know:

 

welcome home

 

~McQ

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