ISSUE BRIEF

History Suggests Social Security Insolvency

Is Coming Sooner Than Projected
Rachel Greszler
No. 3980 | JUNE 27, 2013
T
his years Social Security trustees report was
released with little fanfare, as the projected date
of Social Securitys nancial insolvency held steady
at 2033.
1
Many analysts and lawmakers have point-
ed to 20 years of alleged solvency as an excuse to
delay meaningful Social Security reform. However,
if history is any guide to future solvency, the Social
Security program could become insolvent much
sooner than 2033.
Past Reforms Have Failed. Social Security has
been reformed numerous times throughout his-
tory, often in response to deteriorating program
nances. In 1977, lawmakers enacted reforms to
Social Security that were expected to keep the pro-
gram solvent over the next 50 years.
2
But just six
years and one double-dip recession later, Social
Security was confronted with immediate insolven-
cy. In 1983, Social Security was mere months from
being unable to send out benet checks due to lack
of nances.
Lawmakers enacted new reforms that year that
were projected to make the trust fund solvent over at
least the next 75 years, including gradually increas-
ing the normal retirement age by two years, bringing
previously exempt workers into the Social Security
system, accelerating scheduled tax increases, rais-
ing tax rates for the self-employed, and taxing a por-
tion of benets for higher-income earners.
3

Following the 1983 reforms, the annual Social
Security trustees report asserted: On the basis
of all but the most pessimistic of the four sets of
assumptions used, the program is now estimated to
be nancially sound over the next 75 years.
4
Seventy-ve years of future solvency meant the
program was sound through at least 2058. Yet once
again, the projected solvency of Social Security was
too optimistic. Ten years later, the projected date of
insolvency moved up by 22 years to 2036. Now, 30
years after the 1983 reforms, the projected date of
insolvency has moved up by 25 years to 2033.
Economic and Demographic Changes.
Although Social Security was intended to be self-
sustaining over the long term, its nancing is sus-
ceptible to factors unforeseen by its creators. As
the United States has undergone signicant demo-
graphic and economic changes over the decades
since Social Securitys inception, Social Securitys
projected date of insolvency has drawn closer.
Some of the reasons cited by the trustees for these
declines over the years have included decreased
mortality, lower birth rates, higher incidences of
disability, lower economic growth, reduced average
hours of work, lower interest rates on the trust fund,
and higher ination. Additionally, legislative chang-
es, such as enhanced and new benets, have afected
Social Securitys solvency.
Insolvency Will Likely Come Even Earlier.
Over the past ve years alone, the projected date
of Social Security insolvency has declined by
eight years. This most recent decline in projected
This paper, in its entirety, can be found at
http://report.heritage.org/ib3980
Produced by the Center for Data Analysis
The Heritage Foundation
214 Massachusetts Avenue, NE
Washington, DC 20002
(202) 546-4400 | heritage.org
Nothing written here is to be construed as necessarily reecting the views
of The Heritage Foundation or as an attempt to aid or hinder the passage
of any bill before Congress.
BACKGROUNDER
Key Points
Winning Without Fighting:
The Chinese PWarfare Challenge
Dean Cheng
No. 2821 | JULY 11, 2013
Over the past decade, the Peo-
ples Republic of China has exhib-
ited growing interest in waging
asymmetrical warfare.
To this end, the PRC released
political work regulations for
the Peoples Liberation Army
addressing the importance of
waging the three warfares: pub-
lic opinion warfare, psychological
warfare, and legal warfare.
The three warfares repre-
sent the PRCs commitment to
expanding potential areas of
conflict from the purely military
(i.e., involving the direct or indi-
rect use of military forces) to the
more political.
Such expansion will be supported
by manipulation of an enemys
leadership, including through
intimidation and coercion, alien-
ation, and deception.
To avoid being psychologically
outmaneuvered by a PRC intent
on winning without firing a shot,
the U.S. must strengthen its own
psychological warfare capabili-
ties, including strategic commu-
nications, public diplomacy, and
media outreach capabilities, as
well as dedicated psychological
operations units.
Abstract
Beijing hopes to win future conicts without ring a shot. How? By us-
ing psychological warfare to manipulate both a nations leaders and
its populaceafecting the thought processes and cognitive frame-
works of allies and opponents alike. Indeed, the PRCs psychological
warfare operations are already underway despite the fact that there is
no active conict. It is therefore essential that the United States coun-
ter such psychological operations now while preparing to use its own
arsenal of political warfare weapons should a conict ever arise.
O
ne of the elements distinguishing the Chinese Peoples Libera-
tion Army (PLA) from many of its counterparts is its contin-
ued role as a Party army. The PLA is, rst and foremost, the armed
wing of the Chinese Communist Party (CCP). This distinction both
obligates the PLA to help maintain the CCPs grip on power and
gives it an additional set of tools with which to defend the CCP and
the Chinese state. At the moment, the PLA is not only planning for
operations on the physical battleeld; it is also preparing to conduct
political warfare, including what is termed the three warfares:
public opinion warfare, legal warfare, and psychological warfare.
Psychological warfare is in some ways the most far-reaching
of the three warfares. It involves the application of specialized
information and media in accordance with a strategic goal and in
support of political and military objectives.
1
Such eforts are aimed
at a variety of potential audiences and usually involve operational
missions against an opponents psychology and cognitive capacities.
This paper, in its entirety, can be found at http://report.heritage.org/bg2821
Produced by the Asian Studies Center
The Heritage Foundation
214 Massachusetts Avenue, NE
Washington, DC 20002
(202) 546-4400 | heritage.org
Nothing written here is to be construed as necessarily reecting the views of The Heritage
Foundation or as an attempt to aid or hinder the passage of any bill before Congress.
BACKGROUNDER
Key Points
Egypt: A Way Forward After a Step Back
James Jay Carafano, PhD, and James Phillips
No. 2824 | JULY 11, 2013
Egypts army was justified in
ousting President Mohamed
Morsi, whose increasingly
authoritarian rule was leading
Egypt into a civil war.
The army, however, is sitting on a
volcano and knows it.
The U.S. must recognize that
Egypt is much closer to becom-
ing a failed state or economic
basket case than it is to becom-
ing a genuine democracy.
To salvage the increasingly diffi-
cult situation in Egypt, the United
States should press the Egyptian
military to lay the groundwork
for a return to civilian rule as
soon as possible.
Washington should attach
tighter strings to U.S. aid and
recalibrate the aid program to
focus on fighting terrorism and
preventing food shortagesthe
chief threats to Egypts future.
No amount of aid from Wash-
ington can resolve Egypts deep
economic problems, but the
U.S. can encourage Cairo to
undertake free-market eco-
nomic reforms to rejuvenate its
economy.
E
gypts army recently ousted President Mohamed Morsi, just as it
removed Hosni Mubarak in 2011, to prevent growing civil disor-
der from undermining the power of the state and its own privileges
within the state. The intervention was widely applauded by opposi-
tion political parties and the overwhelming majority of the millions
of protesters who demanded that Morsi step down.
By taking steps to preserve public order, the military could help
to salvage Egypts chances of making the difcult transition to a sta-
ble democracy. Clearly, Egypt was headed for a civil war as a result of
a surging rebellion against Morsis increasingly authoritarian rule.
To salvage the increasingly difcult situation in Egypt, the
United States should press the Egyptian military to lay the ground-
work for a return to civilian rule as soon as possible, attach tighter
strings to U.S. aid, and recalibrate the U.S. aid program to focus on
ghting terrorism and preventing food shortagesthe chief threats
to Egypts future.
Morsis Threat to Democracy
President Mohamed Morsi was his own worst enemy. He
ruled in a secretive, authoritarian, and exclusionary manner
that derailed Egypts democratic experiment and alienated far
too many Egyptians, even some of his former supporters. During
his year in ofce, he focused more on maximizing his own power
and that of the Muslim Brotherhood than on addressing Egypts
worsening economic, social, and political problems. When chal-
lenged, he arrogantly ignored, marginalized, and demonized
This paper, in its entirety, can be found at http://report.heritage.org/bg2824
Produced by the Douglas and Sarah Allison
Center for Foreign Policy Studies
The Heritage Foundation
214 Massachusetts Avenue, NE
Washington, DC 20002
(202) 546-4400 | heritage.org
Nothing written here is to be construed as necessarily reecting the views of The Heritage
Foundation or as an attempt to aid or hinder the passage of any bill before Congress.
2
BACKGROUNDER | NO. 2824
JULY 11, 2013
opposition political parties, which he linked to for-
eign conspiracies.
Under these conditions, Egypts army justiably
intervened to restore order in support of the majority
of Egyptians who were rebelling against an Islamist
authoritarian regime. On July 3, Egyptian Defense
Minister General Abdel-Fattah el-Sissi announced
that Morsi, who had failed to meet the demands of
the people, was relieved of his duties and that the
Islamist-written constitution was suspended.
Unlike Gamal Abdel Nassers coup in 1952 or the
2011 coup that brought down Hosni Mubarak, this
time the military sought the endorsement of reli-
gious leaders, political leaders, and youth activists,
many of whom shared the stage when General el-Sis-
si announced Morsis ouster in a televised statement.
During his year in ofce, Mohamed
Morsi focused more on maximizing
his own power and that of the Muslim
Brotherhood than on addressing
Egypts worsening economic, social,
and political problems.
The next day, the military authorities announced
that Adly Mansour, chief justice of the Supreme
Constitutional Court, had been sworn in as interim
president. Mansour is a little-known but respect-
ed low-key technocrat. As a judge, he could be well
suited to steering the writing of a new constitu-
tion to replace the Islamist document that Morsi
had rammed through in December. mr. Mansour
pledged to continue the democratic reforms of the
2011 revolution so that we stop producing tyrants
and said that new elections were the only way for-
ward, although he gave no indication of when they
would be held.
President Mansour initially chose former oppo-
sition leader Mohamed el-Baradei as prime min-
ister of the interim government on July 6, but this
appointment was later rescinded under pressure
from the Nour Party, one of the few Islamist groups
that supported the coup. Baradei, a secular liberal
who led the National Salvation Front, a coalition of
leftist and liberal parties, frequently clashed with
the United States over the Iran nuclear issue when
he led the International Atomic Energy Agency.
It is expected that President Mansour will soon
announce the formation of a new government with a
cabinet composed of technocrats and caretakers.
Morsi has been detained at an undisclosed loca-
tion. The authorities have sought to arrest more
than 200 top leaders of the Muslim Brotherhood and
other Islamist organizations on charges of inciting
their followers to kill anti-Morsi demonstrators, but
Islamist leaders have vowed not to give up without
a ght.
Mohammed Badie, the supreme leader of the
Muslim Brotherhood, has called for continued pro-
tests until Morsi is reinstated as president. Speaking
at Cairos Rabaa Mosque during a demonstration on
Rejection Friday, Badie warned, We are all will-
ing to sacrice our necks and our souls for him.
1

Tens of thousands of Morsi supporters poured out
of mosques on Friday to protest Morsis ouster. Pro-
Morsi demonstrations were quickly countered by
anti-Morsi protests in a highly charged atmosphere
that degenerated into widespread clashes, leav-
ing at least 36 dead and more than 1,000 injured.
On Monday, at least 51 of Morsis supporters were
killed when troops responded to an attack on the
Republican Guard headquarters where Morsi was
last seen before his ouster.
Egypts mushrooming political violence will be
hard to control. Even in the unlikely event that the
Muslim Brotherhood reins in its members as part
of some deal to allow it to compete in future elec-
tions, more radical Islamists are sure to push back
violently.
Islamist militants in the northern Sinai, a hot-
bed of Islamist extremism, launched coordinated
attacks against police facilities and an airport at
El Arish, the provincial capital. Ansar al-Sharia in
Egypt (Supporters of Islamic Law), a new Islamist
group, announced its formation on an online forum
for militants in the Sinai region and proclaimed
that it will gather arms and train recruits for a jihad
against Egypts new government. Similar organiza-
tions in Libya, Yemen, and Tunisia have served as
front groups for attracting recruits to al-Qaedalike
terrorist organizations.
1. Matt Bradley, Tamer El-Ghobashy, and Reem Abdellatif, Post-Coup Violence Spreads in Egypt, The Wall Street Journal, July 6, 2013, http://
online.wsj.com/article/SB10001424127887323899704578587131736732940.html (accessed July 8, 2013).
3
BACKGROUNDER | NO. 2824
JULY 11, 2013
Islamist militants will likely soon expand their
attacks beyond the Sinai region to include army,
police, and government facilities; anti-Morsi political
groups; symbols of the anti-Morsi revolution such as
Tahrir Square; and symbols of foreign conspiracies
such as the U.S. embassy, American companies, and
other Western companies. Egypts Coptic Christian
minority, about 10 percent of Egypts more than 80
million people, will likely become even more of a
lightning rod for terrorist attacks. Islamists charge
that Egypts ancient Christian community was com-
plicit in inciting protests to bring down Morsi. There
will likely be a surge in anti-Christian attacks, par-
ticularly in southern Egypt, a focal point for sectar-
ian violence.
The splintered Islamist movement is by no means
unied in support of Morsi. The Nour Party, a Salast
movement that favors the immediate imposition of
Sharia law and resented Morsis high-handed eforts
to monopolize political power, joined non-Islamist
opposition parties in pushing for early elections.
Other Islamists will likely increasingly criticize and
ostracize the Nour leaders, who supported the mili-
tary intervention.
An outburst of violence by Islamist extrem-
ists could open a dangerous new chapter in Egypts
unnished revolution. Left unchecked, it could
devolve into an even bloodier version of Algerias
civil war, which has consumed more than 100,000
lives since the Algerian Army stepped in to avert an
Islamist election victory in 1991.
Sitting on a Volcano
Egypts army is sitting on a volcano and knows
it. Egypt has fallen into dire economic straits, and
political stability will likely be elusive until the
countrys worsening economic situation is reversed.
Nearly one-quarter of Egypts workers are unem-
ployed, and the gure is much higher for young
men, who form the shock troops for street protests.
Egypts economic woes have created a huge reser-
voir of unemployed youth who are vulnerable to the
siren call of radical ideologies, particularly Islamist
extremism.
The political turmoil and rising crime rates of the
past two years have severely hurt tourism, which
formerly generated the bulk of Egypts foreign cur-
rency earnings and provided jobs to about one of
every seven workers. Morsi further sabotaged the
tourism industry by appointing as governor of Luxor
Province a member of the Islamist terrorist group
that massacred 62 tourists in Luxor in 1997not
exactly a reassuring signal for nervous tourists.
Islamist extremists will likely target tourists once
again to undermine the new government.
The army cannot stabilize Egypt
without resolving Egypts worsening
economic problems, which will
require considerable American and
international support.
Egypt is imploding in a bitter political struggle
fought amid economic collapse, social turmoil, surg-
ing crime rates, widespread unemployment, falling
standards of living, and rising sectarian tensions.
The imminent bankruptcy of Egypts state-domi-
nated economy could quickly lead to catastrophic
food shortages, bread riots, labor strikes, and grow-
ing political polarization. Foreign currency reserves
are nearly exhausted, which will make it difcult to
pay for wheat imports, which provide nearly half of
Egypts food consumption.
The army needs to put Egypts house in order
quickly and then get out of the way. It inevitably
will lose popular support the longer it rules, as it
did between Mubaraks fall in February 2011 and
Morsis purge of top army leaders in August 2012.
The army can only do so much to repair Egypts dys-
functional political system. Moreover, it cannot sta-
bilize Egypt without resolving Egypts worsening
economic problems, which will require considerable
American and international support.
U.S. Help Needed in the
Struggle for Freedom
Egypt, the largest Arab country, is a bellwether
for the Arab Middle East. The United States has a
national interest in stabilizing Egypt, preventing
the rise of an Islamist totalitarian state, and pre-
venting the eruption of a full-blown civil war on
the scale of Algerias in the heart of the Arab world.
Washington also has a humanitarian interest in pre-
venting food shortages if Egypts social fabric con-
tinues to unravel.
The Obama Administration has been asleep at
the switch for much of the past two years. It eagerly
ISSUE BRIEF
Cost of a Climate Policy:
The Economic Impact of Obamas Climate Action Plan
David W. Kreutzer, PhD, Nicolas D. Loris, and Kevin D. Dayaratna
No. 3978 | JUNE 27, 2013
P
resident Obama recently released his Climate
Action Plan, which is a continuation of the costly,
inefective policies from his rst four years in ofce:
Solyndra-style loan guarantees, nice-sounding but
too expensive efciency mandates, and his war on
coal. It is this war on coal that would prove the most
costly, with hundreds of thousands of lost jobs and
$1.47 trillion of lost national income by 2030.
Bankrupting Coal Hurts American Families.
When Senator and presidential candidate Barack
Obama pushed his cap-and-trade plan in 2008, he
said that if someone wants to build a coal-powered
plant, they can. Its just that it will bankrupt them
because they are going to be charged a huge sum for
all that greenhouse gas thats being emitted.
1
Congress rejected his and other cap-and-trade
plans, but in his recent speech on climate change,
President Obama vowed to go around Congress to
reduce greenhouse gas emissions. In case anyone
thinks the Administration has since backed of from
the anti-coal agenda, Obama climate advisor Daniel
Schrag just this week said that a war on coal is
exactly whats needed.
2
In a speech on June 25, President Obama called
on the Environmental Protection Agency (EPA) to
reduce carbon dioxide emissions from new and exist-
ing power plants, which would adversely afect coal-
red plants the most. These regulations are part of
a broader efort from the President to signicantly
reduce coal as an afordable, reliable energy source
the efect of which is to drive up prices for American
families and businesses. The Heritage Foundation
modeled the efects of signicantly reducing coal-
red plants in America and found devastating eco-
nomic efects.
Regulations Pile On. With 497 billion tons of
recoverable coal in the United Statesenough to
provide electricity for 500 years at current con-
sumption rates
3
coal has the potential to be an
important resource long into the future. The EPAs
constant attacks on coal threaten to close of access
to this dependable energy source.
In March 2012, the EPA proposed a rule that
would prohibit new power plants from emitting
more than 1,000 pounds of carbon dioxide per mega-
watt of electricity generated. Without the addition
of carbon capture and sequestration, a prohibitive-
ly costly and technologically challenging require-
ment,
4
the regulation would efectively ban the con-
struction of new coal-red plants.
5
Whether the nal
rule reects the proposed rule remains to be seen.
The Presidents recent announcement also
threatens existing plants and would adversely afect
the more than 1,100 coal-red generators at near-
ly 600 plant locations that generate 40 percent of
Americas afordable, reliable energy.
6
Last year, the EPA nalized new mercury and air
toxics standards that will force utilities to use maxi-
mum achievable control technology standards to
reduce mercury emissions and other hazardous air
This paper, in its entirety, can be found at
http://report.heritage.org/ib3978
Produced by the Center for Data Analysis
The Heritage Foundation
214 Massachusetts Avenue, NE
Washington, DC 20002
(202) 546-4400 | heritage.org
Nothing written here is to be construed as necessarily reecting the views
of The Heritage Foundation or as an attempt to aid or hinder the passage
of any bill before Congress.
BACKGROUNDER
Key Points
Egypt: A Way Forward After a Step Back
James Jay Carafano, PhD, and James Phillips
No. 2824 | JULY 11, 2013
Egypts army was justified in
ousting President Mohamed
Morsi, whose increasingly
authoritarian rule was leading
Egypt into a civil war.
The army, however, is sitting on a
volcano and knows it.
The U.S. must recognize that
Egypt is much closer to becom-
ing a failed state or economic
basket case than it is to becom-
ing a genuine democracy.
To salvage the increasingly diffi-
cult situation in Egypt, the United
States should press the Egyptian
military to lay the groundwork
for a return to civilian rule as
soon as possible.
Washington should attach
tighter strings to U.S. aid and
recalibrate the aid program to
focus on fighting terrorism and
preventing food shortagesthe
chief threats to Egypts future.
No amount of aid from Wash-
ington can resolve Egypts deep
economic problems, but the
U.S. can encourage Cairo to
undertake free-market eco-
nomic reforms to rejuvenate its
economy.
E
gypts army recently ousted President Mohamed Morsi, just as it
removed Hosni Mubarak in 2011, to prevent growing civil disor-
der from undermining the power of the state and its own privileges
within the state. The intervention was widely applauded by opposi-
tion political parties and the overwhelming majority of the millions
of protesters who demanded that Morsi step down.
By taking steps to preserve public order, the military could help
to salvage Egypts chances of making the difcult transition to a sta-
ble democracy. Clearly, Egypt was headed for a civil war as a result of
a surging rebellion against Morsis increasingly authoritarian rule.
To salvage the increasingly difcult situation in Egypt, the
United States should press the Egyptian military to lay the ground-
work for a return to civilian rule as soon as possible, attach tighter
strings to U.S. aid, and recalibrate the U.S. aid program to focus on
ghting terrorism and preventing food shortagesthe chief threats
to Egypts future.
Morsis Threat to Democracy
President Mohamed Morsi was his own worst enemy. He
ruled in a secretive, authoritarian, and exclusionary manner
that derailed Egypts democratic experiment and alienated far
too many Egyptians, even some of his former supporters. During
his year in ofce, he focused more on maximizing his own power
and that of the Muslim Brotherhood than on addressing Egypts
worsening economic, social, and political problems. When chal-
lenged, he arrogantly ignored, marginalized, and demonized
This paper, in its entirety, can be found at http://report.heritage.org/bg2824
Produced by the Douglas and Sarah Allison
Center for Foreign Policy Studies
The Heritage Foundation
214 Massachusetts Avenue, NE
Washington, DC 20002
(202) 546-4400 | heritage.org
Nothing written here is to be construed as necessarily reecting the views of The Heritage
Foundation or as an attempt to aid or hinder the passage of any bill before Congress.
BACKGROUNDER
Key Points
Winning Without Fighting:
The Chinese Psychological Warfare Challenge
Dean Cheng
No. 2821 | JULY 11, 2013
Over the past decade, the Peo-
ples Republic of China has exhib-
ited growing interest in waging
asymmetrical warfare.
To this end, the PRC released
political work regulations for
the Peoples Liberation Army
addressing the importance of
waging the three warfares: pub-
lic opinion warfare, psychological
warfare, and legal warfare.
The three warfares repre-
sent the PRCs commitment to
expanding potential areas of
conflict from the purely military
(i.e., involving the direct or indi-
rect use of military forces) to the
more political.
Such expansion will be supported
by manipulation of an enemys
leadership, including through
intimidation and coercion, alien-
ation, and deception.
To avoid being psychologically
outmaneuvered by a PRC intent
on winning without firing a shot,
the U.S. must strengthen its own
psychological warfare capabili-
ties, including strategic commu-
nications, public diplomacy, and
media outreach capabilities, as
well as dedicated psychological
operations units.
Abstract
Beijing hopes to win future conicts without ring a shot. How? By us-
ing psychological warfare to manipulate both a nations leaders and
its populaceafecting the thought processes and cognitive frame-
works of allies and opponents alike. Indeed, the PRCs psychological
warfare operations are already underway despite the fact that there is
no active conict. It is therefore essential that the United States coun-
ter such psychological operations now while preparing to use its own
arsenal of political warfare weapons should a conict ever arise.
O
ne of the elements distinguishing the Chinese Peoples Libera-
tion Army (PLA) from many of its counterparts is its contin-
ued role as a Party army. The PLA is, rst and foremost, the armed
wing of the Chinese Communist Party (CCP). This distinction both
obligates the PLA to help maintain the CCPs grip on power and
gives it an additional set of tools with which to defend the CCP and
the Chinese state. At the moment, the PLA is not only planning for
operations on the physical battleeld; it is also preparing to conduct
political warfare, including what is termed the three warfares:
public opinion warfare, legal warfare, and psychological warfare.
Psychological warfare is in some ways the most far-reaching
of the three warfares. It involves the application of specialized
information and media in accordance with a strategic goal and in
support of political and military objectives.
1
Such eforts are aimed
at a variety of potential audiences and usually involve operational
missions against an opponents psychology and cognitive capacities.
This paper, in its entirety, can be found at http://report.heritage.org/bg2821
Produced by the Asian Studies Center
The Heritage Foundation
214 Massachusetts Avenue, NE
Washington, DC 20002
(202) 546-4400 | heritage.org
Nothing written here is to be construed as necessarily reecting the views of The Heritage
Foundation or as an attempt to aid or hinder the passage of any bill before Congress.
3
BACKGROUNDER | NO. 2824
JULY 11, 2013
Islamist militants will likely soon expand their
attacks beyond the Sinai region to include army,
police, and government facilities; anti-Morsi political
groups; symbols of the anti-Morsi revolution such as
Tahrir Square; and symbols of foreign conspiracies
such as the U.S. embassy, American companies, and
other Western companies. Egypts Coptic Christian
minority, about 10 percent of Egypts more than 80
million people, will likely become even more of a
lightning rod for terrorist attacks. Islamists charge
that Egypts ancient Christian community was com-
plicit in inciting protests to bring down Morsi. There
will likely be a surge in anti-Christian attacks, par-
ticularly in southern Egypt, a focal point for sectar-
ian violence.
The splintered Islamist movement is by no means
unied in support of Morsi. The Nour Party, a Salast
movement that favors the immediate imposition of
Sharia law and resented Morsis high-handed eforts
to monopolize political power, joined non-Islamist
opposition parties in pushing for early elections.
Other Islamists will likely increasingly criticize and
ostracize the Nour leaders, who supported the mili-
tary intervention.
An outburst of violence by Islamist extrem-
ists could open a dangerous new chapter in Egypts
unnished revolution. Left unchecked, it could
devolve into an even bloodier version of Algerias
civil war, which has consumed more than 100,000
lives since the Algerian Army stepped in to avert an
Islamist election victory in 1991.
Sitting on a Volcano
Egypts army is sitting on a volcano and knows
it. Egypt has fallen into dire economic straits, and
political stability will likely be elusive until the
countrys worsening economic situation is reversed.
Nearly one-quarter of Egypts workers are unem-
ployed, and the gure is much higher for young
men, who form the shock troops for street protests.
Egypts economic woes have created a huge reser-
voir of unemployed youth who are vulnerable to the
siren call of radical ideologies, particularly Islamist
extremism.
The political turmoil and rising crime rates of the
past two years have severely hurt tourism, which
formerly generated the bulk of Egypts foreign cur-
rency earnings and provided jobs to about one of
every seven workers. Morsi further sabotaged the
tourism industry by appointing as governor of Luxor
Province a member of the Islamist terrorist group
that massacred 62 tourists in Luxor in 1997not
exactly a reassuring signal for nervous tourists.
Islamist extremists will likely target tourists once
again to undermine the new government.
The army cannot stabilize Egypt
without resolving Egypts worsening
economic problems, which will
require considerable American and
international support.
Egypt is imploding in a bitter political struggle
fought amid economic collapse, social turmoil, surg-
ing crime rates, widespread unemployment, falling
standards of living, and rising sectarian tensions.
The imminent bankruptcy of Egypts state-domi-
nated economy could quickly lead to catastrophic
food shortages, bread riots, labor strikes, and grow-
ing political polarization. Foreign currency reserves
are nearly exhausted, which will make it difcult to
pay for wheat imports, which provide nearly half of
Egypts food consumption.
The army needs to put Egypts house in order
quickly and then get out of the way. It inevitably
will lose popular support the longer it rules, as it
did between Mubaraks fall in February 2011 and
Morsis purge of top army leaders in August 2012.
The army can only do so much to repair Egypts dys-
functional political system. Moreover, it cannot sta-
bilize Egypt without resolving Egypts worsening
economic problems, which will require considerable
American and international support.
U.S. Help Needed in the
Struggle for Freedom
Egypt, the largest Arab country, is a bellwether
for the Arab Middle East. The United States has a
national interest in stabilizing Egypt, preventing
the rise of an Islamist totalitarian state, and pre-
venting the eruption of a full-blown civil war on
the scale of Algerias in the heart of the Arab world.
Washington also has a humanitarian interest in pre-
venting food shortages if Egypts social fabric con-
tinues to unravel.
The Obama Administration has been asleep at
the switch for much of the past two years. It eagerly
3
BACKGROUNDER | NO. 2821
JULY 11, 2013
very perceptions that inform decision making, from
the context to the biases. Successful psychologi-
cal operations will therefore have repercussions at
every level of operations, inuencing the course of
the conict. To be efective, however, psychologi-
cal warfare operations cannot be limited to war-
time. Instead, peacetime psychological operations
are necessary, both to understand an opponent bet-
ter and to lay the groundwork for efective wartime
operations.
PLA writings emphasize that modern
information technology blurs the
lines between peacetime and wartime,
between military and civilian, and
among strategy, operations, and tactics.
Peacetime applications of psychological war-
fare techniques involve inuencing and altering an
opponents unconscious, implicit views in order to
make that opponent more susceptible to coercion.
By employing various forms of strategic communi-
cations, including diplomatic eforts, one can foster
a positive national image and increase foreign sym-
pathy and support for ones own policies and goals.
At the same time, such techniques attempt to iso-
late opponents, undermining their positions, por-
traying them as fostering ill intentions, and forcing
them to react to a variety of charges so that their
energy is dispersed.
In addition, employing all the tools of communi-
cations, including various forms of media, empha-
sizes ones own strengths as well as a willingness to
employ that strength to deter and coerce opponents
more efectively. All the while, one must be work-
ing to counter opponents eforts to foster their own
image of strength and unity. It is also likely that an
opponent will attempt to demoralize ones populace
and that appropriate defensive measures will have
to be taken.
In wartime, psychological operations shift
emphasis towards more specically military tar-
gets and goals. The primary objective of such eforts
is to generate confusion, doubt, anxiety, fear, terror,
regret, and exhaustion in an opponent, especially
among senior military and civilian leaders. Ideally,
such a campaign will induce neglect and maxi-
mize the chances of an opponent making mistakes.
Wartime psychological warfare operations also aim
to generate a sense of uncertainty and indecisive-
ness at all levels, thereby degrading opposition deci-
sion-making processes. The ability to interfere with
an opponents information systems, coupled with
eforts to inuence decision makers, can create a
strong psychological impact.
Another facet of wartime psychological opera-
tions is the sowing of discord and a sense of hopeless-
ness in the enemy. Not only will this help generate
war-weariness among enemy forces and populations
and discourage resistance, but once the conict is
concluded, such operations may facilitate peace
negotiations and induce more concessions. When
one defeats the enemy, it is not solely by killing the
enemy, or winning a piece of ground, but is mainly
in terms of cowing the enemys heart.
6
In order to
undermine the opponents morale, one must empha-
size information favorable to oneself through vari-
ous forms of media as well as through third parties,
friendly elements in the opponents society, and sim-
ilar outlets.
Finally, ofensive psychological warfare opera-
tions must be complemented by defensive measures,
since an opponent will also be trying to undermine
ones own forces, population, and leaders. One must
therefore attempt to solidify popular support for the
conict, highlight ones successes and the enemys
failures, and instill condence and support for the
Party and the state. Such defensive measures require
tight control of information ows in ones own soci-
ety and the insulation of ones decision-makers and
decision-making processes from enemy informa-
tion warfare eforts. This need for control explains
Beijings eforts to limit cyber access to the larger
population, including the Great Firewall of China.
Chinese Concept of Psychological
Warfare Tasks
For the PLA, psychological warfare is the res-
posibility of the General Political Department
(GPD), working in coordination with the rest of the
PLA. The GPD not only ensures political orthodoxy
6. Guo, Psychological Warfare Knowledge, p. 14.
3
BACKGROUNDER | NO. 2821
JULY 11, 2013
very perceptions that inform decision making, from
the context to the biases. Successful psychologi-
cal operations will therefore have repercussions at
every level of operations, inuencing the course of
the conict. To be efective, however, psychologi-
cal warfare operations cannot be limited to war-
time. Instead, peacetime psychological operations
are necessary, both to understand an opponent bet-
ter and to lay the groundwork for efective wartime
operations.
PLA writings emphasize that modern
information technology blurs the
lines between peacetime and wartime,
between military and civilian, and
among strategy, operations, and tactics.
Peacetime applications of psychological war-
fare techniques involve inuencing and altering an
opponents unconscious, implicit views in order to
make that opponent more susceptible to coercion.
By employing various forms of strategic communi-
cations, including diplomatic eforts, one can foster
a positive national image and increase foreign sym-
pathy and support for ones own policies and goals.
At the same time, such techniques attempt to iso-
late opponents, undermining their positions, por-
traying them as fostering ill intentions, and forcing
them to react to a variety of charges so that their
energy is dispersed.
In addition, employing all the tools of communi-
cations, including various forms of media, empha-
sizes ones own strengths as well as a willingness to
employ that strength to deter and coerce opponents
more efectively. All the while, one must be work-
ing to counter opponents eforts to foster their own
image of strength and unity. It is also likely that an
opponent will attempt to demoralize ones populace
and that appropriate defensive measures will have
to be taken.
In wartime, psychological operations shift
emphasis towards more specically military tar-
gets and goals. The primary objective of such eforts
is to generate confusion, doubt, anxiety, fear, terror,
regret, and exhaustion in an opponent, especially
among senior military and civilian leaders. Ideally,
such a campaign will induce neglect and maxi-
mize the chances of an opponent making mistakes.
Wartime psychological warfare operations also aim
to generate a sense of uncertainty and indecisive-
ness at all levels, thereby degrading opposition deci-
sion-making processes. The ability to interfere with
an opponents information systems, coupled with
eforts to inuence decision makers, can create a
strong psychological impact.
Another facet of wartime psychological opera-
tions is the sowing of discord and a sense of hopeless-
ness in the enemy. Not only will this help generate
war-weariness among enemy forces and populations
and discourage resistance, but once the conict is
concluded, such operations may facilitate peace
negotiations and induce more concessions. When
one defeats the enemy, it is not solely by killing the
enemy, or winning a piece of ground, but is mainly
in terms of cowing the enemys heart.
6
In order to
undermine the opponents morale, one must empha-
size information favorable to oneself through vari-
ous forms of media as well as through third parties,
friendly elements in the opponents society, and sim-
ilar outlets.
Finally, ofensive psychological warfare opera-
tions must be complemented by defensive measures,
since an opponent will also be trying to undermine
ones own forces, population, and leaders. One must
therefore attempt to solidify popular support for the
conict, highlight ones successes and the enemys
failures, and instill condence and support for the
Party and the state. Such defensive measures require
tight control of information ows in ones own soci-
ety and the insulation of ones decision-makers and
decision-making processes from enemy informa-
tion warfare eforts. This need for control explains
Beijings eforts to limit cyber access to the larger
population, including the Great Firewall of China.
Chinese Concept of Psychological
Warfare Tasks
For the PLA, psychological warfare is the res-
posibility of the General Political Department
(GPD), working in coordination with the rest of the
PLA. The GPD not only ensures political orthodoxy
6. Guo, Psychological Warfare Knowledge, p. 14.
2
BACKGROUNDER | NO. 2821
JULY 11, 2013
Specically:
There are myriad targets and objects of psycho-
logical warfare; it is applied against the enemy,
but also against friends; it targets externally, but
also internally; it must deal with allied countries,
but also the entire globe, and one must rely on the
media acting in multiple directions jointly, with
efective coverage of many areas, in order to com-
prehensively realize the various goals.
2
The goal of psychological warfare is to inuence,
constrain, and/or alter an opponents thoughts, emo-
tions, and habits while at the same time strengthen-
ing friendly psychology.
3
Psychological Warfare and Information
Warfare
Psychological warfare operations are integral
to the broad concept of information warfare (xinxi
zhanzheng). A product of the Information Age, infor-
mation warfare is the struggle to dominate the gen-
eration and ow of information in order to enhance
and support ones own strategic goals while degrad-
ing and constraining those of an opponent. The
ability to triumph in future Local Wars Under
Informationized Conditionsthe most likely form
of wars in the Information Agerests upon the abil-
ity to secure information dominance (zhi xinxi
quan). This in turn requires the ability to collect,
manage, and exploit accurate information more
quickly than an opponent.
Information dominance rests on two primary
factors: modern information technology, which is
integral to information collection and transmission,
and the ability to degrade the quality of information,
whether by slowing down transmission or by intro-
ducing false or inaccurate data. But in the Chinese
conception of psychological warfare, the users of
informationboth high-level decision-makers and
lower-level policy implementers (individual soldiers,
clerks, etc.)are as important as the computers and
networks and the software that runs them. Eforts
to secure information dominance, therefore, will
target not only the physical information infrastruc-
ture and the data that pass through it, but also the
human agents that interact with those data, espe-
cially those who are making decisions.
Given the nature of modern technology and
informationized societies, operations designed
to inuence a rival nation can no longer be aimed
solely at military leaders or reserved for wartime.
The interconnected nature of information, as well
as information systems, makes clear-cut classica-
tions of military and civilian almost impossible.
Similarly, information collection, and even exploita-
tion, is not necessarily restricted by wartime ver-
sus peacetime categorizations. As one Chinese vol-
ume observes, information warfare is constant and
ongoing, whether in wartime or peacetime. Because
of the complex, intertwined nature of modern inter-
national politics and economics:
[I]t is necessary in peacetime to undertake infor-
mation warfare in the political, economic, tech-
nical, and military realms, as only then can one
scientically establish operational plans, appro-
priately calculate gains and losses in a conict,
appropriately control the level of attack, precise-
ly strike predetermined targets, and seek the best
strategic interest and long-term benet.
4
This philosophy is echoed in other PLA writings,
which emphasize that modern information technol-
ogy blurs the lines between peacetime and wartime,
between military and civilian, and among strategy,
operations, and tactics.
5
Rather than trying to draw
articial boundaries among these categories, the
implication is that information should be treated as
an integrated whole.
In this context, psychological operations are seen
as an essential part of future conicts, afecting the
1. Guo Yanhua, Psychological Warfare Knowledge (Beijing, PRC: National Defense University Press, 2005), p. 1.
2. Nanjing Political Academy, Military News Department Study Group, Study of the Journalistic Media Warfare in the Iraq War, China Military
Science, No. 4 (2003), p. 30.
3. Academy of Military Science, Operations Theory and Regulations Research Department and Informationalized Operations Theory Research
Ofce, Informationalized Operations Theory Study Guide (Beijing, PRC: Academy of Military Science Press, November 2005), p. 404.
4. Li Naiguo, New Theories of Information War (Beijing, PRC: Academy of Military Science Press, 2004), p. 154.
5. Yuan Wenxian, The Science of Military Information (Beijing, PRC: National Defense University Press, 2008), pp. 7779.
2
BACKGROUNDER | NO. 2824
JULY 11, 2013
opposition political parties, which he linked to for-
eign conspiracies.
Under these conditions, Egypts army justiably
intervened to restore order in support of the majority
of Egyptians who were rebelling against an Islamist
authoritarian regime. On July 3, Egyptian Defense
Minister General Abdel-Fattah el-Sissi announced
that Morsi, who had failed to meet the demands of
the people, was relieved of his duties and that the
Islamist-written constitution was suspended.
Unlike Gamal Abdel Nassers coup in 1952 or the
2011 coup that brought down Hosni Mubarak, this
time the military sought the endorsement of reli-
gious leaders, political leaders, and youth activists,
many of whom shared the stage when General el-Sis-
si announced Morsis ouster in a televised statement.
During his year in ofce, Mohamed
Morsi focused more on maximizing
his own power and that of the Muslim
Brotherhood than on addressing
Egypts worsening economic, social,
and political problems.
The next day, the military authorities announced
that Adly Mansour, chief justice of the Supreme
Constitutional Court, had been sworn in as interim
president. Mansour is a little-known but respect-
ed low-key technocrat. As a judge, he could be well
suited to steering the writing of a new constitu-
tion to replace the Islamist document that Morsi
had rammed through in December. mr. Mansour
pledged to continue the democratic reforms of the
2011 revolution so that we stop producing tyrants
and said that new elections were the only way for-
ward, although he gave no indication of when they
would be held.
President Mansour initially chose former oppo-
sition leader Mohamed el-Baradei as prime min-
ister of the interim government on July 6, but this
appointment was later rescinded under pressure
from the Nour Party, one of the few Islamist groups
that supported the coup. Baradei, a secular liberal
who led the National Salvation Front, a coalition of
leftist and liberal parties, frequently clashed with
the United States over the Iran nuclear issue when
he led the International Atomic Energy Agency.
It is expected that President Mansour will soon
announce the formation of a new government with a
cabinet composed of technocrats and caretakers.
Morsi has been detained at an undisclosed loca-
tion. The authorities have sought to arrest more
than 200 top leaders of the Muslim Brotherhood and
other Islamist organizations on charges of inciting
their followers to kill anti-Morsi demonstrators, but
Islamist leaders have vowed not to give up without
a ght.
Mohammed Badie, the supreme leader of the
Muslim Brotherhood, has called for continued pro-
tests until Morsi is reinstated as president. Speaking
at Cairos Rabaa Mosque during a demonstration on
Rejection Friday, Badie warned, We are all will-
ing to sacrice our necks and our souls for him.
1

Tens of thousands of Morsi supporters poured out
of mosques on Friday to protest Morsis ouster. Pro-
Morsi demonstrations were quickly countered by
anti-Morsi protests in a highly charged atmosphere
that degenerated into widespread clashes, leav-
ing at least 36 dead and more than 1,000 injured.
On Monday, at least 51 of Morsis supporters were
killed when troops responded to an attack on the
Republican Guard headquarters where Morsi was
last seen before his ouster.
Egypts mushrooming political violence will be
hard to control. Even in the unlikely event that the
Muslim Brotherhood reins in its members as part
of some deal to allow it to compete in future elec-
tions, more radical Islamists are sure to push back
violently.
Islamist militants in the northern Sinai, a hot-
bed of Islamist extremism, launched coordinated
attacks against police facilities and an airport at
El Arish, the provincial capital. Ansar al-Sharia in
Egypt (Supporters of Islamic Law), a new Islamist
group, announced its formation on an online forum
for militants in the Sinai region and proclaimed
that it will gather arms and train recruits for a jihad
against Egypts new government. Similar organiza-
tions in Libya, Yemen, and Tunisia have served as
front groups for attracting recruits to al-Qaedalike
terrorist organizations.
1. Matt Bradley, Tamer El-Ghobashy, and Reem Abdellatif, Post-Coup Violence Spreads in Egypt, The Wall Street Journal, July 6, 2013, http://
online.wsj.com/article/SB10001424127887323899704578587131736732940.html (accessed July 8, 2013).
4
BACKGROUNDER | NO. 2824
JULY 11, 2013
embraced Morsis Muslim Brotherhooddominated
government and was surprised that Egypts people
so quickly became violently opposed to Islamist
rule. The Administration gambled that the practical
responsibilities of governing would dilute the hostile
anti-Western ideology of the Muslim Brotherhood.
Yet once in ofce, Morsi relentlessly expanded his
own power in a winner-take-all manner while
neglecting Egypts festering economic problems.
The Obama Administrations enthusiasm for
the Muslim Brotherhood led it to turn a blind eye
to Morsis power grabs, the rising persecution of
Egypts Coptic Christian minority, the crackdown
on pro-democracy nongovernmental organizations
(NGOs) that the Mubarak regime formerly tolerat-
ed, and the restrictions that the Morsi government
placed on freedom of the press, freedom of speech,
and freedom of religion.
The Obama Administration failed to publicly crit-
icize Morsis excesses, power grabs, and abuses. This
led Egypts secular and liberal opposition to turn
to Egypts army in despair, angry that the Obama
Administration uncritically supported the Morsi
regime. Many protesters demonstrating against
Morsi before the coup also carried signs protesting
President Obamas support for the Morsi regime.
Morsi, for his part, felt no need to compromise with
the opposition or temper his Islamist ambitions
because the Administration was reluctant to use the
leverage aforded by $1.5 billion in annual U.S. aid to
Egypt.
Secular, democratic, and liberal Egyptians
opposed to an Islamist takeover should be natu-
ral allies of the U.S., not leading a backlash against
American policy. The fact that Egyptians resent the
Obama Administrations courting of the Muslim
Brotherhood should be a wake-up call for the White
House. It is a sad sign that U.S. policy toward Egypt
has gone of the rails. Egyptian advocates of freedom
should know that Americans support their eforts
and do not side with an Islamist authoritarian leader
who is hostile to American values and policies.
The United States should support freedom in
Egypt to advance its own interests as well as those
of the Egyptian people. The interim government
established by the army has a better chance of laying
the groundwork for a democratic transition than did
Morsis regime, which was headed for dictatorship.
Military coups have advanced the prospects for
democracy at least two times in the past: Portugal
in 1974, and Egypt in 2011. It remains to be seen
whether Egypts latest coup will succeed in salvag-
ing Egypts dim democratic prospects. However,
General el-Sissi reportedly was a student at the U.S.
Army War College in 2006, in which case he may
have absorbed the professional standards and non-
partisan apolitical tradition of the U.S. Army. In any
event, Egypts military leaders are much more likely
than Morsis cronies to advance freedom in Egypt,
support economic reforms to revive the economy,
and play a stabilizing role in the volatile Middle East.
What the U.S. Should Do
In addressing Egypts deepening crisis, the
United States should:
Press Egypts army to hold elections and step
aside as soon as possible. General el-Sissis
road map for a democratic transition included
no dates. President Mansour has laid out a vague
timetable for a constitutional referendum in four
and a half months and parliamentary elections in
six months. Washington should urge the interim
government to adhere to this timetable. It should
also nd an inclusive way of writing a new consti-
tution to establish the rules of the political com-
petition before elections. The lack of a shared
understanding of the rules of the game enabled
Morsi to stage a power grab. The Administration
has called for a transparent and inclusive political
transition process, but the Muslim Brotherhood
and other Islamist parties should be allowed to
participate only if they publicly choose a path of
nonviolence.
Attach tight strings to any U.S. aid. The Obama
Administration has stopped short of calling the
armys intervention a coup to avoid triggering
an aid cutof. Section 7008 of the Department of
State, Foreign Operations, and Related Programs
Appropriations Act, 2012, as contained in the
Consolidated Appropriations Act, 2012, bars
any assistance to the government of any country
whose duly elected head of government is deposed
by military coup dtat or decree or, after the date
of enactment of this Act, a coup dtat or decree
3
BACKGROUNDER | NO. 2821
JULY 11, 2013
very perceptions that inform decision making, from
the context to the biases. Successful psychologi-
cal operations will therefore have repercussions at
every level of operations, inuencing the course of
the conict. To be efective, however, psychologi-
cal warfare operations cannot be limited to war-
time. Instead, peacetime psychological operations
are necessary, both to understand an opponent bet-
ter and to lay the groundwork for efective wartime
operations.
PLA writings emphasize that modern
information technology blurs the
lines between peacetime and wartime,
between military and civilian, and
among strategy, operations, and tactics.
Peacetime applications of psychological war-
fare techniques involve inuencing and altering an
opponents unconscious, implicit views in order to
make that opponent more susceptible to coercion.
By employing various forms of strategic communi-
cations, including diplomatic eforts, one can foster
a positive national image and increase foreign sym-
pathy and support for ones own policies and goals.
At the same time, such techniques attempt to iso-
late opponents, undermining their positions, por-
traying them as fostering ill intentions, and forcing
them to react to a variety of charges so that their
energy is dispersed.
In addition, employing all the tools of communi-
cations, including various forms of media, empha-
sizes ones own strengths as well as a willingness to
employ that strength to deter and coerce opponents
more efectively. All the while, one must be work-
ing to counter opponents eforts to foster their own
image of strength and unity. It is also likely that an
opponent will attempt to demoralize ones populace
and that appropriate defensive measures will have
to be taken.
In wartime, psychological operations shift
emphasis towards more specically military tar-
gets and goals. The primary objective of such eforts
is to generate confusion, doubt, anxiety, fear, terror,
regret, and exhaustion in an opponent, especially
among senior military and civilian leaders. Ideally,
such a campaign will induce neglect and maxi-
mize the chances of an opponent making mistakes.
Wartime psychological warfare operations also aim
to generate a sense of uncertainty and indecisive-
ness at all levels, thereby degrading opposition deci-
sion-making processes. The ability to interfere with
an opponents information systems, coupled with
eforts to inuence decision makers, can create a
strong psychological impact.
Another facet of wartime psychological opera-
tions is the sowing of discord and a sense of hopeless-
ness in the enemy. Not only will this help generate
war-weariness among enemy forces and populations
and discourage resistance, but once the conict is
concluded, such operations may facilitate peace
negotiations and induce more concessions. When
one defeats the enemy, it is not solely by killing the
enemy, or winning a piece of ground, but is mainly
in terms of cowing the enemys heart.
6
In order to
undermine the opponents morale, one must empha-
size information favorable to oneself through vari-
ous forms of media as well as through third parties,
friendly elements in the opponents society, and sim-
ilar outlets.
Finally, ofensive psychological warfare opera-
tions must be complemented by defensive measures,
since an opponent will also be trying to undermine
ones own forces, population, and leaders. One must
therefore attempt to solidify popular support for the
conict, highlight ones successes and the enemys
failures, and instill condence and support for the
Party and the state. Such defensive measures require
tight control of information ows in ones own soci-
ety and the insulation of ones decision-makers and
decision-making processes from enemy informa-
tion warfare eforts. This need for control explains
Beijings eforts to limit cyber access to the larger
population, including the Great Firewall of China.
Chinese Concept of Psychological
Warfare Tasks
For the PLA, psychological warfare is the res-
posibility of the General Political Department
(GPD), working in coordination with the rest of the
PLA. The GPD not only ensures political orthodoxy
6. Guo, Psychological Warfare Knowledge, p. 14.
2
ISSUE BRIEF | NO. 3978
JUNE 27, 2013
pollutants. By the agencys own admission, the rule
will cost $10 billion by 2015 but have only $6 million
in purported benets from mercury reductions.
7
In
addition, the EPA is also regulating coal combustion
residues and cooling water intake structures and is
considering more stringent smog standards, all of
which make the use of coal power more expensive.
Most recently, the Supreme Court granted the
EPAs request to review its cross-state air pollution
rule, which would compel companies to retire three to
seven gigawatts of electricity generation and retrot
up to 576 plants.
8
In the absence of these new regula-
tions, U.S. air quality has improved signicantly over
the past several decades. Emission of toxic pollutants
has dropped as much as 96 percent since 1980.
9
The attack on coal reaches well beyond power
plant construction and operation. Although not a
new problem, regulations from the Ofce of Surface
Mining Reclamation and Enforcement and the Mine
Safety and Health Administration make building
new coal mining operations or expanding exist-
ing operations increasingly difcult.
10
Coal mining
operations are subject to 10 federal environmental
laws as well as state requirements and regulations.
Climate Policy and Coal. While it may not be
clear exactly which policies will be used, it seems clear
that zeroing-out coal-red electric power plants is a
goal of this Administrations environmental team.
This paper will analyze the economic impact of set-
ting such a target. We look at the rst 16 years of a
20-year phase-out of coal power: 20152030.
The analysis shows signicant economic loss-
es extend beyond the obvious areas of coal mining
and power generation. In particular, we nd that by
2030:
Employment falls by more than 500,000 jobs;
Manufacturing loses over 280,000 jobs;
A family of fours annual income drops more than
$1,000 per year, and its total income drops by
$16,500 over the period of analysis;
Aggregate gross domestic product (GDP) decreas-
es by $1.47 trillion;
Electricity prices rise by 20 percent;
Coal-mining jobs drop 43 percent; and
Natural gas prices rise 42 percent.
The Energy Markets Respond. The analysis
was carried out using the Heritage Energy Model
(HEM).
11
As coal-red power generation is ratcheted
1. Senator Barack Obama (DIL), interview with the San Francisco Chronicle editorial board, January 17, 2008, http://www.youtube.com/
watch?v=DpTIhyMa-Nw (accessed June 26, 2013).
2. Aaron Blake, Obama Science Adviser Calls for War on Coal, The Washington Post, June 25, 2013, http://www.washingtonpost.com/blogs/
post-politics/wp/2013/06/25/obama-science-adviser-calls-for-war-on-coal/ (accessed June 26, 2013).
3. Institute for Energy Research, North American Energy Inventory, December 2011, http://www.energyforamerica.org/wp-content/
uploads/2012/06/Energy-InventoryFINAL.pdf (accessed June 24, 2013).
4. To date, no one has successfully operated a utility-scale carbon-capture power plant. Perhaps even more problematic is how to dispose of the
1520 super tankers worth of liquid carbon dioxide that widespread carbon capture would create.
5. Under the proposed rule, those plants already in the permitting process would not be included.
6. U.S. Department of Energy, Energy Information Administration, What Is the Role of Coal in the United States? July 18, 2012, http://www.eia.
gov/energy_in_brief/article/role_coal_us.cfm (accessed June 24, 2013).
7. Anne E. Smith, Technical Comments on the Regulatory Impact Analysis Supporting EPAs Proposed Rule for Utility MACT and Revised NSPS
(76 FR 24976), NERA Economic Consulting, August 3, 2011, http://www.nera.com/nera-les/PUB_Smith_EPA_report_0811.pdf (accessed
June 24, 2013).
8. North American Electric Reliability Corporation, 2010 Special Reliability Scenario Assessment: Resource Adequacy Impact of Potential U.S.
Environmental Regulations, October 2010, http://www.nerc.com/les/EPA_Scenario_Final_v2.pdf (accessed June 24, 2013).
9. Steven F. Hayward, 2011 Almanac of Environmental Trends, American Enterprise Institute, April 2011, p. 34, http://www.aei.org/
les/2011/04/20/Hayward-almanac2011.pdf (accessed June 25, 2013).
10. Nicolas D. Loris, The Assault on Coal and the American Consumer, Heritage Foundation Backgrounder No. 2709, July 23, 2012, http://www.
heritage.org/research/reports/2012/07/the-assault-on-coal-and-american-consumers.
11. See the appendix for a description of the HEM and the methodology used in this paper.
4
ISSUE BRIEF | NO. 3978
JUNE 27, 2013
Appendix: Methodology
Overview of Heritage Energy Model. This
analysis uses the Heritage Energy Model (HEM),
a derivative of the National Energy Model System
(NEMS).
15
NEMS is used by the Energy Information
Administration of the Department of Energy as
well as various nongovernmental organizations
for a variety of purposes, including forecasting the
efects of energy policy changes on a plethora of
leading economic indicators. The methodologies,
assumptions, conclusions, and opinions in this
report are entirely the work of statisticians and
economists at The Heritage Foundations Center
for Data Analysis and have not been endorsed
by and do not necessarily reect the views of the
developers of NEMS.
HEM is based on well-established economic the-
ory as well as historical data and contains a variety
of modules that interact with each other for long-
term forecasting. In particular, HEM focuses on the
interactions among (1) the supply, conversion, and
demand of energy in its various forms; (2) American
energy and the overall American economy; (3) the
American energy market and the world petroleum
market; and (4) current production and consump-
tion decisions as well as expectations about the
future.
16
These modules include:
A Macroeconomic Activity Module,
17
A Transportation Demand Module,
A Residential Demand Module,
An Industrial Demand Module,
A Commercial Demand Module,
A Coal Market Module,
An Electricity Market Module,
A Petroleum Market Module,
An Oil and Gas Supply Module,
A Renewable Fuels Module,
An International Energy Activity Module, and
A Natural Gas Transmission and Distribution
Module.
HEM is identical to NEMS with the exception
of the Commercial Demand Module. Unlike NEMS,
HEMs module does not make projections regarding
commercial oor-space data of pertinent commer-
cial buildings.
Overarching the above modules is an Integrating
Module that consistently cycles, iteratively execut-
ing and allowing the various modules to interact
with each other. Unknown variables that are related
(such as if they are a component of a particular mod-
ule) are grouped together, and a pertinent subsys-
tem of equations and inequalities corresponding to
each group is solved via a variety of commonly used
numerical analytic techniques, using approximate
values for the other unknowns. Once these groups
values are computed, the next group is solved simi-
larly, and the process iterates. Convergence checks
are performed for each price and quantity statistic to
determine whether subsequent changes in that par-
ticular statistic fall within a given tolerance. After
all group values for the current cycle are determined,
the next cycle begins. For example, at cycle j, a vari-
ety of n pertinent statistics represented by the vector
(x
j
1
, x
j
2
, ..., x
j
n
)R
n
is obtained.
18
HEM provides a num-
ber of diagnostic measures, based on diferences
15. U.S. Department of Energy, Energy Information Administration, The National Energy Modeling System: An Overview, http://www.eia.gov/
oiaf/aeo/overview/pdf/0581(2009).pdf (accessed April 3, 2013).
16. Ibid., pp. 34.
17. HEMs Macroeconomic Activity Module makes use of the IHS Global Insight model, which is used by government agencies and Fortune 500
organizations to forecast the manifestations of economic events and policy changes on notable economic indicators. As with NEMS, the
methodologies, assumptions, conclusions, and opinions in this report are entirely the work of CDA statisticians and economists and have not
been endorsed by and do not necessarily reect the views of the owners of the IHS Global Insight model.
18. S. A. Gabriel, A. S. Kydes, and P. Whitman, The National Energy Modeling System: A Large-Scale Energy-Economic Equilibrium Model,
Operations Research, Vol. 49 (2001), pp. 1425.
3
BACKGROUNDER | NO. 2821
JULY 11, 2013
very perceptions that inform decision making, from
the context to the biases. Successful psychologi-
cal operations will therefore have repercussions at
every level of operations, inuencing the course of
the conict. To be efective, however, psychologi-
cal warfare operations cannot be limited to war-
time. Instead, peacetime psychological operations
are necessary, both to understand an opponent bet-
ter and to lay the groundwork for efective wartime
operations.
PLA writings emphasize that modern
information technology blurs the
lines between peacetime and wartime,
between military and civilian, and
among strategy, operations, and tactics.
Peacetime applications of psychological war-
fare techniques involve inuencing and altering an
opponents unconscious, implicit views in order to
make that opponent more susceptible to coercion.
By employing various forms of strategic communi-
cations, including diplomatic eforts, one can foster
a positive national image and increase foreign sym-
pathy and support for ones own policies and goals.
At the same time, such techniques attempt to iso-
late opponents, undermining their positions, por-
traying them as fostering ill intentions, and forcing
them to react to a variety of charges so that their
energy is dispersed.
In addition, employing all the tools of communi-
cations, including various forms of media, empha-
sizes ones own strengths as well as a willingness to
employ that strength to deter and coerce opponents
more efectively. All the while, one must be work-
ing to counter opponents eforts to foster their own
image of strength and unity. It is also likely that an
opponent will attempt to demoralize ones populace
and that appropriate defensive measures will have
to be taken.
In wartime, psychological operations shift
emphasis towards more specically military tar-
gets and goals. The primary objective of such eforts
is to generate confusion, doubt, anxiety, fear, terror,
regret, and exhaustion in an opponent, especially
among senior military and civilian leaders. Ideally,
such a campaign will induce neglect and maxi-
mize the chances of an opponent making mistakes.
Wartime psychological warfare operations also aim
to generate a sense of uncertainty and indecisive-
ness at all levels, thereby degrading opposition deci-
sion-making processes. The ability to interfere with
an opponents information systems, coupled with
eforts to inuence decision makers, can create a
strong psychological impact.
Another facet of wartime psychological opera-
tions is the sowing of discord and a sense of hopeless-
ness in the enemy. Not only will this help generate
war-weariness among enemy forces and populations
and discourage resistance, but once the conict is
concluded, such operations may facilitate peace
negotiations and induce more concessions. When
one defeats the enemy, it is not solely by killing the
enemy, or winning a piece of ground, but is mainly
in terms of cowing the enemys heart.
6
In order to
undermine the opponents morale, one must empha-
size information favorable to oneself through vari-
ous forms of media as well as through third parties,
friendly elements in the opponents society, and sim-
ilar outlets.
Finally, ofensive psychological warfare opera-
tions must be complemented by defensive measures,
since an opponent will also be trying to undermine
ones own forces, population, and leaders. One must
therefore attempt to solidify popular support for the
conict, highlight ones successes and the enemys
failures, and instill condence and support for the
Party and the state. Such defensive measures require
tight control of information ows in ones own soci-
ety and the insulation of ones decision-makers and
decision-making processes from enemy informa-
tion warfare eforts. This need for control explains
Beijings eforts to limit cyber access to the larger
population, including the Great Firewall of China.
Chinese Concept of Psychological
Warfare Tasks
For the PLA, psychological warfare is the res-
posibility of the General Political Department
(GPD), working in coordination with the rest of the
PLA. The GPD not only ensures political orthodoxy
6. Guo, Psychological Warfare Knowledge, p. 14.
3
BACKGROUNDER | NO. 2821
JULY 11, 2013
very perceptions that inform decision making, from
the context to the biases. Successful psychologi-
cal operations will therefore have repercussions at
every level of operations, inuencing the course of
the conict. To be efective, however, psychologi-
cal warfare operations cannot be limited to war-
time. Instead, peacetime psychological operations
are necessary, both to understand an opponent bet-
ter and to lay the groundwork for efective wartime
operations.
PLA writings emphasize that modern
information technology blurs the
lines between peacetime and wartime,
between military and civilian, and
among strategy, operations, and tactics.
Peacetime applications of psychological war-
fare techniques involve inuencing and altering an
opponents unconscious, implicit views in order to
make that opponent more susceptible to coercion.
By employing various forms of strategic communi-
cations, including diplomatic eforts, one can foster
a positive national image and increase foreign sym-
pathy and support for ones own policies and goals.
At the same time, such techniques attempt to iso-
late opponents, undermining their positions, por-
traying them as fostering ill intentions, and forcing
them to react to a variety of charges so that their
energy is dispersed.
In addition, employing all the tools of communi-
cations, including various forms of media, empha-
sizes ones own strengths as well as a willingness to
employ that strength to deter and coerce opponents
more efectively. All the while, one must be work-
ing to counter opponents eforts to foster their own
image of strength and unity. It is also likely that an
opponent will attempt to demoralize ones populace
and that appropriate defensive measures will have
to be taken.
In wartime, psychological operations shift
emphasis towards more specically military tar-
gets and goals. The primary objective of such eforts
is to generate confusion, doubt, anxiety, fear, terror,
regret, and exhaustion in an opponent, especially
among senior military and civilian leaders. Ideally,
such a campaign will induce neglect and maxi-
mize the chances of an opponent making mistakes.
Wartime psychological warfare operations also aim
to generate a sense of uncertainty and indecisive-
ness at all levels, thereby degrading opposition deci-
sion-making processes. The ability to interfere with
an opponents information systems, coupled with
eforts to inuence decision makers, can create a
strong psychological impact.
Another facet of wartime psychological opera-
tions is the sowing of discord and a sense of hopeless-
ness in the enemy. Not only will this help generate
war-weariness among enemy forces and populations
and discourage resistance, but once the conict is
concluded, such operations may facilitate peace
negotiations and induce more concessions. When
one defeats the enemy, it is not solely by killing the
enemy, or winning a piece of ground, but is mainly
in terms of cowing the enemys heart.
6
In order to
undermine the opponents morale, one must empha-
size information favorable to oneself through vari-
ous forms of media as well as through third parties,
friendly elements in the opponents society, and sim-
ilar outlets.
Finally, ofensive psychological warfare opera-
tions must be complemented by defensive measures,
since an opponent will also be trying to undermine
ones own forces, population, and leaders. One must
therefore attempt to solidify popular support for the
conict, highlight ones successes and the enemys
failures, and instill condence and support for the
Party and the state. Such defensive measures require
tight control of information ows in ones own soci-
ety and the insulation of ones decision-makers and
decision-making processes from enemy informa-
tion warfare eforts. This need for control explains
Beijings eforts to limit cyber access to the larger
population, including the Great Firewall of China.
Chinese Concept of Psychological
Warfare Tasks
For the PLA, psychological warfare is the res-
posibility of the General Political Department
(GPD), working in coordination with the rest of the
PLA. The GPD not only ensures political orthodoxy
6. Guo, Psychological Warfare Knowledge, p. 14.
3
BACKGROUNDER | NO. 2821
JULY 11, 2013
very perceptions that inform decision making, from
the context to the biases. Successful psychologi-
cal operations will therefore have repercussions at
every level of operations, inuencing the course of
the conict. To be efective, however, psychologi-
cal warfare operations cannot be limited to war-
time. Instead, peacetime psychological operations
are necessary, both to understand an opponent bet-
ter and to lay the groundwork for efective wartime
operations.
PLA writings emphasize that modern
information technology blurs the
lines between peacetime and wartime,
between military and civilian, and
among strategy, operations, and tactics.
Peacetime applications of psychological war-
fare techniques involve inuencing and altering an
opponents unconscious, implicit views in order to
make that opponent more susceptible to coercion.
By employing various forms of strategic communi-
cations, including diplomatic eforts, one can foster
a positive national image and increase foreign sym-
pathy and support for ones own policies and goals.
At the same time, such techniques attempt to iso-
late opponents, undermining their positions, por-
traying them as fostering ill intentions, and forcing
them to react to a variety of charges so that their
energy is dispersed.
In addition, employing all the tools of communi-
cations, including various forms of media, empha-
sizes ones own strengths as well as a willingness to
employ that strength to deter and coerce opponents
more efectively. All the while, one must be work-
ing to counter opponents eforts to foster their own
image of strength and unity. It is also likely that an
opponent will attempt to demoralize ones populace
and that appropriate defensive measures will have
to be taken.
In wartime, psychological operations shift
emphasis towards more specically military tar-
gets and goals. The primary objective of such eforts
is to generate confusion, doubt, anxiety, fear, terror,
regret, and exhaustion in an opponent, especially
among senior military and civilian leaders. Ideally,
such a campaign will induce neglect and maxi-
mize the chances of an opponent making mistakes.
Wartime psychological warfare operations also aim
to generate a sense of uncertainty and indecisive-
ness at all levels, thereby degrading opposition deci-
sion-making processes. The ability to interfere with
an opponents information systems, coupled with
eforts to inuence decision makers, can create a
strong psychological impact.
Another facet of wartime psychological opera-
tions is the sowing of discord and a sense of hopeless-
ness in the enemy. Not only will this help generate
war-weariness among enemy forces and populations
and discourage resistance, but once the conict is
concluded, such operations may facilitate peace
negotiations and induce more concessions. When
one defeats the enemy, it is not solely by killing the
enemy, or winning a piece of ground, but is mainly
in terms of cowing the enemys heart.
6
In order to
undermine the opponents morale, one must empha-
size information favorable to oneself through vari-
ous forms of media as well as through third parties,
friendly elements in the opponents society, and sim-
ilar outlets.
Finally, ofensive psychological warfare opera-
tions must be complemented by defensive measures,
since an opponent will also be trying to undermine
ones own forces, population, and leaders. One must
therefore attempt to solidify popular support for the
conict, highlight ones successes and the enemys
failures, and instill condence and support for the
Party and the state. Such defensive measures require
tight control of information ows in ones own soci-
ety and the insulation of ones decision-makers and
decision-making processes from enemy informa-
tion warfare eforts. This need for control explains
Beijings eforts to limit cyber access to the larger
population, including the Great Firewall of China.
Chinese Concept of Psychological
Warfare Tasks
For the PLA, psychological warfare is the res-
posibility of the General Political Department
(GPD), working in coordination with the rest of the
PLA. The GPD not only ensures political orthodoxy
6. Guo, Psychological Warfare Knowledge, p. 14.
2
BACKGROUNDER | NO. 2821
JULY 11, 2013
Specically:
There are myriad targets and objects of psycho-
logical warfare; it is applied against the enemy,
but also against friends; it targets externally, but
also internally; it must deal with allied countries,
but also the entire globe, and one must rely on the
media acting in multiple directions jointly, with
efective coverage of many areas, in order to com-
prehensively realize the various goals.
2
The goal of psychological warfare is to inuence,
constrain, and/or alter an opponents thoughts, emo-
tions, and habits while at the same time strengthen-
ing friendly psychology.
3
Psychological Warfare and Information
Warfare
Psychological warfare operations are integral
to the broad concept of information warfare (xinxi
zhanzheng). A product of the Information Age, infor-
mation warfare is the struggle to dominate the gen-
eration and ow of information in order to enhance
and support ones own strategic goals while degrad-
ing and constraining those of an opponent. The
ability to triumph in future Local Wars Under
Informationized Conditionsthe most likely form
of wars in the Information Agerests upon the abil-
ity to secure information dominance (zhi xinxi
quan). This in turn requires the ability to collect,
manage, and exploit accurate information more
quickly than an opponent.
Information dominance rests on two primary
factors: modern information technology, which is
integral to information collection and transmission,
and the ability to degrade the quality of information,
whether by slowing down transmission or by intro-
ducing false or inaccurate data. But in the Chinese
conception of psychological warfare, the users of
informationboth high-level decision-makers and
lower-level policy implementers (individual soldiers,
clerks, etc.)are as important as the computers and
networks and the software that runs them. Eforts
to secure information dominance, therefore, will
target not only the physical information infrastruc-
ture and the data that pass through it, but also the
human agents that interact with those data, espe-
cially those who are making decisions.
Given the nature of modern technology and
informationized societies, operations designed
to inuence a rival nation can no longer be aimed
solely at military leaders or reserved for wartime.
The interconnected nature of information, as well
as information systems, makes clear-cut classica-
tions of military and civilian almost impossible.
Similarly, information collection, and even exploita-
tion, is not necessarily restricted by wartime ver-
sus peacetime categorizations. As one Chinese vol-
ume observes, information warfare is constant and
ongoing, whether in wartime or peacetime. Because
of the complex, intertwined nature of modern inter-
national politics and economics:
[I]t is necessary in peacetime to undertake infor-
mation warfare in the political, economic, tech-
nical, and military realms, as only then can one
scientically establish operational plans, appro-
priately calculate gains and losses in a conict,
appropriately control the level of attack, precise-
ly strike predetermined targets, and seek the best
strategic interest and long-term benet.
4
This philosophy is echoed in other PLA writings,
which emphasize that modern information technol-
ogy blurs the lines between peacetime and wartime,
between military and civilian, and among strategy,
operations, and tactics.
5
Rather than trying to draw
articial boundaries among these categories, the
implication is that information should be treated as
an integrated whole.
In this context, psychological operations are seen
as an essential part of future conicts, afecting the
1. Guo Yanhua, Psychological Warfare Knowledge (Beijing, PRC: National Defense University Press, 2005), p. 1.
2. Nanjing Political Academy, Military News Department Study Group, Study of the Journalistic Media Warfare in the Iraq War, China Military
Science, No. 4 (2003), p. 30.
3. Academy of Military Science, Operations Theory and Regulations Research Department and Informationalized Operations Theory Research
Ofce, Informationalized Operations Theory Study Guide (Beijing, PRC: Academy of Military Science Press, November 2005), p. 404.
4. Li Naiguo, New Theories of Information War (Beijing, PRC: Academy of Military Science Press, 2004), p. 154.
5. Yuan Wenxian, The Science of Military Information (Beijing, PRC: National Defense University Press, 2008), pp. 7779.
3
BACKGROUNDER | NO. 2821
JULY 11, 2013
very perceptions that inform decision making, from
the context to the biases. Successful psychologi-
cal operations will therefore have repercussions at
every level of operations, inuencing the course of
the conict. To be efective, however, psychologi-
cal warfare operations cannot be limited to war-
time. Instead, peacetime psychological operations
are necessary, both to understand an opponent bet-
ter and to lay the groundwork for efective wartime
operations.
PLA writings emphasize that modern
information technology blurs the
lines between peacetime and wartime,
between military and civilian, and
among strategy, operations, and tactics.
Peacetime applications of psychological war-
fare techniques involve inuencing and altering an
opponents unconscious, implicit views in order to
make that opponent more susceptible to coercion.
By employing various forms of strategic communi-
cations, including diplomatic eforts, one can foster
a positive national image and increase foreign sym-
pathy and support for ones own policies and goals.
At the same time, such techniques attempt to iso-
late opponents, undermining their positions, por-
traying them as fostering ill intentions, and forcing
them to react to a variety of charges so that their
energy is dispersed.
In addition, employing all the tools of communi-
cations, including various forms of media, empha-
sizes ones own strengths as well as a willingness to
employ that strength to deter and coerce opponents
more efectively. All the while, one must be work-
ing to counter opponents eforts to foster their own
image of strength and unity. It is also likely that an
opponent will attempt to demoralize ones populace
and that appropriate defensive measures will have
to be taken.
In wartime, psychological operations shift
emphasis towards more specically military tar-
gets and goals. The primary objective of such eforts
is to generate confusion, doubt, anxiety, fear, terror,
regret, and exhaustion in an opponent, especially
among senior military and civilian leaders. Ideally,
such a campaign will induce neglect and maxi-
mize the chances of an opponent making mistakes.
Wartime psychological warfare operations also aim
to generate a sense of uncertainty and indecisive-
ness at all levels, thereby degrading opposition deci-
sion-making processes. The ability to interfere with
an opponents information systems, coupled with
eforts to inuence decision makers, can create a
strong psychological impact.
Another facet of wartime psychological opera-
tions is the sowing of discord and a sense of hopeless-
ness in the enemy. Not only will this help generate
war-weariness among enemy forces and populations
and discourage resistance, but once the conict is
concluded, such operations may facilitate peace
negotiations and induce more concessions. When
one defeats the enemy, it is not solely by killing the
enemy, or winning a piece of ground, but is mainly
in terms of cowing the enemys heart.
6
In order to
undermine the opponents morale, one must empha-
size information favorable to oneself through vari-
ous forms of media as well as through third parties,
friendly elements in the opponents society, and sim-
ilar outlets.
Finally, ofensive psychological warfare opera-
tions must be complemented by defensive measures,
since an opponent will also be trying to undermine
ones own forces, population, and leaders. One must
therefore attempt to solidify popular support for the
conict, highlight ones successes and the enemys
failures, and instill condence and support for the
Party and the state. Such defensive measures require
tight control of information ows in ones own soci-
ety and the insulation of ones decision-makers and
decision-making processes from enemy informa-
tion warfare eforts. This need for control explains
Beijings eforts to limit cyber access to the larger
population, including the Great Firewall of China.
Chinese Concept of Psychological
Warfare Tasks
For the PLA, psychological warfare is the res-
posibility of the General Political Department
(GPD), working in coordination with the rest of the
PLA. The GPD not only ensures political orthodoxy
6. Guo, Psychological Warfare Knowledge, p. 14.
2
ISSUE BRIEF | NO. 3980
JUNE 27, 2013
insolvency is largely the result of the 20072008
recession. While some of the sources of reduced
solvencysuch as lower economic growth, lower
wages, increased disability incidence, and lower
birth ratesare hopefully temporary, other conse-
quences of the recession are unlikely to be reversed.
For example, the Social Security trustees now proj-
ect lower average hours of work and higher rates of
disability incidence well into the future, and the
lifetime earnings of the long-term unemployed are
likely to be permanently lower.
Aside from a short period in the late 1990s and
early 2000s, when the exceptionally strong econo-
my pushed Social Securitys projected solvency date
forward, Social Securitys nancial trajectory has
been decidedly negative. If the historical pattern of
1. U.S. Social Security Administration, The 2013 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal
Disability Insurance Trust Funds, May 31, 2013, http://www.socialsecurity.gov/OACT/TR/2013/index.html (accessed June 6, 2013).
2. Geofrey Kollmann, Social Security: Summary of Major Changes in the Cash Benets Program, Social Security Administration, May 18, 2000,
http://www.ssa.gov/history/reports/crsleghist2.html (accessed June 6, 2013).
3. Ibid.
4. Social Security Administration, Summary of the Social Security Trustees Report: Old-Age, Survivors, and Disability Insurance Program, Social
Security Board of Trustees, June 27, 1983, http://www.ssa.gov/history/pdf/1983.pdf (accessed June 6, 2013).
CHART 1
Source: Herituge loundution culcluutions bused on dutu rom Sociul Security Administrution, The 2013 Annual
Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust
Funds, Muy 3, 203, http.//www.sociulsecurity.gov/OAC1/1P/203/index.html (uccessed Muy 3, 203).
In 1983, Social Securitys trustees projected that the recently enacted Social Security reforms would keep the
program solvent for at least the next 75 years through 2058. However, over successive annual reports, that
approach date has accelerated. If the trend since 1983 continues, the program will become insolvent in 2024
34 years earlier than originally projected.
PROJECTED NUMBER OF YEARS AWAY BEFORE
SOCIAL SECURITY BECOMES INSOLVENT
YEAR PROJECTION MADE
Social Securitys Life Expectancy Keeps Getting Shorter
herituge.org 8 3980
0
l0
20
30
40
50
60
70
80
l983 l990 2000 20l0 2020 2030 2040 2050 2060
Trend since 1983:
Sociul Security
insolvent in
2024
1983 projection:
Sociul Security
solvent until
ut leust
2058
3
BACKGROUNDER | NO. 2821
JULY 11, 2013
very perceptions that inform decision making, from
the context to the biases. Successful psychologi-
cal operations will therefore have repercussions at
every level of operations, inuencing the course of
the conict. To be efective, however, psychologi-
cal warfare operations cannot be limited to war-
time. Instead, peacetime psychological operations
are necessary, both to understand an opponent bet-
ter and to lay the groundwork for efective wartime
operations.
PLA writings emphasize that modern
information technology blurs the
lines between peacetime and wartime,
between military and civilian, and
among strategy, operations, and tactics.
Peacetime applications of psychological war-
fare techniques involve inuencing and altering an
opponents unconscious, implicit views in order to
make that opponent more susceptible to coercion.
By employing various forms of strategic communi-
cations, including diplomatic eforts, one can foster
a positive national image and increase foreign sym-
pathy and support for ones own policies and goals.
At the same time, such techniques attempt to iso-
late opponents, undermining their positions, por-
traying them as fostering ill intentions, and forcing
them to react to a variety of charges so that their
energy is dispersed.
In addition, employing all the tools of communi-
cations, including various forms of media, empha-
sizes ones own strengths as well as a willingness to
employ that strength to deter and coerce opponents
more efectively. All the while, one must be work-
ing to counter opponents eforts to foster their own
image of strength and unity. It is also likely that an
opponent will attempt to demoralize ones populace
and that appropriate defensive measures will have
to be taken.
In wartime, psychological operations shift
emphasis towards more specically military tar-
gets and goals. The primary objective of such eforts
is to generate confusion, doubt, anxiety, fear, terror,
regret, and exhaustion in an opponent, especially
among senior military and civilian leaders. Ideally,
such a campaign will induce neglect and maxi-
mize the chances of an opponent making mistakes.
Wartime psychological warfare operations also aim
to generate a sense of uncertainty and indecisive-
ness at all levels, thereby degrading opposition deci-
sion-making processes. The ability to interfere with
an opponents information systems, coupled with
eforts to inuence decision makers, can create a
strong psychological impact.
Another facet of wartime psychological opera-
tions is the sowing of discord and a sense of hopeless-
ness in the enemy. Not only will this help generate
war-weariness among enemy forces and populations
and discourage resistance, but once the conict is
concluded, such operations may facilitate peace
negotiations and induce more concessions. When
one defeats the enemy, it is not solely by killing the
enemy, or winning a piece of ground, but is mainly
in terms of cowing the enemys heart.
6
In order to
undermine the opponents morale, one must empha-
size information favorable to oneself through vari-
ous forms of media as well as through third parties,
friendly elements in the opponents society, and sim-
ilar outlets.
Finally, ofensive psychological warfare opera-
tions must be complemented by defensive measures,
since an opponent will also be trying to undermine
ones own forces, population, and leaders. One must
therefore attempt to solidify popular support for the
conict, highlight ones successes and the enemys
failures, and instill condence and support for the
Party and the state. Such defensive measures require
tight control of information ows in ones own soci-
ety and the insulation of ones decision-makers and
decision-making processes from enemy informa-
tion warfare eforts. This need for control explains
Beijings eforts to limit cyber access to the larger
population, including the Great Firewall of China.
Chinese Concept of Psychological
Warfare Tasks
For the PLA, psychological warfare is the res-
posibility of the General Political Department
(GPD), working in coordination with the rest of the
PLA. The GPD not only ensures political orthodoxy
6. Guo, Psychological Warfare Knowledge, p. 14.