NEW YORK TIMES
January 3, 2013
Fiscal Deal Fails to Allay Doubts on U.S. Global Power
By DAVID E. SANGER
WASHINGTON – Two years ago the departing chairman of the Joint Chiefs of Staff, Adm. Mike Mullen, declared that “the most significant threat to our national security is our debt.” After a decade in which the nation had chased Al Qaeda and invaded Iraq, Admiral Mullen was saying, in essence, that the biggest enemy was us.
Some analysts worry that the United States will not maintain influence in places like Myanmar.
Now that Congress and President Obama have slipped past the latest budget deadline with a bill that does little to address the country’s long-term debt issues – and by some measures might worsen them – the worries of the national security establishment have been reignited. Most pointedly, military and diplomatic experts wonder whether the United States is at risk of squandering its global influence.
“There’s a sense that we’ve been playing roulette with our position, and this deal does nothing to stop that,” Richard N. Haass, the president of Council on Foreign Relations, said in an interview. His coming book, “Foreign Policy Begins at Home,” is part of a wave of recent literature arguing that America’s reduced global ambitions are linked to its status as a debtor nation.
Vali Nasr, who will soon publish “The Dispensable Nation,” argues that the debt, among other economic woes, has allowed Mr. Obama and other Democrats to justify a retreat from global engagement. “It’s made it far easier to say ‘We can’t do more,’ ” said Mr. Nasr, the dean of the School of Advanced International Studies at Johns Hopkins University. “And without addressing the debt issues, it will be easier to make that argument for years to come.”
A departing senior diplomat at the State Department who requested anonymity, ruminating on the outcome of the confrontation on the fiscal crisis, said that the failure to attack the long-term debt issues would become another reason “to turn our backs on the Middle East and trim our sails on the new focus on Asia.”
That is the theme that the Chinese – who have an interest in portraying the United States as a declining power unable to manage its economy – are already promoting. “The politicians have chosen to kick the can down the road,” the state-run Xinhua news agency said in a commentary on Wednesday. “The can will never disappear,” it continued, warning that the United States was falling “into an abyss you can never come out of.”
Most evidence suggests that the country’s debt is not an immediate crisis. The deficit is expected to shrink somewhat in coming years, and even after the United States lost its AAA bond rating, foreigners have remained willing to lend the country money at very low interest rates. That is a sign of confidence in the American economy and a recognition that Europe and Asia have problems of their own.
But the aging of the population and the growth of health costs will most likely cause the deficit to grow rapidly in coming decades, meaning that the most difficult choices about taxes and spending are still ahead. Absent decisions on those issues, the government will have fewer resources and be more dependent on foreign lenders – increasingly the Chinese.
“Partly it is about resources,” Mr. Haass said, referring to the national security implications of the deficit. “But it is also about reducing your vulnerability to the machinations of currency markets and potentially hostile central bankers” who choose whether to buy American debt.
“When we appear to be dysfunctional, as we have in recent times, it makes it hard to be the model for the democratic, capitalistic model we say we want to be in the world,” he added.
History suggests that the relationship between debt and American power is a complex one, subject to differing interpretations by both economists and historians. The federal debt exceeded 100 percent of the gross domestic product at the end of World War II, but the postwar period nonetheless marked the beginning of America’s superpower status. The debt fell fairly steadily during the cold war, and it was cut to about a third of gross domestic product by the end of the Nixon administration – even as the country retreated into a post-Vietnam War funk.
On the flip side, the era now regarded as America’s “unipower moment” – the Clinton years of the mid-1990s – was also a time when the government was significantly reducing debt.
But historians point out that other factors besides debt have often driven the perception of American power. The growth of the American manufacturing behemoth in the ’50s and ’60s helped drive the nation’s rise. So much seemed at stake in the cold war that most Western countries waited for Washington to act first, regardless of its postwar deficit. In the 1990s, the collapse of the Soviet Union left the United States as the only player with global reach – and made it easier to cut defense budgets, suggesting that power drove deficits more than the reverse.
Today, the United States lacks many of those earlier advantages. With economic growth harder to come by, the only obvious way to make major cuts in the budget is to go after Social Security, Medicare and the $1 trillion national security budget – which includes the military, intelligence, diplomacy and development. And whenever the United States decides not to engage in some part of the world, countries look to a new source of investment and aid: China.
That is certainly happening in countries that are waiting for the promised “Arab Spring fund” to aid emerging democracies. “Morsi has played this very smart, asking the Chinese whether they are willing to invest in Egypt the way they have in Kenya or Uganda,” Mr. Nasr said, referring to Egypt’s president, Mohamed Morsi. “What’s happened is that we’ve been able to hide behind the economic argument to justify why we are no longer the venture capitalist of democracy,” added Mr. Nasr, who worked for Richard C. Holbrooke, the special envoy for Afghanistan and Pakistan early in the Obama administration who died in 2010.
When Mr. Obama came to office, no one made the argument about focusing on the domestic sources of American power more than the new president. He used that as an argument for ending America’s military presence in Iraq and moving to the exits in Afghanistan. “Our prosperity provides a foundation for our power,” Mr. Obama said in 2009. “It pays for our military. It underwrites our diplomacy.”
In the presidential campaign last year, he pushed back at arguments about long-term American decline. Since his re-election, his aides have as well, arguing that the restoration of growth, though slow, and exploitation of new sources of American oil and gas have set the stage for a revival over the next four years.