Guns, Butter, and a Bag of Chips
The greatest threat to America’s primacy in the world comes not from its overseas commitments, explains the historian Niall Ferguson in his smart forthcoming book “Colossus”: “It is the result of America’s chronically unbalanced domestic finances.” The mounting federal budget deficits that now stretch out as far as the eye can see will meanÃ¢€”if history is any guideÃ¢€”sharp cutbacks in American military and foreign-affairs spending. We will see a forced retreat of America’s foreign policy similar to the years after the Vietnam WarÃ¢€”only the cuts this time are likely to be much, much deeper and the resulting chaos far greater.
My initial thought was there was no way Zakaria would say something that insipid and that he was going to refute Ferguson later on. He does not. Indeed, he compounds it concluding,
At some point denial will stop working, the markets will react, interest rates will rise and the budget will be under severe pressure. Then Congress will begin searching for cuts, and spending on foreign affairs, even military spending, will get the ax. And America’s grand new engagement in the world will turn out to be short-lived indeed.
Matt’s chief quibble is to note that we had balanced budgets during part of the Clinton administration which, while true, was a function chiefly of the .com bubble and had, so far as I can tell, zero impact on our defense budget. Kevin calls Zakaria’s comments “nonsensical” and notes, correctly,
[T]he fact is that America has never cut back on defense because of domestic spending. We cut back after World War II because the war was over. We cut back after Vietnam because the war was over. We cut back after the Cold War because the war was over. Domestic spending had nothing to do with it.
Back in the days when conservative Republicans were balanced budget hawks, Ronald Reagan would say that government, like a family, must live within its means and balance its budget. It sounded reasonable to me then. But I was 14 years old. All that’s asked of families is that they pay the bills when they come in. It’s not smart to buy perishable luxuries on credit–it would be inadvisable to take the family on vacation using a high interest credit card–but families routinely go into debt to buy a house, a car, and other big ticket items that they need. If an emergency comes up–mom needs an operation, the pipes burst, the transmission dies–then most families just go into debt and figure out how to make ends meet after the crisis is over.
By the same token, government quite reasonably takes on debt to pay for long-term investments in infrastructure, security, and to even out the effects of the business cycle. Ronald Reagan spent us into then-record deficits–which none of us thought we’d see paid off in our lifetimes–in order to defeat the Soviets. In hindsight, it’s possible that we spent more than we needed to. But the fact remains that the mission got accomplished and the benefits are accruing to generations to come; it’s not unreasonable that they are asked to pay some of the costs.
We’re currently fighting a global war on terrorists that most of us think is worth fighting. We’re also fighting back an insurgency in Iraq in a noble if incredibly controversial effort to create something like democratic government in what was once the world’s most brutal tyranny. Unfortunately, these events came right in the middle of mild recession followed by a slower-than-anticipated recovery. That’s a bad combination and going into debt was necessary. Some–including Kevin and Matt–argue that cutting taxes during such a time was unwise; I’d argue that stimulating the economy was was necessary. But we’d be undertaking massive debt regardless.
The United States has now, and will have as far as the eye can see, easily the largest economy on the planet. And that hegemony seems much more likely to increase rather than to recede. So, if we achieve a consensus that foreign policy on a grand scale is what we need, that’s what we’ll have. If we have to go further into debt to pay for it, then we’ll do just that. We can afford to make the payments on the loans.