Defense Budgets and American Power
Source: Brookings Institution
In the late 1980s, as U.S. GDP growth slowed, budget deficits remained stubbornly high, and other nations’ economies outperformed that of the United States, arguments that “the Cold War is over—and Japan and Germany won” were heard frequently. Since that time, however, these U.S. allies have encountered their own challenges—Germany in reintegrating its eastern half and then helping establish the viability (and solvency) of the European Union (EU) and Euro systems; and Japan in dealing with a protracted deflating of its earlier financial bubble, combined with demographic challenges that leave its future economic prospects uncertain, at best.
Today, we are witnessing a period of even greater American economic travails, with much larger fiscal deficits. These are coupled with deep concern that less friendly powers—China in particular and perhaps Russia and others—may be poised to benefit from the relative decline of the United States specifically and the West in general. Is this assessment accurate? What do these shifting economic realities bode for the future of American power and ultimately the security of this country and its allies? Most of all, in light of these changes, to what extent can the United States mitigate the downsides of any hegemonic realignment of global power by more responsible fiscal policy? Put most sharply for the purposes of this essay, to what extent should the United States, as part of a broader strategy to reduce its deficits and strengthen its future economic prospects, accept some defense budget cuts now to preserve and enhance its power in the future?
