The Agenda

Will Defense Budget Cuts Lead to American Decline?

William Kristol believes that the defense cuts that are (sort of) part of the debt deal are a recipe for American decline:

Three stark conclusions:

1. If this deal governs policy for the next decade, it will be hard for the U.S. to remain the sole superpower.

2. This is the best day the Chinese have ever had.

3. This deal embodies a vision of America in decline.

A few thoughts:

(1) (a) I tend to think that our sole superpower status rests on economic fundamentals. As other economies grow, their capacity for increasing defense expenditures will by definition grow as well. Extrapolating current growth trends into the future — always a dicey proposition — implies that the only way for us to remain the sole superpower would be to wage a preventive war against the largest of the world’s fast-growing economies.

(b) There is, of course, another model, in which our sole superpower status rests on the extent to which our defense expenditures surpass the combined defense expenditures of all other states. The unipolar stability hypothesis, with which I’m sympathetic, suggests that a sharp decline in U.S. defense expenditures might increase the amount of security competition, particularly in industrial Eurasia. This could translate into regional arms races and spiraling tension.

But how sharp a decline would we need to see before this kind of security competition breaks out? I’d suggest that other would-be great powers are reluctant to step up to the plate, and that the security environment would have to deteriorate rather a lot before they’d do so. Europe is facing a demographic crisis and, in the near term, severe fiscal challenges in the periphery that are already prompting deep defense cuts.

(c) So the action is presumably in the Gulf region and in East Asia. In the Gulf, the U.S. footprint is likely to decline for a number of reasons, including Iraq’s reluctance to embrace a long-term U.S. presence. One can imagine a rapprochement of some kind between Iraq and Iran, which certainly sounds like bad news to me, assuming we don’t seen profound change in Iran. If Iraq chooses to resist Iran’s effort to expand its influence in the region, there is good reason to believe that it will have the resources (flowing from its hydrocarbon resources) to do so, in partnership with the U.S. and regional allies. If Iraq does not, I’m not sure there’s much we can do about it, even with the aid of the other Gulf states. The real question here is a diplomatic question — if Iraq is the swing state, will it or won’t it swing our way? I suppose it’s possible that Iraq will be more likely to swing our way if we are the “strong horse” relative to Iran, or perhaps a coalition of Iran and China or Iran and Russia (which is in a state of demographic collapse) or both. Will the defense cuts we’re talking about really tip things one way or the other?   

I think that Bill is really interested in East Asia, which we’ll discuss next.

(2) (a) Are the Chinese really, really excited about deep defense cuts in the U.S.? The U.S. sharply expanded its regional influence in Central Asia — China’s backyard — in the aftermath of the 9/11 terror attacks, and the Chinese were pretty damn quiescent considering. The Chinese have also been fairly friendly to the U.S. presence in Japan, in part out of an ingrained desire to restrain a perceived latent threat of large-scale Japanese rearmament. It is certainly true that the Chinese have been investing in countermeasures, e.g., missile systems designed to overwhelm our theater-based missile defense and other tools designed to more effectively coerce the Taiwanese government, etc. And they’ve also invested heavily in building a blue-water navy, which isn’t crazy in light of their dependence on the flow of hydrocarbons from the Gulf region. 

(b) Let’s accept that the Chinese really are aching to take on a larger strategic role. That is, they don’t want to outsource security to us — because doing so entails a high exposure to the risk that we’ll suddenly stop being more or less amenable to growing Chinese economic power — and they want to buy a lot of self-insurance in a way that will cause more friction with its immediate neighbors. This could prompt its neighbors and would-be regional rivals to ramp up defense expenditures, and at least some of these countries have deep pockets. This is definitely a risky strategy for the Chinese.

Of course, China could try to “Finlandize” its neighbors, i.e., it could raise its defense expenditures to the point where states in East and Southeast Asia decide that it is too expensive and too risky to bother balancing against Chinese power. There is presumably a window of time between when China can Finlandize, say, Japan and when we’re going to start slicing into the defense budget. We can course correct. 

And I have to say, I have a hard time imagining India getting Finlandized. 

(c) If you were a Chinese military official hostile to U.S. interests, would you be more concerned about a United States that is economically stagnant due to a crushing spending and tax burden but that devotes a fairly big share of GDP to defense expenditures? Or would you be more concerned about a rich, dynamic United States that is growing pretty fast for a mature economy and that devotes a somewhat smaller share of of a much bigger GDP to defense expenditures? 

I have to say, I’d be more freaked out about the latter than the former because the former United States has a great deal more latent power than it can draw upon when necessary. Granted, this “latent power” might not matter all that much in an immediate crisis, but it shouldn’t be neglected. 

Now, we might have a basic disagreement here: is a heavy spending burden really a growth-dampening problem for an economy like hours? Is military spending uniquely unlikely to dampen growth as opposed to other kinds of spending? Many of my friends believe that health entitlements are so much bigger a deal than defense expenditures that defense expenditures shouldn’t really be on the table. I’m not unsympathetic to this view — health entitlements really are central — but I hate the idea of wasteful spending in any domain, and I’m not convinced that we can’t both increase the lethality and reach of our military and increase its cost-effectiveness (by, for example, relying more heavily on armed drones, in the air and on the ground).

I worry that Bill is engaging in the same zero-sum thinking in defense that our interlocutors on the left engage in when they talk about Medicare reform. Part of the premise of premium support is that we can both reduce health safety net expenditures and actually improve the cost and quality of medical care on an economy-wide basis by changing the incentive structure. Cutting spending doesn’t have to mean making everyone worse off. Spending discipline can actually improve the quality of the service in question. With the right institutional reforms, I think this can be true in defense as well as in the various domestic silos. 

(3) I don’t think that cutting defense expenditures as part of a broader fiscal consolidation embodies a vision of an America in decline. I associate the view that a smaller government and disinvestment means American decline with the left. Retrenchment on the part of government can create more space for private actors to solve problems. This, admittedly, doesn’t quite apply to defense, though reductions in national security spending could mean greater reliance on firms like Palantir Technologies that seem to outperform our traditional national security bureaucracies at lower cost. And somewhat controversially, I’ve already described my openness to an increasing reliance on private military companies. 

I’d love to hear your thoughts on this subject — I’m particularly curious about what Michael Auslin and Daniel Blumenthal and Thomas Donnelly of AEI think, as I imagine they’d be somewhat sympathetic to Bill’s view. 

Reihan Salam is president of the Manhattan Institute and a contributing editor of National Review.

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