By Robert Kagan
In the interest of national security, and the preservation of the world order the United States has upheld and benefited from since World War II, Republicans and Democrats must make the necessary compromises and agree on a deal to address the nation’s fiscal crisis in both the near and the long term.
I am not an economist or a budget analyst, so I don’t presume to know exactly what a “grand bargain” should look like. It seems pretty obvious that a compromise will require both tax reform, including if necessary some tax increases, and entitlement reform, since those programs are the biggest driver of the fiscal crisis. What I do know, as a national security analyst, is that our continuing failure to address the crisis in a way that makes possible a return to stable economic growth has become a serious foreign policy problem.
In a world that still looks to U.S. leadership on many issues, despite what some say, our utter dysfunction on matters involving the basic health of our economy does not inspire confidence. Nor will the United States act with confidence abroad while we are unable to address our problems at home. It is no accident that all the misguided talk of a “post-American world” came after the financial crisis exploded.
A principal victim in the absence of a deal to address the fiscal crisis has been and will continue to be the national security budget. Republicans and Democrats alike have been prepared to see hundreds of billions of dollars cut from the defense budget, with even more cuts coming if Congress fails to avoid the automatic “sequestration.” The already shrunken foreign-aid budget is also being cut at a time when, in the Middle East, for instance, we need to be spending more, not less, to support stable economies as the basis for democratic reform.
It would be one thing if the world were kindly affording us a timeout, a nice period of placidity in international affairs, while we get our house in order. But the world is not cooperating. The international environment is becoming more, not less, challenging. Iran continues to move closer to obtaining a nuclear weapon, and the prospect of a conflict cannot be dismissed. The outcome of the Arab revolutions remains uncertain. The tumult in Syria threatens to embroil the entire region. The future of Afghanistan and nuclear-armed Pakistan remains worrying. Terrorists continue to expand their efforts in the Middle East and Africa. China’s military is growing, and at a time of changing leadership some forces in the Chinese system are pushing for greater assertiveness in the South China Sea and elsewhere. Even absent some new crisis, both Leon Panetta and Bob Gates have warned of the catastrophic consequences of deeper defense cuts to the nation’s security.
We need to dispel the illusion that cuts to the national security budget really save us money. Some Republicans who oppose compromising on taxes make the same miscalculation as Democrats who favor deeper defense cuts. They think that if the United States would simply scale back its role in the world, it could save money and make raising further revenue unnecessary. This is a faulty assumption. The present global economic and political order, which has provided the environment in which the United States has grown and prospered for decades, is built on and around American power and influence. Were the United States to cease playing its role in upholding this order, were we to retreat from East Asia or to back away from the challenge posed by a nuclear Iran, the result could only be global instability. From a purely economic perspective, it would be far more costly to restore order and stability – both essential to a prosperous global economy – than it would be to sustain it. Indeed, if there is no deal on the fiscal cliff and the long-term fiscal crisis because Republicans and Democrats won’t make a sensible compromise on raising revenue and reforming entitlements, and the result is further cuts in the defense and foreign affairs budgets, then the cost – including the dollar cost – could make the present budget arguments look absurdly petty.
The point is, none of the elements of a deal to address the fiscal crisis – not taxes or entitlements or anything else – can be considered in isolation. We should have learned the lesson of the 1920s and 1930s, another period when a global economic crisis was inconveniently accompanied by an unsettled and dangerous geopolitical situation. Then, American leaders concentrated on trying to address their domestic economic problems, somehow imagining these could be separated from the broader international economic and political environment. The United States actively retreated from global involvement to focus on what these days we would call “nation-building at home.” The result was disastrous both at home and abroad.
The United States is far more deeply integrated in the global economy than it was 80 years ago, and the well-being of the global economy is far more dependent on the security and stability that U.S. power and influence provide. The world won’t stand still while Americans fight these political battles. And it won’t be forgiving of decisions that weaken our ability to defend the international order in which Americans have for so long prospered.