- - Wednesday, March 9, 2011

ANALYSIS/OPINION:

Are America’s best days over?

The doomsayers are everywhere. Some say we’re suffering from what they call “imperial overstretch” — an overly committed military that’s bankrupting the country. Others think we’re afflicted less with imperial than “entitlements overstretch” — unsustainable social spending and debt. Still others see China rising and surpassing America by 2025.

All these prognosticators share one premise: They see history (and America’s decline) as inevitable. They’re resigned to, or actually pleased with, the prospect of America’s diminished role abroad.


This “declinist” camp includes liberals, libertarians and so called “realists,” but for different reasons. Liberals think the less we do overseas the more we can do at home. Libertarians believe government should do less at home and abroad. Realists are resigned to whatever happens, not wanting to apply much of an effort to change the outcome.

But there’s a problem with their unifying premise: It’s wrong. If America declines, it will be by choice. There is no ironclad law of historical determinism.

Take the idea of “imperial overstretch.” Yale historian Paul Kennedy trumpeted it in the 1980s, arguing that deficit spending on military buildups caused the great power failures of history. He clearly was trying to draw a comparison to President Reagan’s military buildup and not so subtly suggesting that America was headed for the same fate because of it.

It didn’t turn out that way. Reagan’s buildup did not bring economic disaster. His policies unleashed the two longest decades of economic growth in American history.And the armed forces he created delivered military victories in the Persian Gulf and Iraq wars. The jury may still be out on Afghanistan, but if we fail there it will be because we pulled out for primarily political, not economic, reasons.

Military spending is not what’s causing our economic problems. Today we spend nearly 4.9 percent of gross domestic product on defense programs, including overseas operations. This compares with 37.8 percent during World War II, 10.2 percent during the height of the Cold War and 6.2 percent as recently as 1986.

It’s hard to see how military spending is driving us into the ground when it is proportionately so much less than what it was in the past. For Mr. Kennedy’s thesis to be true, we would have to be spending much more on defense. The truth is entitlement spending, not including interest on the debt, consumes about 10 percent of GDP and more than 43 percent of the federal budget. Defense outlays are less than half of that.

Which leads me to Michael Mandelbaum’s idea of “entitlement overstretch.” By this, he means that America is declining because of too many promises for future transfer payments in Social Security, Medicare, Medicaid and other health care entitlements.

Yet Mr. Mandelbaum thinks it’s not entitlement spending that needs restraining, rather it’s America’s role as world leader. In his view of America as the “frugal superpower,” its leaders will refrain from many of the global activities it engaged in after the Cold War. It will conduct far fewer humanitarian operations like in Somalia and the Balkans and military operations like in Iraq and Afghanistan. Even peaceful interventions would be viewed as unaffordable.

Here’s the problem: We could eliminate the entire budget for the Department of Defense, but absent entitlement reform, we would still run out of money for any discretionary spending by 2035. Mr. Mandelbaum is right that entitlement spending — unchecked — will some day ruin America’s ability to play a global role; but he’s wrong on two other counts: 1) that merely cutting back on overseas operations would eliminate or even ameliorate the debt problem; and 2) that nothing can be done to restrain social spending.

As my colleague Alison Fraser argues in a recent paper, we can fix the federal budget by fully funding defense, keeping taxes low, fixing the budget process and reforming entitlements.That means, e.g., repealing Obamacare, taking entitlement spending off autopilot and channeling assistance to those most in need. All that has been missing is political will.

Lastly, what about China? Will it, as some predict, surpass us by 2025, come what may? Will we really be outperformed by an authoritarian regime with serious economic and political problems of its own?

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