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America’s Debt Problem Is a National Security Problem

May 24, 2019
America’s Debt Problem Is a National Security Problem
(Mario Tama/Getty Images)

The end of the Cold War marked the United States’ progression into the sole rules-maker and -enforcer for the world. Several factors contributed to America’s ascension to this role—military power, alliances, liberal values, a large population, and a cultural willfulness (at least for a time) to be the global hegemon.

All of these factors were important. A primary reason America became the hyperpower with the ability to enforce international rules was economics. Our dynamic economy was a good reason for other countries to be allied with us. It incentivized peace. And—most importantly—our economy created enough wealth to support the most fearsome military in the history of the planet.

That was then.

Today, America is still digging out from the financial crisis of 2008. This economic shock resulted in the enactment of many irresponsible policies—including drastic cuts to the military. But military budgets can be restored, so long as there is money in the treasury. The Republican tax cut of 2017 succeeded in goosing the macro economy—but at the cost was America’s long-term fiscal solvency.

And, by total coincidence, as America’s financial indiscretions have mounted, resulting sequestration policy which caused military budget cuts, China, Russia, Iran, and Saudi Arabia have moved to challenge the international order, an order that the United States is its biggest beneficiary.

Consider this: For the first time in peacetime, America’s debt-to-GDP rate has exceeded 100 percent.

The primary reason for this explosion of debt is non-discretionary expenditures—Medicare, Medicaid, and Social Security—and continuing tax cuts.

By now everyone is familiar with the insanity of government spending under Trump: As a candidate, he promised to eliminate the national debt in 8 years. Instead, he has set new records for widening our budget deficits. And even the White House’s own (totally unrealistic) scenarios can’t envision reduction of the national debt.

It’s not hard to see where this all leads: Eventually non-discretionary spending and higher interest rates crowd out discretionary spending. And one of the easiest things to cut is military spending which is the biggest discretionary item in the budget.

This presents a problem that other nations do not face.

Most countries carry national debt. But world peace does not rely on their financial stability. If Mauritius has a debt crisis—their current debt per capita is $148,000 for every man, woman, and child—no one has to worry about the trade routes in the South China Sea.

Which is why, ultimately, fiscal responsibility is a national security issue.

The more our debt forces us to cut military spending, the further we will be pushed from our position as global hegemon, and the more other nations will attempt to challenge global norms in order to shift them in their favor. These norms include secure trade lines and the sovereignty of smaller nations. In recent years, the United States has been forced to choose between preserving these norms and risking escalation to war—for instance, with the Chinese building of artificial islands, Russia’s annexation of Crimea, and Iran’s interventions in Syria and elsewhere. American presidents have struggled with these choices.

But at least they had choices. And this fact had an inhibiting effect on aggressor nations. At some point our fiscal problems may make it so that America doesn’t even have a real option. At which point Russia, China, and other bad actors will be unbound by anything but their own ambitions.

Presidents always seem to understand how important the national debt is right before they take office. Candidate Obama called President Bush unpatriotic for significantly increasing the national debt. President Obama doubled that debt during his term. Candidate Trump kicked off his campaign by talking about the national debt. President Trump has grown it at record pace.

Deficit reduction is hard. We have grown used to a government that gives more things away with each passing year. Cutting the deficit means taking some of those benefits away. It’s telling that Candidate Trump made two contradictory promises: (1) That he would eliminate the debt in 8 years. (2) That he would not cut Medicare and Social Security, because they benefit the largest demographic of the electorate, which became his base.

There was no way to keep both of them. You can guess which one he chose to honor.

It’s hard to blame Trump. This has the been the posture of every president since the turn of the century: They make noise about the dangers of debt and then refused to reform the two programs most responsible for driving our debt.

Debt reduction is simple, but not easy. It requires less spending and more revenue. But more, it requires a great deal of political will and leadership which seems to be lacking in the two elected branches of the federal government.

At some point, someone will have to take one for the team and make the hard cuts. For people who hoped President Trump would be a reformer, it’s a disappointment that he didn’t use his straight-talk, unfiltered persona to tell these hard truths. Because maybe he could have been the president to make it work.

An America facing a debt crisis will have to make very difficult compromises and disruptive adjustments that will change the comfortable and safe world we and our allies live in, disruptive adjustments that will make it very difficult for our allies to trust us to lead them again.

Before becoming Secretary of Defense, James Mattis talked about the national debt as the greatest national security threat to the United States, including during his confirmation hearing. He was right.

Maybe the next president will heed his warning.

Shay Khatiri

Shay Khatiri studied Strategic Studies at the Johns Hopkins University School of Advanced International Studies. He’s an immigrant from Iran and writes the Substack newsletter The Russia-Iran File.