Heg sustainable indict


The US economy is strong and can’t independently tank hegemony—their authors cite policy mistakes, not systemic failure



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ECONOMY

The US economy is strong and can’t independently tank hegemony—their authors cite policy mistakes, not systemic failure


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(Dr. Simona R., researcher at IPSDMH, 2013, PROVOCARILE LUMII EUROATLANTICE, Nr. 1-2, “Global Goliath vs. Global Leader: the United States’ Difficult Choice,” Accessed 7/28/14, JC)



The critics of the declinist school generally emphasize the U.S. economy is not in danger of decline. Brooks and Wohlforth (2008: 98-147)argue the sheer massive presence of the U.S. in the global economy, the fact that its currency is the global reserve currency and the global commercial transactions currency, that the American economy acts as the global market of last resort and the largest provider of FDI to finance other economies, these are all strong arguments that other states in the system are more economically dependent on the U.S. and that Washington is in the driver seat when it comes to making and imposing the rules of the game in the international political economy. Furthermore, leading economists such as Krugman argue that economic crises and recessions are habitual in the international political economy (Krugman,2012); but altogether economic crises and recessions are not enough to cause a great power’s decline: “one recession, or even a severe economic crisis, need not mean the beginning of the end for a great power. The United States suffered deep and prolonged economic crises in the 1890s, the 1930s, and the 1970s. In each case, it rebounded in the following decade and actually ended up in a stronger position relative to other powers than before the crisis. The 1910s, the1940s, and the 1980s were all high points of American global power and influence” (Kagan,2012). The thing that most critics of the declinist school are unclear about is why the present American economic downturn is more signifi-cantly negative for the American power that previous economic downturns; declinist scholars like to emphasize that for the first time in its history the U.S. is not just faced with a recession, but it actually risks bankruptcy because of inherent structural problems – aging population, growing social security and healthcare costs, growing defense budgets, etc. – that have yet to be addres-sed. Yet as Josef Joffe (2012) clearly points out, this is the latest of a series of five American waves of relative power decline. And there does not seem to be much difference between the current situation and previous ones – except Iraq. The fact of the matter is the war in Iraq – the U.S.’ war of choice – is the only pertinent evidence the declinists bring to support their claims. According to declinist pundits, the Iraq war cost the American tax payer an estimated $1.7 trillion, increased the American foreign debt by $490billion (Blyth, 2012; Belasco, 2011) and fed the federal budget deficit. On top of it all, the U.S. has just undergone the second most severe economic crisis in its history which left a huge dent on the American economy. Even four years on, the American economy is recovering very slowly. Unemployment remains disfunctionally high; the economic output is rising, but remains unstable; reindustrialization is slow, etc. So deep are the American economic problems that in August 2011 two simultaneous caps were needed on public spending: the Budget Control Act (BCA) which placed caps on discretionary public expenditure in general, both defense and non-defense related and the sequester which placed additional caps on mandatory public spending starting January 1, 2013. However, the declinists offer little evidentiary support for their claims concerning relative power decline; indicate unclear savings from switching to a more prudent grand strategy; and rests on unknown costs of maintaining the U.S. status absent its engagement in the system as well as unclear costs of alternative grand strategies(Brooks, Ikenberry and Wohlforth, 2013a; 2013b). While it is true that the quantitative evidence of American economic power indicate a slow-down of the American economy, the declinists fail to establish a causal connection between Washington’s extensive global commitments and over-militarized policy and this particular economic downturn. By all accounts, the relocation of the American industry overseas over the last two decades cost the American economy tens of millions of jobs which amount to far more than the estimated $900 billion the U.S. spends on its global defense commitments every decade. Similarly, the Bush-era tax cuts cost the American economy and the federal budget over$3.5 trillion according to the Congressional Budget Office (CBO, 2013) estimates and this is twice the value of the Iraq war’s costs. Moreover, the CBO’s data indicates the deficit was relatively stable and sustainable during the Bush administrations varying between $120-480billion. Only in 2009, during the Obama administration, did the deficit truly quadrupled reaching $1.3 billion; and it has not come down substantially since. If the Bush administrations spent trillions of dollars in Iraq and Afghanistan, the Obama administration raised, not diminished defense spending. In fact, the defense deficit for the 2002-2012 period amounts to roughly $1.8trillion – that is, $180 billion annually on average, triple the amount the declinists claim needs to be shaved off of the defense budget to become sustainable. The data simply just don’t add up. The American defense budget has been growing larger than the 2012 dollars equivalents of the Cold War era budget; but the average defense budget between 2002-2012 was roughly 4% of GDP, which is far less than the average 7.6% of the Cold era. Therefore, arguing the U.S. is overstretched because of the wars in Iraq and Afghanistan does not seem to be supported by empirical evidence and the evidentiary support offered by the declinists is more circumstantial than causal and probatory. Granted, the wars in Afghanistan and Iraq might not have accomplished much in terms of military and political goals, but they did cost far less than the Vietnam War. Why are the first considered examples of overstretch and the latter not? As for the foreign public debt, it may be at record high levels nowadays, but it reached these levels because of a combination of political decisions, not only because of the American global security commitments. In fact, as Krugman (2012) pertinently points out, the Clinton economic plan brought the American economy on an unprece-dented growth path. Had the Bush administration maintained that plan, by 2012 economic estimates show the U.S. would have completely paid its foreign debt using the budget surpluses generated by the economic growth. And the U.S. become just as indebted to finance its $787 billion stimulus package to mitigate the effects of the economic crisis, even though the measure was tardive and insufficient. Any one of the causes invoked here are just as pertinent as the declinists prefered cause.



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