Decline Inevitable The current addiction to hegemony assures that America will never regain its world power status
David P. Calleo, professor at Johns Hopkins University, 7/21/2010, Survival (American Decline revisited, http://www.informaworld.com/smpp/content~content=a924622589~db=all~jumptype=rss)
Thus, while the financial crisis has certainly made Americans fear for their economic future, it does not yet seem to have resulted in a more modest view of the country’s place in the world or a more prudent approach to military spending. Instead, an addiction to hegemonic status continues to blight the prospects for sound fiscal policy. Financing the inevitable deficits inexorably turns the dollar into an imperial instrument that threatens the world with inflation. It might perhaps be expected that Obama’s own unusual life experience would make him both willing and able to lead the country to embrace a more plural world. His eloquent speeches often suggest that he is ready to pronounce a more genuinely pluralist vision, one that permits the United State to follow a less economically extravagant foreign and security policy. The Pentagon’s recent National Security Strategy, for example, finds the president himself trying to lay out a more balanced view. But despite rhetorical bursts of presidential wisdom, the president has substantially increased America’s commitments in Afghanistan and a relentless worldwide expansion of American military engagement continues apace. Seen from the Pentagon, the globe is six military districts, each with its American commander and a massive pool of resources. In short, the unipolar vision is poisoned legacy passed on all too firmly to new generation of American leaders. Not only does it repeatedly entrap the nation in unworthy adventures, but it makes America’s morbid decline much more probable than it ought to be.
U.S. Hegemony is unsustainable 4 reasons-
1. Debt and increased money supply will collapse dollar heg and defense spending
2. the debt to GDP ratio is unsustainable crippling the U.S. budget
3. Our allies will abandon us
4. There will be increased political pressure for cutting defense spending to boost entitlements Christopher Layne (Professor in Intelligence and National Security, at Texas A&M) Summer 2009 “ The Waning of U.S. Hegemony—Myth or Reality? A Review Essay” International security Volume 34 No 1 Muse
The warning signs with respect to U.S. decline are a looming fiscal crisis and doubts about the future of the dollar as the reserve currency, both of which are linked to the fear that after recovery, the United States will face a serious inflationary threat.77 Optimists contend that once the United States recovers, [End Page 167] fears of a fiscal crisis will fade: the country faced a larger debt to GDP ratio after World War II, and yet embarked on a sustained era of growth. The postwar era, however, was a golden age of U.S. industrial and financial dominance, trade surpluses, and sustained high growth rates. The United States of 2009 is far different from the United States of 1945, however, which is why many economists believe that even in the best case, it will emerge from the current crisis with serious macroeconomic handicaps.78 Chief among these handicaps are the increase in the money supply (caused by the massive amount of dollars the Federal Reserve and Treasury have pumped into circulation to rescue the economy), and the $1 trillion plus budget deficits that the Brookings Institution and the Congressional Budget Office (CBO) project the United States will incur for at least a decade.79 When the projected deficits are bundled with the persistent U.S. current account deficit, the entitlements overhang, and the cost of two ongoing wars, there is reason to worry about the United States’ long-term fiscal stability.80 The CBO states, “Even if the recovery occurs as projected and the stimulus bill is allowed to expire, the country will face the highest debt/GDP ratio in 50 years and an increasingly urgent and unsustainable fiscal problem.”81 If the Congressional Budget Office is right, it spells trouble ahead for the dollar.As Jonathan Kirshner noted on the eve of the meltdown, the dollar’s vulnerability “presents potentially significant and underappreciated restraints upon contemporary American political and military predominance.”82 The dollar’s loss of reserve currency status would undermine U.S. dominance, and recent events have magnified concerns that predated the financial and economic crisis.83 First, the other big players in the international economy now are either [End Page 168] military rivals (China) or ambiguous “allies” (Europe) that have their own ambitions and no longer require U.S. protection from the Soviet threat. Second, the dollar faces an uncertain future because of concerns that its value will diminish over time. Because of these two factors, as Eric Helleiner notes, if the dollar experiences dramatic depreciation in the future, there is a “risk of defections generating a herd-like momentum” away fromit.84 To defend the dollar, in coming years the United States will be under increasing pressure to prevent runaway inflation through some combination of budget cuts, tax increases, and interest-rate hikes.85 Given that the last two options could choke off renewed growth, there is likely to be strong pressure to slash the federal budget. For several reasons, it will be almost impossible to make meaningful cuts in federal spending without deep reductions in defense expenditures. First, discretionary nondefense spending accounts for only about 20 percent of annual federal outlays.86 Second, there are obvious “guns or butter” choices. As Kirshner points out, with U.S. defense spending at such high absolute levels, domestic political pressure to make steep cuts in defense spending is likely to increase greatly.87 If this analysis is correct, the United States may be compelled to retract its overseas military commitments.88
Decline Inevitable Econ Crisis causes U.S. to forgo military dominance.
Friedberg, 2010(Aaron, July 21st, professor of politics at Princeton University, Implications of a Financial Crisis for U.S. – China Rivalry, Survival, 52: 4,
This transition is symbolic; higher debt payments do not necessarily have to mean downward pressure on defence spending. For a variety of reasons, however, this is likely to be the case. The combination of rising interest costs, slower growth and the long-awaited explosion in entitlement programmes due to population aging will tend to squeeze all forms of ‘discretionary spending’.21 Of these, the defence budget is the biggest and, in political terms, it may turn out to be the most vulnerable. As the United States disentangles itself from Iraq and Afghanistan, there will be calls to pocket the resulting ‘peace dividend’ and to direct more resources to urgent domestic needs. Instead of being freed to spend more on systems relevant to a possible long-term competition with China, the Defense Department is likely over the coming decade to face the necessity of making cuts in R&D and procurement.22 U.S. more interested in domestic politics than world hegemony.
Friedberg, 2010(Aaron, July 21st, professor of politics at Princeton University, Implications of a Financial Crisis for U.S. – China Rivalry, Survival, 52: 4,
These sentiments no doubt reflect the nation’s unhappy experiences over the last eight years with terrorism and insurgency, but they are also clearly a product of the recent economic downturn. Since the start of the crisis the number of Americans who see their country as the world’s leading economic power has fallen sharply (from 41% in February 2008 to 27% in November 2009), even as those who see China in this role have grown more numerous (from 30% to 44%). While ordinary citizens remain wary of China, they show little sign of wanting to compete with it for influence. To the contrary, the American people at present seem far more inclined to want to tend to their own problems than to go out into the world looking for trouble.23 What remains to be seen is whether and if so how China will try to exploit an interval of American introspection.
Decline inevitable Domestic and international pressures make US decline inevitable Alan Cafruny is Henry Bristol Professor of International Affairs at Hamilton College, ""The 'Imperial Turn' and the Future of US Hegemony: 'Terminal Decline" or Retrenchment?"", 3/26/08, http://www.allacademic.com/meta/p_mla_apa_research_citation/2/5/2/1/0/p252105_index.html
The first decade of the 21st century has not been kind to the American superpower. The meltdown in U.S. credit markets resulting from the bursting of the housing bubble has laid the global financial system “wide open to catastrophic failure” (Financial Times, 2008: p. 10). A disastrous military campaign in Iraq, a bloody and inconclusive holding action in Afghanistan, and growing threats to the super-currency status of the dollar have raised the specter of U.S. “terminal decline” (Arrighi, 2005), a European counterhegemonic project in defense of the European social model (Judt, 2005; Haseler, 2004; Leonard, 2005; Kupchan, 2003; Derrida and Habermas, 2003; Reid, 2004; McCormick, 2007), and rapid Chinese ascent. The “project for a new American century” seems to have ended almost before it was supposed to have begun.
Decline inevitable: Deficits
Budget deficit collapses US primacy Paul Kennedy, professor of history and director of International Security Studies at Yale University and is the author/editor of 19 books, including "The Rise and Fall of the Great Powers", "American Power Is on the Wane", Wall Street Journal, 1/14/09, http://online.wsj.com/article/SB123189377673479433.html
As the world stumbles from the truly horrible year of 2008 into the very scary year of 2009, there seems, on the face of it, many reasons for the foes of America to think that the world's number one power will take heavier hits than most other big nations. Those reasons will be outlined below. But let's start by noting that curious trait of human beings who, in pain themselves, seem to enjoy the fact that others are hurting even more badly. (One can almost hear some mournful Chekhovian aristocrat declare: "My estates may be damaged, Vasily, but yours are close to ruin!")So while today's Russia, China, Latin America, Japan and the Middle East may be suffering setbacks, the biggest loser is understood to be Uncle Sam. For the rest of the world, that is the grand consolation! By what logic, though, should America lose more ground in the years to come than other nations, except on the vague proposition that the taller you stand, the further you fall? The first reason, surely, is the U.S.'s truly exceptional budgetary and trade deficits. There is nothing else in the world like them in absolute measures and, even when calculated in proportion to national income, the percentages look closer to those you might expect from Iceland or some poorly run Third World economy. To my mind, the projected U.S. fiscal deficits for 2009 and beyond are scary, and I am amazed that so few congressmen recognize the fact as they collectively stampede towards the door entitled "fiscal stimulus." The planned imbalances are worrying for three reasons. The first is because the total projections have been changing so fast, always in a gloomier direction. I have never, in 40 years of reading into the economics of the Great Powers, seen the figures moved so often, and in such vast proportions. Clearly, some people do believe that Washington is simply a printing machine. The second reason all this is scary is because no one seems to be certain how usefully (or fecklessly) this money will be applied. I wish Barack Obama's administration all the best, but I am frightened by the prospect that he and his team will feel under such time pressures as to shovel out the money without adequate precautions, and that lots of it will slip into the wrong hands. The news in the press last week that lobbyists were pouring into Washington to make the case for whatever industry, interest group, or service sector they have been hired to represent made my heart sink. Printing lots of unsecured money is bad enough. Frittering it away on courtiers is worse. The third thing I'm really scared about is that we'll likely have very little money ourselves to pay for the Treasury bonds that are going to be issued, in tens of billions each month, in the years ahead. Sure, some investment firms, bruised by their irrational exuberance for equities and commodities, will take up a certain amount of Treasury issues even at a ridiculously low (or no) rate of return. But that will not cover an estimated budget deficit of $1.2 trillion in 2009. Never mind, I am told, the foreigners will pay gladly for that paper. This notion makes me queasy. In the first place, it is (without its advocates ever acknowledging it) a dreadful sign of America's relative decline. If you have seen Clint Eastwood's poignant war movie "Flags of Our Fathers," you also will have been stirred by the scenes where the three bewildered Iwo Jima veterans are dragged all over the country to beg the cheering audiences: "Buy American Bonds!" It's uncomfortable all right, but there was one massive consolation. The U.S. government, fully converted to Keynesianism, was asking its citizens to dig into their own hoarded savings to help sustain the war effort. Who else, after all, could buy? A near-bankrupt British Empire? A war-torn China? The Axis? The Soviet Union? How fortunate it was that World War II doubled U.S. GDP, and the savings were there. Today, however, our dependency upon foreign investors will approximate more and more the state of international indebtedness we historians associate with the reigns of Philip II of Spain and Louis XIV of France -- attractive propositions at first, then steadily losing glamour. It is possible that the early sales of Treasurys this year could go well, since panicked investors may prefer to buy bonds that pay nothing to shares of companies that may go bust. But certain sharp-eyed analysts of the Treasurys market already hint that the appetite for Obama-bonds is limited. Do people really think that China can buy and buy when its investments here have already been hurt, and its government can see the enormous need to invest in its own economy? If a miracle happened, and China bought most of the $1.2 trillion from us, what would our state of dependency be then? We could be looking at as large a shift in the world's financial balances as that which occurred between the British Empire and the United States between 1941 and 1945. Is everybody happy at that? Yet if foreigners show little appetite for U.S. bonds, we will soon have to push interest rates up. If I have spent so much space on America's fiscal woes, it is because I guess that its sheer depth and severity will demand most of our political attention over the next two years, and thus drive other important problems to the edges of our radar screen. It is true that the economies of Britain, Greece, Italy and a dozen other developed nations are hurting almost as badly, and that much of Africa and parts of Latin America are falling off the cliff. It is also true that the steep drop in energy prices has dealt a heavy blow to such charmless governments as Vladimir Putin's Russia, Hugo Chávez's Venezuela, and Mahmoud Ahmadinejad's Iran, with the hoped effect of curbing their mischief-making capacities. On the other hand, the data so far suggest the economies of China and India are growing (not as fast as in the past but still growing), while America's economy shrinks in absolute terms. When the dust settles on this alarming and perhaps protracted global economic crisis, we should not expect national shares of world production to be the same as in, say, 2005. Uncle Sam may have to come down a peg or two. Moreover, no three or four of those countries -- and perhaps not a dozen of them combined -- have anywhere like the staggering array of overseas military commitments and deployments that weigh upon Uncle Sam's shoulders. That brings us back, I'm sorry to say, to the "imperial overstretch" remarks I made some 20 years ago. As I suggested at that time, a strong person, balanced and muscular, can carry an impressively heavy backpack uphill for a long while. But if that person is losing strength (economic problems), and the weight of the burden remains heavy or even increases (the Bush doctrine), and the terrain becomes more difficult (rise of new Great Powers, international terrorism, failed states), then the once-strong hiker begins to slow and stumble. That is precisely when nimbler, less heavily burdened walkers get closer, draw abreast, and perhaps move ahead. Decline Inevitable: Dollar Heg Dollar hegemony is key to US primacy Rohini Hensman is an an idependent scholar, writer and activist based in India and Sri Lanka, "Averting World War III, Ending Dollar Hegemony And US Imperialism", 11/19/07, Countercurrents, http://www.stwr.org/global-financial-crisis/averting-world-war-iii-ending-dollar-hegemony-and-us-imperialism.html
If the Bush administration has decided to attack Iran militarily, is there any power on earth that can stopit if the people of the US are unable or unwilling to do so? The argument below is that if the USA’s ability to undertake imperial conquests depends on its obvious military supremacy, this in turn is ultimately based on the use of the US dollar as the world’s reserve currency. It is the dominance of the dollar that underpins US financial dominance as a whole as well as the apparently limitless spending power that allows it to keep hundreds of thousands of troops stationed all over the world. Destroy US dollar hegemony, and the “Empire” will collapse. David Ludden’s article ‘America’s Invisible Empire’(4) sums up the problem of the world’s most recent empire with remarkable clarity. Constituting itself at a time when decolonisation was well under way and other empires were disintegrating, US imperialism could never openly speak its name. Initially, it disguised itself as the defender of democracy against communism; when the Soviet Union ceased to exist, the pretext became the “war against terror”. National security and national interest were invoked as the rationale for global dominance. Ludden’s description evokes the image of US citizens (and a few others) living in a Truman Show world, a bubble of illusion created by state deception and media complicity that prevents them from being aware of the reality of empire, although everyone outside can see it only too clearly. It sounds quite credible that ‘the empire will not be undone until its reality and costs become visible to Americans’ (p.4777). However, Ludden’s claim that ‘US taxpayers and voters pay the entire cost of the US empire’ (p.4776) is less credible. If that were true, many more Americans would see their empire and oppose it; the Democrats would have put up a principled opposition to the occupation of Iraq and threatened war against Iran, and the overwhelming majority of the US electorate would have supported them. But it is the rest of the world that has been paying for the US empire: that is why it is almost invisible within the US. The history of dollar hegemony The core advantage of the US economy, the source of its financial dominance, is the peculiar role of the US currency. It is because the dollar has been for decades the world’s reserve currency that the US is able to maintain its twin deficits (fiscal and trade) and depend on the world’s generosity. It needs capital inflows of almost $4 billion from the rest of the world every working day to keep up its level of spending.(5) Its military superiority is one reason why it is unlikely ever to face an embargo, but more importantly, it has been able to live beyond its means because of US dollar hegemony. The dollar mechanism has been described extensively elsewhere,(6) this is merely a summary. The strength of the US economy after World War II enabled the US dollar, backed by gold, to become the world’s reserve currency. When the US abandoned the gold standard in 1971, the dollar remained supreme, and its position was further boosted in 1974 when the US came to an agreement with Saudi Arabia that the oil trade would be denominated in dollars.(7) Most countries in the world import oil, and it made sense for them to accumulate dollars in order to guard against oil shocks. Third World countries had even more reason to hoard dollars so as to protect their fragile economies and currencies from sudden collapse. With everyone clamouring for dollars, all the US had to do was print fiat dollars and other countries would accept them in payment for their exports. These dollars then flowed back into the US to be invested in Treasury Bonds and similar instruments, offsetting the outflow. The International Monetary Fund (IMF) and World Bank, headquartered in Washington, reinforced dollar hegemony. As a reserve currency fulfills world needs in addition to the functions of a domestic currency, the favoured country can build up debt for a protracted period on a scale that would wreck any other country’s currency. But this advantage is a double-edged sword.(8) It allowed the US economy to decline unnoticed, its fiscal and trade deficits to climb steeply: by 2006 the US trade deficit had reached $763.6 billion, the current account deficit $850 billion, the gross national debt around $9 trillion. Globalization destroyed the US as a manufacturing nation; the outsourcing of services means that even this sector is gradually being shifted out of the US.8 Only its pre-eminence in the global financial services industry remains intact.(9) And this is underpinned by US dollar hegemony. Decline Inevitable – Dollar Heg Dollar hegemony declining now Rohini Hensman is an an idependent scholar, writer and activist based in India and Sri Lanka, "Averting World War III, Ending Dollar Hegemony And US Imperialism", 11/19/07, Countercurrents, http://www.stwr.org/global-financial-crisis/averting-world-war-iii-ending-dollar-hegemony-and-us-imperialism.html
Habit and inertia might have prevailed against these political initiatives to undermine the dollar as the world’s reserve currency, if continuing US belligerence and mismanagement of its economy had not helped to push the value of the dollar lower. As the dollar steadily lost value due to the massive US debt, George Soros pulled his money out of dollar assets, and other US investors followed suit.(19) An article in China Daily on 28 September 2004 by Jiang Ruiping, the director of International Economics at the China Foreign Affairs University, pointed out that China was already losing due to the dollar slide and would lose even more if it crashed; he recommended moving out of dollars into euros and possibly also yen, as well as using its dollar reserves to stock up on oil.(20) In fact, only about 15 per cent of China’s additional foreign exchange reserves acquired in the first three quarters of 2004 were in US Treasury holdings, and OPEC countries reduced the dollar assets in their reserves from 75 to 60 per cent.(21) In July 2005, the fixed exchange rate of the yuan to the dollar was abandoned, followed closely by the Malaysian ringgit, with both currencies being allowed to float in a tight band against a basket of foreign currencies.(22) The Japanese government indicated it might diversify its reserves portfolio, and the Reserve Bank of India started buying euro-denominated securities.(23) In March 2005, the Bank for International Settlements in Basle announced that Asian central and commercial banks held only 67 per cent of their deposits in dollars in September 2004, compared with 81 per cent three years earlier; Indian banks were down from 68 to 43 per cent, while Chinese dollar holdings were down from 83 to 68 per cent, with the euro and yen being the most popular alternatives.(24) Holdings in more exotic currencies also grew rapidly, albeit from much lower levels: Chinese renminbi (yuan) by 530 per cent, Indonesian rupaiah by 283 per cent, Taiwanese dollars, Korean won and Indian rupees by 129,117 and 114 per cent respectively, presumably on the expectation that they would grow in importance.(25) By the end of 2005, euro-denominated securities had overtaken dollar-denominated ones as a medium for international investors.(26) In 2006, the Swedish central bank cut its dollar holdings from 37 per cent to 20 percent, the Russian central bank from around two-thirds to 40 per cent, while Italy switched a quarter of its foreign currency reserves from dollars to sterling; Russian President Vladimir Putin also called for a ruble-denominated oil and natural gas exchange in Russia.(27) The Gulf Cooperation Council (GCC), planning to launch a common currency in 2010, was thrown off-course when Kuwait abandoned the dollar peg in May 2007 in order not to continue importing inflation via a devaluing dollar; later, as the subprime mortgage crisis struck in the US, and the Federal Reserve cut interest rates by 0.5 per cent, Oman, Saudi Arabia and Bahrain did not cut their rates in unison, amidst reports that there was an ongoing debate on a more flexible alternative to the dollar peg in all six GCC countries.(28) Data released by the US Federal Reserve showed that between late July and early September 2007, foreign central banks reduced their holdings of US Treasury Bonds by $48 billion.(29) Meanwhile, plans to establish the Banco del Sur by seven Latin American countries (with others likely to join), in order to provide an alternative to US-dominated funds like the IMF, World Bank and Inter-American Development Bank,(30) would be an even greater threat to the dollar if they included the use of a regional currency. An interesting result of the dollar’s declining value is that while the rich turn to euro, the less wealthy, from Russia to the Maldives and Mexico to Vietnam, prefer their local currency to the dollar.(31)
Decline Inevitable: Navy