The maelstrom surrounding budget cuts that has engulfed the United States over the last twelve months seems no nearer to reaching a satisfactory conclusion.
The U.S. Congressional House and Senate currently spar over contending legislation. Each has produced a version that bears close resemblance to that which predated last year’s presidential and congressional elections. The Republicans, led by House Republican and former vice presidential candidate Paul Ryan, have offered a version that stresses tax cuts and slashes public services.
The Democrats, led by Harry Reid in the Senate, emphasize the closing of tax loopholes that will effectively raise taxes for the richest Americans. The Democrats may have retained the presidency and won the popular vote in the House, but nothing’s changed and lots of negotiations lie ahead in reconciling the two versions.
Analysts have focused much of their attention on the economic consequences of any failure to reach a suitable compromise. Infrastructure programs and public services will be cut. Recipients of many forms of government assistance programs will be denied them; government employees will be fired, receive reduced salaries, or be temporarily laid off from work without pay (a situation Americans term being “furloughed”). The army of consultants and subcontractors hired by the US government will have their work suspended or cancelled. Health services of all kinds that rely on government subsidies will be denied, and even air traffic will slow, if not grind to halt, with no controllers to direct traffic at many small airports.
A strong consensus among economists and policy wonks is that the slow and fragile American economic recovery, five years after the 2008 crisis, will be endangered by any prolonged government shutdown. Unemployment, “down” to 7.7%, may begin to rise again.
Yet an abiding question concerns the effect of these domestic convulsions on America’s global standing, and its capacity to pursue its foreign policy goals. The most obvious effect of the budget wrangling so far was the unprecedented downgrading of the United States’ credit rating by Standard and Poors in August of 2011.
Yet this proved more symbolic than tangible. The United States has continued to borrow from foreign investors in unprecedented amounts, The Dow Jones stock market index has reached new highs, unemployment has slowly declined and its domestic housing market has roared back to life. Foreign investors clearly don’t treat an American budget crisis the way they do a Cypriot one.
The more obvious issue concerns the possibility of cuts in the defense budget, and their effects on America’s military capabilities. Senior Republicans want to preserve the military budget intact. Their position presents a paradox: They are the traditional proponents of strong national defence. But as advocates of deep and prolonged budget cuts to a variety of social services (what Americans generally refer to as “entitlement programmes”), it is hard for them to also argue that there is something special about the defense budget as the wars in Afghanistan and Iraq wind down. That apparent contradiction hasn’t stopped Republicans from trying. While the issue of foreign policy was relegated to the sidelines at last year’s Republican presidential convention in Tampa, there has been a trumpet call by them to defend the defence budget in the current session of Congress.
Democrats have been less forthright on the issue, concerned that they not appear weak on defence. Nonetheless, invoking the opinions of three successive Secretaries of Defence – Robert Gates, a Republican himself, Leon Panetta and now Chuck Hagel – they’ve argued that that the defense budget isn’t sacrosanct and cuts need to be made.
From a nonpartisan perspective, it is hard to argue that the US defence budget is anything but bloated. Between 2001 and 2010 the US defense budget increased by a whopping 128 percent. In 2003, the US spent US$417 billion on defense, 47 percent of the world total. By 2010 the US defense budget stood at US$693 billion and still accounted for over 43 percent of world defense spending. It still spends that percentage today. In absolute terms this figure was more than twice the total of Japan, Russia, the United Kingdom, Germany and China combined.
America’s nearest competitor is China. Estimates of China’s expenditures on arms vary wildly – with the US Department of Defence, not surprisingly, having the highest estimate. But reasonable figures suggest that China accounts for about 10% of all global expenditures. Experts such as Tai Ming Cheung at the University of California San Diego report that China’s efforts to create sophisticated military technologies have not been successful. America spends the most and is by far the best equipped.
This trend towards increased expenditures has continued during the Obama Presidency. By 2012 the U.S. defense budget stood at over US$700 billion and climbed to an estimated figure of over $868 billion if the cost of foreign wars, homeland security and other related expenses are included in the calculation. The military budget accounts for 4.7% of US GDP. China and Europe spend less than half of that proportion.
The period since the end of the Cold War has been unique in US history. After every other major war, there was a “build down” in the US defence budget. In this case the opposite has occurred. As a result, America is a giant in terms of military expenditures and even its nearest competitors are dwarves. The US has unprecedented military reach and on land, sea and air.
The chances are that the military budget will survive the vagaries of the budget process relatively unscathed. Defence contractors have sophisticated lobbyists who assiduously work the halls of Congress. Senior congressmen on several key appropriations committees have large numbers of constituents whose livelihoods rely on that budget, and selling a muscular defence policy is always good politics in America. Even what in other circumstances would be regarded as significant percentage cuts in another part of the budget could be relatively easily endured in this case. But one of the most expensive components of a defence budget is people. So where will there be downsizing or base closures around the globe in any cuts do go into effect?
What’s clear from the Obama Administration’s rhetoric and behavior is that Asia will remain a priority. His “pivot to Asia”, clearly intended to send a signal to America’s regional allies and the Chinese alike, has been accompanied by a shift in defence spending. While analysts have discussed where the budget may be cut, creating the base in Australia, maintaining them in Japan, or spending more money on air and sea power projection in the region has not been discussed as likely candidates for the chopping block. Chalmers Johnson, the late noted American scholar on Asia, argued in one of his last books that the US had over 700 military bases and installations in the world. It currently would count those in Asia as among its most important.
Next – and close - in terms of priority is maintaining the US presence in the Middle East and Africa because of the continued threat posed by Al Qaeda. America’s one African base, in Djibouti, is worth its weight in gold to the US. Indeed, America couldn’t even find an African country willing to host Africom, its new African Central Command headquarters, and had to eventually locate it in Stuttgart in Germany. Concerns about Jihadism, reliable oil supplies, policing piracy and Iran’s pursuit of a nuclear weapon will keep American troops in Saudi Arabia.
Europe presents a contrast, and the most likely candidate for force reductions. Americans have bitterly complained for decades that Europeans don’t “pull their weight” when it comes to defence expenditure and it’s true. European countries slashed their defence budgets in the 1990s. So although, for example, it was the French and British who took the glory in the Libyan intervention, it was the Americans who provided the logistics, the technology for communications and intelligence, and fired most of the missiles that decimated Colonel Ghaddafi’s forces.
The same is occurring in Mali today. If anything, American bases in Europe are likely to be downsized. It will entail maintaining a troop presence for rapid reaction purposes and to support European operations, but not in sufficient numbers to fight a conventional war. For Republicans at home, used to criticizing what they characterize as free loading and pacifist Europeans, this makes for good electoral politics.
At the end of the day, America’s military budget cuts will likely be small, as will the effects on its capacity to project power around the globe. Its culture and politics would rather endure cuts to public services at home than its ability to project power abroad. Schools may be closing in America’s cities in record numbers, but its bases will not. That may too be historically unprecedented.