By John Ubaldi
Contributor, In Homeland Security
With the 2016 presidential election campaign already underway, each of the aspirants for the White House will soon articulate positions on various issues, but the one issue which threatens the U.S. the most is our economy.
A few years ago, former Chairman of the Joint Chiefs of Staff Michael Mullen, stated that the greatest threat to American national security is the enormous national debt. “I’ve said many times that I believe the single, biggest threat to our national security is our debt,” stated Admiral Mullen. This threat should also extend to the struggling U.S. economy. When Admiral Mullen made his pronouncement, the national debt was around $15 trillion; it’s currently more than $18 trillion and growing.
The New Yorker reported last month that other countries, especially Asian ones, continue to develop, while the U.S. share of global trade, gross domestic product and wealth will diminish. But that won’t necessarily reflect any failing on America’s part. It is the inevitable consequence of globalization and the development of a single worldwide market economy.
Until around 1990, many big countries had cut themselves off from global capitalism and the opportunities it provides for the transmission of capital and knowledge. Eastern Europe, China, India, and, increasingly, parts of Africa are all now active players. As a result, the U.S. economy looms less large than it once did—even as (by almost any measure) America is still number one.
America may be number one, but serious challenges remain. If left unchecked, we may encounter disastrous consequences for the future viability of this country.
The financial crash of 2008-2009 dealt the U.S. economy a serious blow—one that the nation has not yet recovered from. In many circles, experts often tout how the economy is improving, but if the unemployment report for March is any indicator, then policy makers need to address the challenges facing the U.S. economy.
The labor participation rate is the lowest since 1978, and with fewer workers in the labor force it has a direct impact on the nations entitlement programs—especially Social Security which is a pay as you go system.
A CATO Institute report last July pointed out that in a Congressional Budget Office report, interest on the debt is becoming an ever larger portion of federal spending. This year, the federal government will pay $221 billion in interest charges alone. By 2024, the amount will rise to more than $876 billion. Soon we will be paying a trillion dollars every year just for interest on the debt. By 2035, interest on the debt will be tied with Medicare as the second largest line item in the federal budget, trailing only Social Security. And this assumes that interest rates won’t return to their previous high norms (though the CBO assumes they do rise somewhat).
The interest that the nation pays on its national debt is money that is not invested back into the U.S. economy, especially in modernizing an aging national infrastructure across the country.
Last year the budget deficit was around $500 billion, an improvement from the $1.4 trillion in 2009, but this will be short lived as the CBO reports the deficit will begin to rise in 2016 and again move into the $1 trillion range around 2023.
The Brookings Institution, a progressive leaning think tank in Washington, reported that the CBO estimates the debt will be well more than 100 percent of gross domestic product by 2039 under conservative assumptions about spending and revenue. When CBO incorporates its estimates of the impact of the continuing large federal deficits on the nation’s economy, it estimates that the accumulated debt held by the public will reach an astounding 180 percent of gross domestic product by 2039.
This should have all national security strategists concerned about what effect this will have on the defense of the nation. One only has to look back in history to see that whenever policy makers want to reduce spending, it always begins with discretionary spending – which always impacts the Defense Department. The sequestration, which began in 2013, had a devastating impact on the Department of Defense’s budget, especially when faced with today’s global challenges.
The draw-down after World War II greatly impacted U.S. efforts in the early stages of the Korean War, and the deficit reductions in the 1990s, hampered military operations after the events of Sept. 11, 2001.
In the years ahead, entitlement spending will gather a greater share of the nation’s budget allocations and contribute to a greater share of the national debt if left unchecked. Non-discretionary spending has always been the third rail of politics as entitlement spending of Social Security, Medicare, and Medicaid has remained off limits to reform or adjustments, and can only be adjusted by law.
Neither Congress nor the president has shown much appetite in addressing non-discretionary spending. During the 2016 election cycle, it will be interesting to see how Republicans and Democrats handle this real and present threat to the U.S. economy.
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