Indispensable or insolvent?

If the United States reduced its defense budget significantly, how would this affect international affairs? I raise this point because one of the primary justifications for America’s disproportionately high level of defense spending is the idea that U.S. military dominance is an essential stabilizing force in contemporary world politics. This argument has been advanced by scholars like William Wohlforth and Michael Mandelbaum, was implicit in Madeleine Albright’s infamous characterization of the United States as the "indispensable power," and runs throughout the Clinton, Bush and now Obama versions of the National Security Strategy. It is also one of those well-established verities that are rarely questioned in the American foreign policy establishment.

Given our current budget situation, however, that assumption really ought to be questioned. The United States spends more on national security than the rest of the world combined, and a substantially larger fraction of its GDP than other major powers do. According to the 2010 edition of the IISS Military Balance, in 2008 the US spent about 4.9 percent of GDP on national security, and the defense budget has grown in real terms by about 3 percent per year since 2001. By contrast, China spent about 1.4 percent of its GDP on defense, Russia 2.4% Great Britain only 2.3 percent , and German and Japan roughly 1.3 percent and 0.9 percent respectively. Lucky them.

Meanwhile, the United States has been piling up impressive amounts of red ink in recent years. The federal deficit reached 10 percent of GDP in FY2009 (the highest level since 1945), and various projections suggest that total U.S debt could reach 80 to 100 percent of GDP by FY2020. (My thanks to Gordon Adams of the Stimson Center and George Washington University, the author of an unpublished paper from which I drew these numbers). This situation led President Obama to form a bipartisan commission to study ways to reduce the federal deficit, and the president and Secretary of Defense Robert Gates have both made it clear that defense spending has to be part of that process.

No doubt defense contractors and congressional hawks will try to insulate DoD from significant cuts, but that position will be politically untenable if other sectors are being slashed. In fact, if we were really serious about trying to close the deficits mentioned above, we’d be looking at cuts similar to the "peace dividend" that accompanied the end of the Cold War. Measured in constant dollars, for example, the DoD budget fell 36 percent in constant dollars between 1985 and 1998, accompanied by comparable reductions in the active-duty force and the Pentagon’s civilian workforce.

So here’s my question: Would similar cuts today produce a dangerous shift in the structure of world politics and invite all sorts of nasty regional instability? I don’t think so. If the U.S. cut defense by 20-30 percent (an enormous reduction), it would still be devoting roughly $400 billion per year to keeping Americans safe. Our national security spending would still be six times larger than China’s, ten times larger than Russia’s and a whopping forty times larger than Iran’s. And because many militarily consequential powers are U.S. allies, its actual position is even better than those crude comparisons suggest. Thus, even seemingly draconian defense cuts would still leave the United States far stronger than any current rivals, especially if the reductions were done intelligently.

Moreover, if you look region-by-region, it’s not obvious that reductions of this magnitude would change things very much. It would have little or no effect on Europe, because a large U.S. presence isn’t central to European security any longer. There’s little danger of serious conflict in Europe these days (and certainly no potential threat that the European states can’t handle), and all that’s needed from the United States is a mostly symbolic presence to help hold NATO together and remind Europeans not to let security competition reignite on the continent. And please don’t try to tell me that Putin’s Russia poses a resurgent threat to the rest of Europe. NATO Europe spends roughly $300 billion on defense each year compared to Russia’s $40 billion; if our European allies can’t handle Russia’s not-very-impressive military, then they don’t deserve U.S. help.

I’d say much the same thing about Latin America and Africa. Although the United States will remain diplomatically engaged with both regions (and maintain various security partnerships with states in each area), it is not likely to undertake major military operations on either continent. The United States could sustain its current level of peacetime activity in both regions with a smaller force structure, and political developments in both places have been and will probably remain largely independent of the size of the U.S. military presence or the level of U.S. defense spending. Put differently, we wouldn’t be able to determine Africa’s political future even if we spent ten percent of our GDP on defense, and major cuts wouldn’t make much difference either.

The Persian Gulf is a different matter, but not as much as one might think. Once the United States is out of Iraq, it will be time to revert to its previous strategy of "offshore balancing." The United States has no need to control these oil-rich regions, it just wants to ensure that no single hostile power does. So long as the Gulf is divided, oil producers will continue to deliver oil to world markets where we can buy it. We can rely on local allies and naval power to preserve our access and influence, and keep a smaller version of the Rapid Deployment Force in reserve should the situation there deteriorate. Fortunately, none of the countries in the Gulf have significant power-projection capabilities, which will make it relatively easy to maintain a stable balance-of-power in the region. Remember: a reduced U.S. budget would still leave the U.S. far stronger than any other country in the world, and it would not herald a return to isolationism. The Gulf still matters, but we would have enough to protect our interests there, particularly if we allocated assets wisely.

East Asia is another place where dramatic U.S. reductions might have noticeable effects over time. America’s ability to act with impunity in areas very close to China (such as the Sea of Japan, or Taiwan) might begin to erode (though it would not disappear overnight), particularly if China built up its own forces rapidly and our Asian allies did nothing in response. What this means, it seems to me, is that we would want to reallocate a larger percentage of defense assets to Asia, thereby mitigating the effects of an overall budget decrease. We also want to devote more attention to nurturing security ties with other states in the region, who are increasingly concerned about China’s rise and should be willing to do more to maintain a balance in the region. Of course, they are more willing to contribute their fair share if they understand that the United States isn’t going to do it all.

And then there’s Central Asia. We’re now spending $100 billion or so each year trying to defeat the Taliban and establish a functioning state in Afghanistan, and there’s no end in sight if we persist in that quest. (That’s why you keep getting reminded that the summer 2011 "deadline" isn’t particularly firm). Getting out of Afghanistan could have significant effects there, but as I’ve noted before, I don’t think it would have particularly significant effects on U.S. security. More to the point, it is far from obvious that investing more money and lives in that mission is going to yield positive long-term effects for U.S security. In other words-and contrary to the Obama administration’s positions — it may not matter very much for us if we win or if we lose. So if reducing defense expenditures also means getting out of the nation-building business there, fine by me.

The bottom line is that major cuts in defense spending might not be nearly as destabilizing as many people think. I’m not saying it would have no effects, but they would be less dramatic than we often assume and in some cases might even be salutary. Don’t forget that continuing to live beyond our means carries ample risks too, as well as sizeable opportunity costs. And if you don’t believe me, just ask our last five-star general.

Of course, this blog post is hardly a systematic study of this issue, and it’s possible that I’m being overly sanguine. The question of how reduced U.S. defense budget would affect world politics cries out for systematic analysis, and it is precisely the sort of topic that our intelligence services ought to be tasked with evaluating, preferably under the guidance of a smart and independent-minded director.

Because there tens of billions of dollars at stake, we know the answers we are likely to get from the Pentagon, or from think tanks that depend on defense contractors for their livelihood. Ideally, an effort to address this question would draw upon the knowledge and expertise of academic experts, journalists with regional expertise, and some members of our diplomatic corps as well.

Disclaimer: I don’t for one second believe that we are going to see defense cuts of the sorts imagined here under the Obama administration, though I think downward pressure will be hard to resist. When that happens, doomsayers will undoubtedly predict disaster if the budget is held flat. If my analysis is right and even drastic cuts would have little impact, then it follows that holding the budget flat would have no negative geopolitical effects at all.

P.S,: I’m told that the Gordon Adams paper referenced above will be available shortly on one of the Stimson Center’s blogs, here. This is a very useful site from which you can learn a lot.