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Deficits and Foreign Policy Dilemmas

Author: Robert McMahon, Managing Editor
November 18, 2010


Debate over how to slash the towering U.S. budget deficit is well underway in the run-up to the December 1 report of President Barack Obama's deficit-reduction commission. New reports issued independently by commission members outline an urgent need for broad and deep cutbacks on long-sacred domestic and foreign policy programs.  The stark measures are warranted, each report stressed, because of the national security consequences of inadequate action.

Last week's proposal from Democrat Erskine Bowles and Republican former Sen. Alan Simpson called for a sweeping overhaul of tax and spending plans. They began with a warning that the United States could face $1 trillion in debt interest payments alone by 2020 and that "our country will not be able to compete without a plan to get this crushing debt burden off our back." The report released November 17 by the Bipartisan Policy Center, chaired by Alice Rivlin, a former White House budget director and Republican former Sen. Pete Domenici, echoed this theme, saying inaction on fiscal reform would increase U.S. "dependence on China and other foreign lenders, diminishing our living standards, raising risks of an economic crisis, and reducing America to a second-rate power."

Defense spending -- at roughly $700 billion equal to military spending of all other countries combined -- comes in for some strict cutting. Bowles-Simpson calls for cuts of $100 billion in 2015, achieved through measures including closing overseas bases, pay freezes, and cuts to programs like the F-35 Joint Strike Fighters. The Rivlin-Domenici Task Force urges a defense spending freeze at 2011 levels for five years. Rep. Jan Schakowsky (D-IL), another member of the presidential deficit commission, this week produced a plan that included $110 billion in defense cuts in 2015.

U.S. Defense Secretary Robert Gates has criticized Bowles-Simpson as dangerous for national security, saying the proposed cuts are "math, not strategy (WSJ)." Rep. Buck McKeon of California, set to be Republican chairman of the House Armed Services Committee in the next Congress, said that proposed defense cuts would weaken the country (NPR) and "should be a red line for all Americans."

Yet CFR President Richard N. Haass and Roger C. Altman in a new Foreign Affairs essay challenge the premise of war spending. In Afghanistan in particular, they write, the estimated $100 billion a year it costs to maintain a counterinsurgency force of 100,000 troops cannot and should not be maintained in the coming period of austerity and that a more modest counterterrorism approach should be pursued. Further complicating matters for U.S. planners in Afghanistan is the ongoing fiscal retrenchment among NATO partners (FT), placing an ever greater burden on the U.S.-led war effort. Meanwhile, Derek Thompson in points to several Republican senators, including John McCain, Tom Coburn, and newcomer Rand Paul, who would be inclined to support robust defense cuts.

The proposed cuts are sure to open legislative battles beyond defense issues. Some of the recommendations to date include cutting the foreign aid budget by 10 percent in 2015, cutting the State Department's overseas budget by 10 percent by 2015, raising revenues by closing tax loopholes for companies that send jobs overseas, and eliminating billions of dollars in agriculture subsidies. Add to that a fractious Congress that CFR's Kay King describes in a new report as over-politicized and dysfunctional, and the stage appears set for a challenging legislative debate beyond December 1.

Additional Analysis:

Douglas J. Besharov and Douglas M. Call note in the Wilson Quarterly that Washington is not alone in embarking on austerity efforts but is now part of a global competition to develop more economically efficient tax and social welfare policies while maintaining an effective social safety net.

Six scholars from the Brookings Institution weigh the deficit reduction proposals.

To give a sense of the scale and challenges facing lawmakers, the New York Times invites readers to help solve the deficit puzzle by casting votes for different budget cutting areas.


This CFR Geographics blog post traces the increasing U.S. share of global military spending since 1990 and an inherent underlying weakness.

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