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A Malaise Election

Author: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics and Director of the Maurice R. Greenberg Center for Geoeconomic Studies
February 11, 2008
Washington Post

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Now that John McCain has all but clinched the Republican nomination, we can see the outline of this fall’s election. McCain will be the national security candidate, more fluent on military readiness than on mortgage troubles or health care; meanwhile, his Democratic opponent will campaign on some version of that line from 1992—“It’s the economy, stupid.” And behind this simple juxtaposition, a larger debate is likely to unfold. For the United States is entering another Kennedy moment.

That’s not John Kennedy, nor Bobby, Caroline or Ted; we’re talking Paul Kennedy, the historian. In 1987, this Yale professor produced the surprise bestseller of the times: a 600-page tome titled “The Rise and Fall of the Great Powers,” whose warning about imperial overstretch captured the attention of an anxious nation. Americans worried about huge budget deficits and the costs of Ronald Reagan’s military buildup. A few weeks before the publication of Kennedy’s book, a new form of financial engineering known as portfolio insurance had backfired, exacerbating the crash on Wall Street.

The malaise that Kennedy tapped into lasted for perhaps half a dozen years, and it mattered in the 1992 election. When Bill Clinton’s campaign used the expression, “It’s the economy, stupid,” it was not merely promising to address voters’ kitchen-table concerns. It was promising to shore up U.S. economic vitality, without which America’s international engagement would not be sustainable. “The Cold War is over, and Japan and Germany won,” the commentariat complained. Clinton positioned himself as the candidate who would do something about that.

Fast-forward to 2008, and the ingredients of a new malaise have come together. Financial engineering has again gone wrong; for portfolio insurance, substitute securitized subprime mortgages. The budget deficit is again swelling, and the entitlement challenge is worse than ever. Defense spending is rising and may have to rise some more to rebuild an overstretched military. “The Iraq war is not yet over, but China and the petro-states have already won,” goes this year’s version of that post-Cold War lament. Whether or not the next Democratic nominee is named Clinton, he or she is sure to seize upon the sentiment.

If 1992 was the last malaise election, what are the lessons for this one? Putting the economy ahead of national security worked for Bill Clinton, and the formula looks even better this time. Far more than in the 1990s, voters suspect that U.S. global engagement underpins a world they do not like: Living standards for most Americans are stagnant, and although globalization is not the main culprit, it is certainly the main scapegoat. McCain seems to want to frame this election as a choice between experience and naiveté on national security. But exit polls suggest voters care less about national security than they do economic security.

A more subtle question is whether indulging the voters is good policy. After the failures of the Bush era, reasonable people contend that the United States should take a foreign policy timeout. The nation needs time to rebuild its military and tackle problems in its economy, especially entitlements. And it needs to stop forcing its agenda on a reluctant and resentful world—at least until other nations remember that the only thing worse than an overassertive hyperpower is an underassertive one.

So the case for a foreign policy timeout seems plausible. Professor Kennedy’s warning of imperial overstretch is not idle: The political gravity that prevents America from being the flawless hegemon for which internationalists yearn may be precisely what allows it to conserve its strength and persevere as a flawed hegemon. But there is one big trouble with the time-outers’ argument. The moment the United States decides to take a break, the challenges it faces will get nastier.

There is an unnatural quality to world order. It takes a constant supply of sticks and carrots to curb the destructive instincts of self-interested nations, and the most powerful country in the world supplies the most influential threats and blandishments. If the United States signals disengagement from the Israel-Palestine conflict, moderates will lose courage, and the conflict will worsen. If it gives up on Afghanistan, NATO’s European members will abandon what will then be perceived as a futile mission. If it withdraws precipitously from Iraq, extremists everywhere will conclude that sowing anti-American mayhem can be a winning strategy.

In the end, 1992 offers a dual lesson. It shows that, in a Paul Kennedy moment, a foreign policy candidate faces long odds: This is the lesson for the McCain camp. But it also shows that downgrading foreign policy is not a sustainable option. In his first year in office, Bill Clinton subordinated the U.S.-Japan military alliance to trade arguments; he threatened China with a loss of trade access; and he stood aloof from the Balkans. But within a couple of years he had reversed himself on all three counts. He had promised a foreign policy timeout. But reality did not indulge him.

This article appears in full on CFR.org by permission of its original publisher. It was originally available here.

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