Several years ago, when its national debt was just $20 trillion, I wrote an essay arguing America’s weak finances would lead it to withdraw its military from the Muslim world, creating a vacuum China would fill. The underlying premise of my argument was that America’s growing debt would force its leaders to trim military spending and the Muslim world, not being vital to its core interests, would be the first to witness the beginning of the end of the Pax Americana, a retrenchment necessitated by being in a nearly continuous state of either hot, cold, or asymmetrical war for most of the past 80 years.
America’s military presence in the region is still going strong today. It maintains a permanent naval presence in the Gulf and has troops scattered throughout the region. However, its attempts to build an anti-Iranian military coalition between Israel and the Arab world as an eventual substitute for its own forces and the recent rapprochement between Iran and Saudi Arabia brokered by China suggests I was on the right track. Both developments support the argument that its role in the region is diminishing and portend trends that will only accelerate with time. As such, I am still confident in my thesis. But I was wrong about one crucial assumption.
I implicitly believed America’s leaders would react rationally. That they would see the massive pile of debt their wasteful spending and imperial wars of conquest have led to and develop a rational plan to fix the situation. I was wrong.
As evidence, I offer the recent deal reached between the Biden Administration and the Republican led Congress to raise America’s debt ceiling to accommodate a sum that has now grown to $31.4 trillion. There are two aspects of this deal that vividly highlight just how irrational and detached from reality America’s policy elite have become. The first, it cut funding for America’s tax collection and enforcement agency, the IRS. Second, it did not cut military spending. Instead, it increased military outlays by 1%.
Of the government agencies and departments most vital to a nation’s prosperity and security, none is more important than those that collect tax revenue. Not even the military. As Pakistan’s dysfunctional government and economy shows, without a well-funded and efficient tax collection and enforcement agency nothing else works. Paying for the public services like roads, competent law enforcement and regulatory agencies, or schools that glue a nation together and nurture economic activity becomes impossible. Also, as a matter of common sense, when the government has accrued $31.4 trillion in debt, it should be trying to increase revenue and collections.
But America’s conservative faction fought hard to claw back some of the funding that President Biden wisely allocated to the IRS. In doing so they did not just contradict their stated desire to improve America’s finances, they helped illustrate just how irrational its leaders have become.
By itself, the attack on the IRS staged by America’s right was unsettling enough. But what was far more upsetting was how little discussion there was about the root cause of America’s debt by either of its political factions.
Over the past 20 years, America has spent $16 trillion on its military and that is a conservative estimate that does not account for intelligence activities like those provided by the CIA or the cost of its nuclear arsenal, parts of which gets budgeted under the Department of Energy for accounting purposes. It also excludes the cost of caring for its veterans and the national security functions performed by the Department of Homeland Security. For those keeping track, the conservative estimate is over half its debt.
Due to this spending, America is the most dominant military power in the world by a wide margin. It fields a massive arsenal of the most advanced tanks, fighters, drones, submarines, and aircraft carriers. Despite having already spent trillions to build this impressive force and having important geographic advantages that protect it from invasion, there was no meaningful discussion about cutting military spending. Perhaps that has something to do with the fact that so many of the professionals paid to discuss these issues work for defense contractors? One can only guess. Thankfully, understanding why is not important. What is important is recognizing the fact that military spending is America’s holy grail. One that neither party will ever meaningfully threaten, no matter how bleak its finances.
Some may argue that events in Ukraine and the Pacific justify America’s refusal to scale back its military. But these arguments do not fare well under closer scrutiny. Aside from the fact that Europe should be defending itself, the bear we were all raised to fear has proven less ferocious than previously imagined. Russia and Western Europe will never be friends and Europe’s nations will always need to prepare accordingly, but the idea that Russia presents a threat to America is ludicrous.
America’s fixation with containing China is equally illogical. Again, as a preliminary matter, protecting Asia is not America’s responsibility. That burden must ultimately fall to Asia’s nations. China’s behavior, particularly its treatment of the poor Uighurs, has been abhorrent, there is no denying that. But it has never threatened America’s commercial or national security interests. America’s obsession with countering China has more to do with its own hegemonic ambitions than anything else and reinforces the argument that its leaders are no longer acting rationally.
The key takeaway: America’s finances will only worsen as it continues to fund a military designed to dominate the world rather than protect the homeland. Instead of taking the steps necessary to reign in spending, America’s leaders seem determined to do the same thing they did in Afghanistan; pretend like nothing is wrong until everything implodes in the blink of an eye.
The only real question is when, but no one can truly answer that. America is a large, wealthy country, making it hard to predict how far down this path it can go before reality rears its ugly head. If I were a betting man, I would wager the inflection point will correlate to the interest payments on its debt. Once this number reaches a certain level, America will be printing money to pay the interest on the money it has already borrowed and printed. It’s hard to predict the exact fallout, but debasing a nation’s currency to pay its debts has never ended well for the many governments throughout history that have followed this path.
The rest of the world needs to prepare accordingly. Even in a weakened financial position, America’s massive military industrial infrastructure will still allow it to wreak havoc in many ways. Much like the demise of the Soviet Union flooded the world with its weapons, America’s decline will incentivize it to expand its role as the world’s merchant of death. Many of its weapons will end up in Israel, India, and Greece.
The leaders of Iran, Pakistan, and Turkey should take note. As I argued in a companion piece to the essay about America’s looming military withdrawal, these nations must come together to create new political, economic and military organizations for their mutual defense and prosperity. The key to doing so is creating institutional mechanisms to support trade and joint infrastructure development within the framework of a free trade zone like the one Europe built in the aftermath of WW2. Projects like the long-delayed Peace Pipeline between Iran and Pakistan would serve as the perfect building blocks to increase trade and connectivity.
Unfortunately, the Muslim world’s leaders are even more irrational and illogical than America’s. Despite centuries of conquest and instability, Muslim elites refuse to make the sort of changes that would allow them to prosper either individually or collectively. Pakistan, for example, seems intent on creating the same toxic and ineffective neocolonial dynamic with China that has repeatedly failed Muslim societies since the Ottomans first tried the same tactic with Germany. Iran’s leaders are still obsessing over how Iranian women dress. One could write volumes about the irrational policies favored by Afghanistan’s rulers.
Like most of the Muslim world, all three suffer under the weight of authoritarian and non-responsive political and social systems that stifle change or serious attempts at reform. Consequently, they are highly unlikely to take the steps necessary to protect themselves from the chaos and upheaval that always accompanies major shifts in the world’s geopolitical sands. That is a pity, because America’s loosening grip on the region also means the time to do so has never been better.
America’s military presence in the region is still going strong today. It maintains a permanent naval presence in the Gulf and has troops scattered throughout the region. However, its attempts to build an anti-Iranian military coalition between Israel and the Arab world as an eventual substitute for its own forces and the recent rapprochement between Iran and Saudi Arabia brokered by China suggests I was on the right track. Both developments support the argument that its role in the region is diminishing and portend trends that will only accelerate with time. As such, I am still confident in my thesis. But I was wrong about one crucial assumption.
I implicitly believed America’s leaders would react rationally. That they would see the massive pile of debt their wasteful spending and imperial wars of conquest have led to and develop a rational plan to fix the situation. I was wrong.
As evidence, I offer the recent deal reached between the Biden Administration and the Republican led Congress to raise America’s debt ceiling to accommodate a sum that has now grown to $31.4 trillion. There are two aspects of this deal that vividly highlight just how irrational and detached from reality America’s policy elite have become. The first, it cut funding for America’s tax collection and enforcement agency, the IRS. Second, it did not cut military spending. Instead, it increased military outlays by 1%.
Of the government agencies and departments most vital to a nation’s prosperity and security, none is more important than those that collect tax revenue. Not even the military. As Pakistan’s dysfunctional government and economy shows, without a well-funded and efficient tax collection and enforcement agency nothing else works. Paying for the public services like roads, competent law enforcement and regulatory agencies, or schools that glue a nation together and nurture economic activity becomes impossible. Also, as a matter of common sense, when the government has accrued $31.4 trillion in debt, it should be trying to increase revenue and collections.
I implicitly believed America’s leaders would react rationally. That they would see the massive pile of debt their wasteful spending and imperial wars of conquest have led to and develop a rational plan to fix the situation. I was wrong.
But America’s conservative faction fought hard to claw back some of the funding that President Biden wisely allocated to the IRS. In doing so they did not just contradict their stated desire to improve America’s finances, they helped illustrate just how irrational its leaders have become.
By itself, the attack on the IRS staged by America’s right was unsettling enough. But what was far more upsetting was how little discussion there was about the root cause of America’s debt by either of its political factions.
Over the past 20 years, America has spent $16 trillion on its military and that is a conservative estimate that does not account for intelligence activities like those provided by the CIA or the cost of its nuclear arsenal, parts of which gets budgeted under the Department of Energy for accounting purposes. It also excludes the cost of caring for its veterans and the national security functions performed by the Department of Homeland Security. For those keeping track, the conservative estimate is over half its debt.
Due to this spending, America is the most dominant military power in the world by a wide margin. It fields a massive arsenal of the most advanced tanks, fighters, drones, submarines, and aircraft carriers. Despite having already spent trillions to build this impressive force and having important geographic advantages that protect it from invasion, there was no meaningful discussion about cutting military spending. Perhaps that has something to do with the fact that so many of the professionals paid to discuss these issues work for defense contractors? One can only guess. Thankfully, understanding why is not important. What is important is recognizing the fact that military spending is America’s holy grail. One that neither party will ever meaningfully threaten, no matter how bleak its finances.
Of the government agencies and departments most vital to a nation’s prosperity and security, none is more important than those that collect tax revenue. Not even the military. As Pakistan’s dysfunctional government and economy shows, without a well-funded and efficient tax collection and enforcement agency nothing else works.
Some may argue that events in Ukraine and the Pacific justify America’s refusal to scale back its military. But these arguments do not fare well under closer scrutiny. Aside from the fact that Europe should be defending itself, the bear we were all raised to fear has proven less ferocious than previously imagined. Russia and Western Europe will never be friends and Europe’s nations will always need to prepare accordingly, but the idea that Russia presents a threat to America is ludicrous.
America’s fixation with containing China is equally illogical. Again, as a preliminary matter, protecting Asia is not America’s responsibility. That burden must ultimately fall to Asia’s nations. China’s behavior, particularly its treatment of the poor Uighurs, has been abhorrent, there is no denying that. But it has never threatened America’s commercial or national security interests. America’s obsession with countering China has more to do with its own hegemonic ambitions than anything else and reinforces the argument that its leaders are no longer acting rationally.
The key takeaway: America’s finances will only worsen as it continues to fund a military designed to dominate the world rather than protect the homeland. Instead of taking the steps necessary to reign in spending, America’s leaders seem determined to do the same thing they did in Afghanistan; pretend like nothing is wrong until everything implodes in the blink of an eye.
Even in a weakened financial position, America’s massive military industrial infrastructure will still allow it to wreak havoc in many ways. Much like the demise of the Soviet Union flooded the world with its weapons, America’s decline will incentivize it to expand its role as the world’s merchant of death.
The only real question is when, but no one can truly answer that. America is a large, wealthy country, making it hard to predict how far down this path it can go before reality rears its ugly head. If I were a betting man, I would wager the inflection point will correlate to the interest payments on its debt. Once this number reaches a certain level, America will be printing money to pay the interest on the money it has already borrowed and printed. It’s hard to predict the exact fallout, but debasing a nation’s currency to pay its debts has never ended well for the many governments throughout history that have followed this path.
The rest of the world needs to prepare accordingly. Even in a weakened financial position, America’s massive military industrial infrastructure will still allow it to wreak havoc in many ways. Much like the demise of the Soviet Union flooded the world with its weapons, America’s decline will incentivize it to expand its role as the world’s merchant of death. Many of its weapons will end up in Israel, India, and Greece.
The leaders of Iran, Pakistan, and Turkey should take note. As I argued in a companion piece to the essay about America’s looming military withdrawal, these nations must come together to create new political, economic and military organizations for their mutual defense and prosperity. The key to doing so is creating institutional mechanisms to support trade and joint infrastructure development within the framework of a free trade zone like the one Europe built in the aftermath of WW2. Projects like the long-delayed Peace Pipeline between Iran and Pakistan would serve as the perfect building blocks to increase trade and connectivity.
Unfortunately, the Muslim world’s leaders are even more irrational and illogical than America’s. Despite centuries of conquest and instability, Muslim elites refuse to make the sort of changes that would allow them to prosper either individually or collectively. Pakistan, for example, seems intent on creating the same toxic and ineffective neocolonial dynamic with China that has repeatedly failed Muslim societies since the Ottomans first tried the same tactic with Germany. Iran’s leaders are still obsessing over how Iranian women dress. One could write volumes about the irrational policies favored by Afghanistan’s rulers.
Like most of the Muslim world, all three suffer under the weight of authoritarian and non-responsive political and social systems that stifle change or serious attempts at reform. Consequently, they are highly unlikely to take the steps necessary to protect themselves from the chaos and upheaval that always accompanies major shifts in the world’s geopolitical sands. That is a pity, because America’s loosening grip on the region also means the time to do so has never been better.