America’s Losing Game

At the start of the New Year, the Pentagon announced it would make cuts to its expenditure over a 5-year period. Then, just a few days later, Robert Gates publicly stated that the U.S. would make efforts to counter China’s military build-up, by continuing to invest in technologies of its own.
At once, I was reminded of St. Augustine’s famous entreaty: ‘LORD make me chaste, but not yet’. The United States is a country that wants to reduce its military spending, but finds that it cannot.
Of course, I could be guilty of over-interpreting things here. To begin with, the cost of matching China’s build up does not necessarily the Pentagon will renege on its budgetary promises. Also, Gates’ announcement can be construed as a political maneuver, reminding Beijing once again who is the pre-eminent military power. Ahead of President Hu Jintao’s visit to Washington this week, such signals could be useful.
On the other hand, the fact that Gates could so boldly make such an announcement following his previous promise demonstrates a well-known truth. The U.S. regards military spending as sacrosanct, and it isn’t afraid to remind others that it does so. Even during the financial crisis, the U.S. has continued to increase military expenditure, from 4.0% of GDP in 2005 to 4.6% in 2009 (see a breakdown of its defense budget here).
However, Admiral Mullen makes the point that such spending may not sustainable. In an interview with the Financial Times last September, Mullen pointed out that America’s debt problems have ramifications not only for its country’s unemployed, but for its national security as well. Currently, America’s debt-to-GDP ratio is 62%, and is projected to rise to 90% by 2020. If it rises to such a level, it will not be able to maintain its military ambitions.
In fact, America is in risk of playing a losing game. If it continues the same pattern of military spending when austerity is needed, this will jeopardize its prospects of a long-term recovery. If long-term recovery fails, America will be unable to support its military later on.
Seen from this light, the issue isn’t hawks versus doves, but of simple practicality. Given America’s current fiscal trajectory, hawks may be forced into extinction one day – not because of a lack of popular support, but because it will too expensive to be one.
Such a prospect, of course, is still a very remote one. Yet, as the U.S. weighs a potential arms race with China, it should take a lesson from its own history. At the end of the Cold War, Communist Russia wasn’t defeated by ideology or nuclear weapons. It collapsed because its economy was flawed. Likewise, America should put first things first and willingly sacrifice military spending – just for a while – until its economy is working again. The Pentagon’s New Year announcement was a good start; let’s see if they can live up to their promises.