The most important international affairs topic of the last few weeks has not been the war in Ukraine, or the fraught relations between the West and China, or the Turkish election, or even the existential menace of climate change and global warming.
Trumping them all, even though it has seldom been framed this way in the United States itself, is the arcane struggle between Democrats and Republicans over raising the country’s debt ceiling, which is the amount of money that Congress will permit the U.S. federal government to borrow in order to service previously contracted financial obligations.
As nearly all of the world knows by now, the leaders of the two sides, U.S. President Joe Biden and House Speaker Kevin McCarthy, reached a tentative agreement over the weekend to institute a two-year fix. One can only hope that a sufficient number of votes can be pulled together quickly enough to beat the June 5 deadline announced by Treasury Secretary Janet Yellen, after which the United States—at once the world’s largest borrower and the custodian of its reserve currency, the U.S. dollar—will otherwise go into default.
Almost wherever you sit, you should hope for a passing vote. It has already been widely remarked that a default would inflict a devastating blow to the U.S. economy and confidence in the country’s leadership. It would prevent Social Security payments from going out to retirees and probably take a huge chunk out of public wealth through a decline in the stock market and investment vehicles like 401(k)s. Europe, whose economy is tightly linked to the United States’, would be hit hard by the blowback, destroying wealth on an enormous scale there, too.
But although many people would be happy to see the United States brought down a peg or two, they should be careful what they wish for. The damage the global economy could be expected to experience from this in the short term is unlikely to be good for many people, even among the United States’ biggest rivals and adversaries. And beyond the greatly increased turbulence and risk, the uncertainty of any default’s aftermath is enough to make anyone sleepless.
The biggest victims, in fact, have so far gone unnamed. They would be the billions of people in the global south, who would be hit by a U.S. default crisis at least as badly as they were by the twin shocks of the Russian invasion of Ukraine and the COVID-19 pandemic, from which most have still not recovered.
Having said that, the proposed compromise itself is by no means something that should inspire confidence in America’s leading role in the world. In fact, it is a severe indictment.
I am not talking about the essentially artificial and self-inflicted nature of the crisis, with Congress having made an incongruous routine of both passing an annual budget and separately requiring its approval of debt payments on the very expenditures it has authorized. Nor do I refer to the mere kicking of the can down the road an additional year this time, should Congress pass the two-year debt ceiling proposal now before it.
No, I am talking about what the details of the package say about the increasingly evident drift and decay of the U.S. system itself. The U.S. press has been full recently of cheer-me-up pieces about the great strength and resilience of the country and the persistence of its wealth and power. Yet in ways that go beyond facile statistical comparisons, the debt ceiling agreement is full of deeply worrying signs.
What should one make, for example, of one of the country’s two major political parties, the Republicans, touting the clawback of as much as $20 billion out of $80 billion in new funding for the Internal Revenue Service (IRS) as a major win? This increased support for the IRS was rationally justified by years of the agency’s declining effectiveness in providing basic customer service—i.e., speedily processing citizens’ tax returns—but also in looking out for cheats, and especially the relatively wealthy portion of the public who disproportionately escape close scrutiny and audits. In recent months, Republican politicians and talking heads have paraded across U.S. TV screens speaking of the IRS as if it is staffed by Chicago gangsters from the 1930s whose goal is to strong-arm people to extort funds from them.
I don’t relish having to surrender a significant portion of my income to the tax authorities any more than the average person does, but this is not about average people. Increasing the IRS’s effectiveness and impartiality is about two fundamental things. The first is sustaining one of the most basic capacities of any well-functioning state, and that is tax collection. The second, which, if anything, is even more important, is preserving the tax system’s legitimacy by making sure that it cannot be easily gamed and that those with the most means aren’t able to avoid its reach.
On another vital matter, military spending, the two parties seem to have been able to reach agreement much more easily. But rather than a reaffirmation of how, despite everything, the system works, the bipartisan consensus—which seems to share a belief in the idea that the answer to every U.S. security challenge is more money—is, in fact, another sign of deep dysfunction. Reasonable arguments can always be made for new budgetary outlays for the Defense Department. The United States’ competition with other global powers over relative strength and influence is changing all the time, with new complex domains coming into play now that scarcely existed even five to 10 years ago. Think the quickening pace of space’s militarization, cyberwarfare, artificial intelligence, hypersonic weapons, Russian aggression in Ukraine, rivalry with China at sea, and more.
Every one of these issues has political and, ideally, diplomatic dimensions that get at the most appropriate ways to manage great-power rivalry and keep the peace, and these deserve a full and separate discussion. What is important to highlight in this budget discussion, though, is the total lack of discipline the country imposes on itself in terms of military spending. In many quarters it is ritually observed that the United States spends more money on its military than the next 10 countries combined. Yet this tells us little about the many failures to make choices informed by the need to sacrifice some things in order to do other, more urgent things.
The long-running bipartisan indulgence of the Defense Department has come to mean that spending on obviously failed, outdated, or wasteful weapons systems is almost impossible to check. Here, one could make a long list. For now, though, think of the littoral combat ship, touted as a whiz-bang warship of the future when the first one was commissioned in 2008, but which the Navy’s own assessment concluded four years later was “ill-suited for combat operations against anything but” small, fast, lightly armed boats. An early estimate put their expected cost at $220 million per ship; by 2011, their cost per unit had risen to $1.8 billion.
When the Navy itself decided last year to retire nine of the littoral combat ships that had already been built, saying they were a waste of money and didn’t meet the current threat, Congress stepped in and blocked it after fierce lobbying from business leaders who said decommissioning the ships would hurt local economies and cost jobs. Only four ships were ultimately allowed to be retired.
This is a familiar pattern. Rather than imposing cost-and-delivery-timeline discipline and cutting back on what needs to be dropped, Congress just keeps adding more money to the defense larder, with the result being that military funding is up by more than one-third since 2015.
The wasteful bipartisan approach to funding the military is ultimately short-sighted because it is founded on a belief that hardware is the most important source of the country’s strength and the ultimate basis of its standing in the world. As negotiators reached the agreement that Congress will have to vote on this week, hopefully in time to avert a default, this reality found expression in where the biggest compromises were made. The battle against climate change—one of the existential challenges people everywhere now face—lost out to a new pipeline project in West Virginia and something euphemistically called permitting reform, which means letting other oil and gas projects proceed more rapidly toward development.
Others, meanwhile, touted the imposition of increased work requirements for things like food stamps and other forms of public support—a reflection of a degree of meanness for which the United States is already something of an outlier among the world’s wealthiest countries. Never mind that measures like these are unlikely to save much money.
The bigger point is that when a rich and powerful country finds it easier to cut back on the way that it invests in its people, in education, in science, and in making sure that the weakest among them are not completely left behind than to curtail useless and profligate weapons spending, there are reasons to worry about the foundations of its power.
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