America’s Systemic Economic And Fiscal Problems Undermine US Foreign Policy Over time, a weak economy and a worsening national debt will make it difficult to be taken seriously

WASHINGTON – What’s the connection between President Obama not authorizing the construction of the Keystone XL oil pipeline linking Canadian oil fields to refineries in Texas and America’s ability to deal more effectively with a Middle East in constant turmoil? No direct connection today. But a major one tomorrow.

Creating options

Indeed, by deciding –today– to rely more on Canada, a trusted neighbor, for vital energy imports, America would diminish and eventually stop its reliance on OPEC oil. Improved US “energy security” would give Washington additional room to manoeuvre in the intrinsically messy Middle East.

Sound economic and fiscal policies are the foundation of strength

By the same token, there is no immediate connection between a (hoped for) Washington bipartisan pact aimed at reforming public spending and entitlements, and America’s current ability to deploy forces or help allies –today– in dangerous parts of the world.

However, a serious and credible political agreement that promises to place America on a path to fiscal soundness, (even though rebalancing our books after “bending the spending curve” would take years), would tell the world that America is not declining.

Beyond the huge domestic benefits, this political agreement would send the message that 10 or 20 years from now we will be still here, strong, well armed, and seriously engaged, because we are addressing and taking care –today– of the long-term issues that would otherwise weaken us tomorrow.

Long term issues need to be addressed –today

Smart leaders know how to balance the need to address immediate problems, while at the same time tackling issues that are not urgent, but really important in the long run.

The classic mistake is to get so engaged in reacting to too many small crises that you do not take care of larger, long-term, systemic problems that, if unaddressed, will undermine your future ability to take care of even little issues.

Many crises, limited options

And this is precisely America’s current predicament. Today, the country is confronted with significant but not catastrophic international crises. There is a bloody civil war in Syria, chaos in Iraq, anarchy in Libya, huge political and security problems in Afghanistan, more violence between Palestinians and Israelis, Putin fomenting civil war in Ukraine, China trying to extend its maritime sphere of influence. And then we have ISIS, (or Islamic State), a terror group that has graduated to becoming a political entity that controls territory in Syria and Iraq, while declaring hostility against America.

As David Brooks stated in a NYT piece, none of these ugly developments represents an immediate, existential threat to the US; but America has a responsibility to set the tone of international reaction, now and in the future. There is no doubt that with fewer means at our disposal we will be able to do less and less. We are already feeling the pinch, as the defense budget has been cut, with more cuts coming.

And here we have two problems unfortunately converging. The first one is that President Barack Obama projects an image of an over-cautious, timid America, uncertain about its proper role, and unwilling to do anything at all. And this is bad.

Without adequate means, no credible foreign policy

The second one is actually much more serious. The American economy is too weak, while the national fiscal picture is slowly but surely getting worse.

And it is obvious that, in the long run, there is a clear cause and effect relationship between actual economic resources and the ability to influence international economic relations, while continuing to have state of the art armed forces that can be used around the world without adding to an already severe (and now systemic) fiscal strain.

And this is precisely where we are headed now. (In fact, pessimists would argue that we are already there: no money, good-bye to serious Pentagon funding).

Dwindling resources

Indeed, even if we had a different, more pugnacious President, he or she would have to consider the objective fiscal limits to any assertive US policy.

Simply stated, a country with a $ 17 trillion national debt, (and rising), and a tired, slow-growing economy has far fewer options than a country in good fiscal health with a thriving economy.

And, if today’s options are more limited, without a major economic and fiscal course correction, tomorrow’s options will be even more constrained.

Deal with the issues

Having said that, it should be obvious that America, in order to preserve its own future viability, and for the sake of world stability, beyond the issues of the day would seriously focus on what it takes to restore fiscal stability and more sustained economic growth. These are the preconditions for having first class armed forces and for being a credible actor on the international stage.

No such thing as an “Impoverished Great Power”

Simply stated, if you have no new money, federal budget deficits year after year, a mounting national debt, and (as a result) a shrinking military, who is going to pay attention to what you have to say?

I do not know of any “Impoverished Great Power”. Those countries that lost their ability to create wealth ceased to be Great Powers. Period. America is headed that way.

All intelligent people know that our unresolved fiscal and global competitiveness issues soon enough will have an impact on our resources and therefore on our ability to project force and to be taken seriously by friends and foes alike.

Wasting time

But while each year’s federal budget deficit gets us closer to the moment of truth, we still have some slack. We are not about to fall into the abyss.

But sadly we use this borrowed time as an excuse to do nothing. And so we waste precious time that could be used to forge serious bipartisan agreements aimed at restoring our economy, the wealth of our people, and our fiscal soundness.

Unfortunately in our political world in which there are national congressional elections every two years, the “long-term” does not exist. Leaders are judged on what they have done today about today’s issue.


As I said above, smart leaders know how to balance handling the issues of the day while taking care of long-term problems well before they morph into major crises leading to terminal decline.

Smart leaders would also find ways to communicate the importance of spending time and resources, today, to address and solve major long-term problems.

However, as we can see, smart leaders are in short supply.



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