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Debt, national security, and our evolving perception of the two July 12, 2010

Posted by Matthew Leatherman in Analysis.
Tags: , , , , , ,

Americans are of two minds about terrorism.  One fixates on the shocking nature of the attack, the stark contrast in values it represents, and the insecurity of knowing that someone somewhere has the stone-willed resolve to do them the most brutal harm if ever given the chance.  Another lambasts the expense to which we’ve gone for disappointing results.  Costs include a new federal department and intelligence system, military commitments from Mauritania to Mindanao, and a dramatically-restructured legal code for national security.

Our conflicted attitudes were exposed sharply in a recent Gallup poll.  Respondents labeled two threats as the most serious to the U.S.’ future well-being.  Terrorism is one.  The federal debt is the other.  Only a rounding error separates the two.

The threat of a terror attack undoubtedly is the most probable threat to our national security mounted by anyone outside of our borders.  Replays of airplanes plowing into the World Trade Center and the Pentagon have seared that risk into our minds.  Degraded as the Al Qaeda organization is, we are reminded routinely that its franchisees are still active and capable, from Najibullah Zazi in Denver to Umar Farouk Abdulmutallab over Detroit.  This threat will demand serious, concerted attention for the foreseeable future.

The threat of terror attack, however, requires context.  It is not the biggest threat we as a country have faced.  Global nuclear annihilation on a hair-trigger is impassable in that category, and terror attack is nowhere close.  Nor is it the most probable threat to our national security today.  Federal debt stands in that place.

The Office of Management and Budget estimates that publicly-held debt will reach 63.6% of GDP this year, its highest level since fiscal year 1951 and more than 15 points higher than it was when the Japanese attacked Pearl Harbor (47%).  Although historically high by U.S. standards, this debt burden is far below that of Greece (113%) and Italy  (115%) – but not for long.  The Congressional Budget Office estimates that, after accounting for likely policy changes, we’ll be in that neighborhood in about 15 years. (See Figure A-2)

Debt of this severity challenges our national security in two related ways.  Most overtly, it permanently displaces other federal spending, including defense.  Lower defense spending is a virtue today, after a decade in which we shattered the Cold War cost ceiling, but the future is unpredictable.  Nothing suggests an upcoming need for defense spending this high, yet those future budgetary decisions must remain at our discretion.  Being forced to pay interest on record debt would reduce our discretion and the security that comes with it.

More generally, a vigorous economy is the foundation on which national security is built.  Not only will discretionary government spending wither as debt grows, so too will the credit opportunities on which our private sector depends.  Such a constrained economy will build fewer of the business relationships that preempt conflict and will lose the technological ingenuity on which our defenses depend.

Accounting for these facts throws the Gallup poll into a troubling light.  Equating today’s  threats of terror attacks and federal debt reveals just how disproportionately we focus on the near-term and the sensational at the expense of long-term, structural problems.  We are fighting a lesser adversary while the true enemy flanks us from behind.  Al Qaeda’s damage tally includes more than just the lives lost, infrastructure destroyed, and civil liberties foregone – it also includes spending ourselves into the ground even as the economy is flailing.  Gallup data aside, today federal debt is a fundamentally greater challenge to our national security than terrorism.



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