America began the new millennium with optimism and confidence. Today, two recessions and two wars later, the optimism is weakened and the confidence is waning. U.S. military spending has risen to nearly half the global total, but the U.S. share of global output is eroding steadily as other economies grow faster.
An assessment by the National Intelligence Council in November 2008 warned that the continuing transfer of wealth from the United States and other Western nations to East Asia is "without precedent in modern history." U.S. trade and budget deficits in this decade have also been unprecedented, with the federal government borrowing more than 40 cents of every dollar it spends.
In such circumstances, claims that America is the sole surviving superpower sound increasingly hollow. Experts can debate what role defense spending has played in this decline, but what is beyond dispute is Washington's waning ability to sustain military outlays at current levels.
There are a number of near-term steps the Obama administration can take to reduce the burden of military spending, such as winding down the U.S. presence in Iraq and Afghanistan and cutting outlays on unneeded weapons. Defense Secretary Robert Gates estimates that cuts he made last year will reduce planned weapons outlays by $330 billion, and now he has launched a campaign to slash support costs.
Force levels will need to be cut, too, because the cost of military pay and benefits has risen to a point where the affordability of the all-volunteer force is in doubt. This will provoke a bitter political debate, given the sacrifices U.S. troops have been asked to make in this decade. Yet, with a $1.47 trillion federal deficit, the government is spending $4 billion it does not have each day, and our forces must shrink. This is particularly true because, as Gates has noted, after Iraq and Afghanistan, we will not do nation-building under fire again.
The big question for policymakers is not whether defense spending will be cut - that is inevitable - but how global security will be maintained as the U.S. role diminishes. Since World War II, the United States has played a central part in preventing wars and protecting vital areas, such as the industrial centers of northeast Asia and the oil fields of the Middle East.
Now Washington must become more selective in its commitments, even as threats grow more diverse. It appears the only way this can be accomplished without encouraging aggression is to expect more of allies and friends. In other words, countries such as Germany, Japan, and India must help fill the strategic vacuum created by America's retreat.
The Obama administration does not concede that America is in retreat, but it has fashioned a National Security Strategy that is well-suited to current trends. The strategy emphasizes the importance of allies and "newly emerging partners" in accomplishing shared defense goals, and it commits the United States to helping partners do more for their own defense, especially in coping with terrorism and insurgencies.
This is a sensible approach given that allies will usually have more "forward presence" overseas than U.S. forces can muster, and they typically will have a better understanding of the cultural context of local conflicts. But there are some steps that Washington needs to take so that partners can take on roles now beyond America's means.
For example, the Pentagon needs to build weapons that are affordable and appropriate for its partners. Nobody can afford the new $3 billion destroyer the Navy developed - a program Gates has canceled - but many countries can afford the faster, more agile Littoral Combat Ship. Similarly, the $150 million price tag on the Air Force's twin-engine F-22 fighter is too high for allies, but if the single-engine F-35 can be fielded for less than half that cost, it will have major export potential.
The White House has already embarked on a series of initiatives to engage allies in more robust security roles, while loosening the export restrictions that impeded arming them. These steps may have trade benefits for America, but their real significance is that America's eroding economic might makes unilateralism too costly to be feasible. Washington needs to help overseas friends play a bigger security role so it can concentrate on rebuilding its economy.