America's debt is creating a security threat to Europe
The US and the West need vigorous economic growth. In order to to that, the US must first reduce the tax and debt burdens of unsustainable entitlement programs such as Social Security and Medicare.
America's spiral of debt isn't just hurting our economy, it's weakening our national security and making the world a more dangerous place.Skip to next paragraph
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No nation can maintain its power or projection of power if its economy is weak. That holds for Sparta, Rome, and the United States. Although America's potential is formidable, Washington has so far lacked the courage to make the bold moves we need to restore our strength through vigorous economic growth in the years ahead.
The good news is that the Obama administration is at least raising the topic for conversation.
President Obama recently set up a special fiscal commission to tackle the nation's debt. And Secretary of State Hillary Rodham Clinton used the release of the new national security strategy May 27 to link debt and diplomacy: "The United States must be strong at home in order to be strong abroad," she said.
Grim economic trends
Tough talk and a toothless commission that may be a ploy to increase taxes, however, won't change a dismal economic prognosis in the US.
In Western Europe, meanwhile, more than 200,000 firms are expected to become insolvent this year, according to Creditreform, a credit collection association. The balance between revenue-generating businesses and recipients of entitlement programs is deteriorating in all Group of Seven economies.
Four years ago, about 30 percent of Americans owed no federal income taxes. Today, that figure has risen to nearly 50 percent. Meanwhile, 73 percent of all US federal revenues derive from the top 10 percent of wage earners.
The burden of entitlement programs and unfunded liabilities is growing for all high-powered Western economies. With low birthrates, their graying populations will strain the welfare state in the next decade.
Yet the "solution" to this well-known problem has mostly involved debt financing. Only in the past few weeks have countries like Spain begun austerity measures, while the French government is battling union resistance to raise the retirement age.
The absurdity of a heavily indebted nation like Greece turning to other (slightly less) indebted countries to obtain temporary relief is a harbinger of shared economic stress.
The immediate reaction is to find new sources of revenue by increasing taxes and fees, but these taxes squelch business investment, which undermines job growth and the tax base, accelerating a self-propelling cycle of impoverishment.
American weakness could have severe consequences for Europe. After World War II, the transatlantic pact was built on a pledge of America's protection for a Continent that was crawling out of 300 years of brutal conflict.
Particularly after the demise of the Soviet Union and the Warsaw Pact, Europe's dependence on American security increased because more and more European states relinquished military spending in order to pay for increasingly expensive domestic entitlement programs. America's rapid economic growth in the 1990s was a cause of both admiration and resentment in Europe.
In recent years, Europeans resented America's superpower status, but now they are regretting that their wish for a weaker US is coming true. In whispered tones, many Europeans are wondering whether they should continue to place their security bets on the US. These doubts are playing out in NATO's closed-door negotiations over developing a new strategic concept. The strains in the alliance are deep and historic, but they come in the context of equally historic economic strains over the stability of the euro and the viability of the European Union.