Opinion

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.

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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.

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.

In the US, debt is not just a federal burden. Cities like Harrisburg, Pa., and states like California and New York are facing imminent bankruptcy.

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.

America's combat activities in Iraq are winding down, but the conflict in Afghanistan, which draws us even further into the maelstrom of Pakistan, is far from over and the very concept of a victory in the region is muddied at best. For Europe, the key strategic question is not how best to help an overextended US win this war on terror, but how to find security itself. Should it continue to rely on the US? Should it bolster its armed forces to become self-reliant? Or should it seek out a new security partnership – perhaps a grand bargain with Russia or even with Middle Eastern states opposed to both Israel and the US?

These aren't theoretical questions. Washington's astonishing moves in Europe over the past two years have made future security for the Continent an urgent present issue.

Washington is hollowing out its defenses

The abandonment in 2009 of the theater missile defense in Eastern Europe as a concession to Russia, followed a year later by a negotiated reduction in nuclear weapons, is breathtaking in its scope. America's friends and allies – and enemies – have concluded that American military power or willpower, or both, is hollowing out.

In a bipolar world where the US and Soviet Union negotiated structured reductions in nuclear arsenals, the SALT and START treaties made sense. But in a world of new nuclear neighbors and a handful of unreliable states striving for nuclear status, these reductions are more likely to accelerate, rather than slow, the spread of nuclear powers.

Iran may well be emboldened in its quest to break through the nuclear threshold because it believes the US and its allies are incapable of responding (as Defense Secretary Robert Gates appears to have suggested in his secret memo to Mr. Obama in January).

For the declared nuclear powers of India and Pakistan, the sharply reduced numbers of nuclear weapons the US and Russia have now agreed to are very much within reach and the temptation to catch up and match the superpower count may be irresistible. Economic security and national security are two strands of the same rope that ties Europe and America together. A fraying of either strand on either side of the Atlantic weakens the whole cord.

The solution for both America and Europe is as simple as it is difficult: vigorous economic growth. Strong growth not only restores jobs and balance sheets; it revitalizes the security infrastructure, giving new leverage to diplomacy. But strong growth is not possible without first reducing the tax and debt burdens of unsustainable entitlement programs such as Social Security and Medicare. History tells us that such steps are politically painful but economically fruitful.

Take the recession of 1920, one of the most severe in US history. Instead of creating new federal programs to stimulate demand (as with the New Deal and the Obama stimulus), President Harding cut taxes and the federal budget sharply, freeing up capital for private investment. These moves helped bring an end to the recession after just 18 months, hastening the Roaring '20s.

There's little political stomach for such moves these days, but there's also no other way out of our current downward cycle of debt.

Walter Andrusyszyn is a former director for central and northern Europe at the National Security Council, and a professor of international business at the University of South Florida.

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