The wrenching, hand-wringing way that Washington reached a debt deal – as well as the deal’s details – may have one good effect: It could force the United States to become more modest about its role as a leader.
Modesty is certainly in order after the circuslike way that Congress and the White House finally raised the debt ceiling and avoided a historic US default. In fact, the political catharsis could be America’s “Suez moment” – a realization that it isn’t the power it once was. (During a 1956 crisis over the Suez Canal, Britain and France had to admit they were no longer imperial powers that could easily dictate events.)
Even President Obama, a leader who prefers to “lead from behind,” threw up his hands at this example of “dysfunctional government.”
His lament echoed comments from abroad. China saw the political brinkmanship as “dangerously irresponsible.” Russian Prime Minister Vladimir Putin referred to US debt as a “parasite” on the global economy and the debt deal as simply delaying “a more systemic solution.” France’s Le Monde newspaper said the most powerful nation had become a “laughing stock.”
Indeed, the world’s preeminent economy may soon have its top AAA bond rating downgraded by Moody’s or Standard & Poor’s – despite the avoidance of a debt default.
Why? The deal goes only a short way to solve the fundamental financial problem: the coming surge in entitlement demands by baby boomers, especially in Medicare.
The pact will leave federal spending at more than a fifth of the US economy in 2021. And the percentage of the budget needed to pay the debt would still be third-world status.
Congress also abdicated its political responsibility by leaving the heavy lifting to a “Gang of 12,” or a supercommittee of Republican and Democratic lawmakers tasked with finding $1.2 trillion to $1.5 trillion in cuts. Even that level of cuts would not be enough to bring the debt under control.
If the supercommittee fails to find consensus, then automatic cuts are triggered – with half coming from the military and other from security agencies.
To put this in some perspective: Imagine the US now trying to rescue the world economy as it did two years ago. The new austerity leaves it largely helpless to set out a safety net for another financial crisis.
Big cuts to the Pentagon will also diminish the critical US role in the world. The military is certainly ripe for trimming, but the US first needs a consensus on what overseas commitments it needs to keep. A 2010 survey by the Chicago Council on Global Affairs found that more than 8 out of 10 Americans say it is either “very desirable” or “somewhat desirable” for the US to “exert strong leadership in world affairs.”
America’s military, economic, and moral leadership has often been challenged – such as during the Vietnam War, the mishandling of the Iraq war, and the government-created housing bubble whose collapse lead to the Wall Street crisis. Each crisis brought the US down a notch, creating humility about itself as an exceptional nation.
This latest display of political gridlock in Washington over solving the $14.3 trillion debt shows a need for even greater modesty, one based first and foremost on living within one’s means.
[An earlier version of this editorial had an incorrect figure for the US debt.]