A superpower in decline?

It’s not pretty

Charles A. Beard describes all the lesson of history in four sentences: “Whom the gods would destroy, they first make mad with power. The mills of God grind slowly, but they grind exceedingly small. The bee fertilizes the flower it robs. When it is dark enough, you can see the stars.”

There are no two ways about the fact that after the disintegration of the USSR and the 9/11 attacks, the United States has progressively become more drunk on its power. In Afghanistan and Iraq alone, around 3 million people have been killed or badly injured and the estimated cost of the war on terror so far is around US$1.5 trillion. In Afghanistan, about 600000 men are engaged in war from more than 50 countries. But the operations in that country are still a far cry from success.

The US is also butting heads with many other countries. Not only did it have a hand in creating unrest in many Arab countries (Syria, Libya etc), it continues to directly or indirectly interfere in the running of many Arab nations. Moreover, the US is also trying to stamp its authority in many Asian countries. Extensive trade and financial sanctions are in place against Iran. The US is pursuing multi-pronged approach against Tehran that includes diplomacy, sanctions, and it is visibly preparing for a military option if diplomacy fails.

It is also antagonizing China. President Obama portrayed China as a military rival in a strategy document issued in January. It is now offending Beijing by raising its naval deployment up to 60% in the Asia Pacific by sending more aircrafts carriers, cruisers, destroyers, submarines and combat ships, carrying the most advanced technology and weapons.

That isn’t the end of it. The US House of Representatives has already approved to sell Taiwan 66 F-16 C/D jets and has also backed plans now underway to upgrade Taiwan’s existing military aircraft. Last September, the US approved a US$5.85 billion arms sale package to Taiwan. This enhancement in Taiwan’s defence capability is a cause of great disquietude for China.

The aforementioned examples show how the US is intoxicated with its own power. Now the second phase is underway. The mills of God are at work of grinding, as they did to USSR. The US is in a disarray not dissimilar to that of the USSR. It was the same battle ground “Afghanistan”- the graveyard of empires. But it wasn’t just the battleground that brought the USSR to its knees. It was the accompanying economic crises that ground the USSR into 15 pieces. History is clearly repeating itself: the US too faces the Afghanistan battleground and economic challenges.

The CBO (Congressional budget office) report says, “Over the past few years, the federal government has been recording budget deficits that are the largest as a share of the economy since 1945. Consequently, the amount of federal debt held by the public has surged. By the end of this year, CBO projects that the federal debt will reach roughly 70 percent of gross domestic product (excluding IOUs).”

The budget outlook is much bleaker under the extended alternative fiscal scenario. Federal debt would grow rapidly from its already high level, exceeding 90 percent of GDP in 2022. After that, the growing imbalance between revenues and spending, combined with spiraling interest payments, would swiftly push debt to higher and higher levels. Debt as a share of GDP would exceed its historical peak of 109 percent by 2026, and it would approach 200 percent in 2037 (not counting the $4.7 trillion owed to future social security recipients and other government beneficiaries). The massive US budget deficit is the gravest threat facing the economy, topping high unemployment and the risk of inflation or deflation.

According to an estimate, in less than ten years USA will be spending more of the federal budget on interest payments than on its military. According to CBO, by 2020 the Government will be paying between 15 to 20 percent of its revenues in interest payments only, while defense spending will be about 14 to 16 percent. Mark Steyn in his book, “After America” made some eye-opening calculations. He surmised that the superpower “will have evolved from a nation of aircraft carriers to a nation of debt carriers.” Steyn also stressed that China holds a big chunk of Americans debt. He says that, “If the People’s Republic carries on buying American debt, then within few years US interest payment on that debt will be covering the entire cost of the Chinese armed forces.”

The collapse of the euro zone is not way too far. American strategies are greatly jeopardising the global economy. Spain became the fourth euro-zone country to require international financial assistance. Great debt crises are still on the way that can shake the whole world’s economy. It is not hard to imagine by taking a look at the debt of European Union countries as a percentage of their GDP in 2012: Greece has 198 %, Italy has 121%, Ireland 118%, Portugal 111%, Belgium 99%, France 89% while Germany has 81%.

Many analysts and thinkers the world over have started debating whether the US is heading towards a sticky end. A reasonable majority believes that America is disintegrating (culturally, morally, politically and on top of everything economically). Patrick J Buchanan in his book “Suicide of a superpower: Will America survive to 2025?” tries to draw parallels between the disintegration of USA and USSR and some of his points carry weight. It’s not just the pundits who have started believing this but the hoi polloi too. Some recent polls show that between 60 and 70 percent of Americans believe that the US is in decline owing to high unemployment, crushing debt and a political gridlock.

The US is disintegrating, that’s for sure. It’s just the modalities that are now falling into place. It is for history to decide the whens and wheres of the process.