Fareed Zakaria has a piece in this morning’s Washington Post titled “America’s Grim Budget Outlook.”
But his argument is less about budget cutting than the investment deficit America’s future faces compared with other periods of its history.
Simply slashing the programs that build out America’s innovation capacity and human capital and thinking all will be well flies in the face of America’s past investments in itself. As I have written previously, President Obama’s call for a five year, non-defense discretionary freeze in spending forfeits America’s future to China.
There is a glut of capital in the world that if accessed for strong investment would transform the US economy into leadership again. America’s problem today is that it has a frayed social contract in which the growth and gains of the last couple of decades have gone almost exclusively to the top 1% in the nation — and that those banks and financial institutions that were gamblers instead of investors turned out to be the ones who got paid off, at the expense of the American middle class.
President Obama sounded this call for investment in his State of the Union address. His budget tries to preserve and even expand spending in key areas that will contribute to future growth. But he faces a Republican Party that is fixated by a budget-cutting mentality but refuses to propose entitlement cuts and in which a sledgehammer is preferred to a scalpel. And America’s business community is sitting on the sidelines, betting its future on the growth in foreign countries (which themselves are making huge investments for their growth).
America’s growth and prosperity over the past few decades have been consequences of major investments made in the 1950s and 1960s. Some of those are the interstate highway system; a public education system that was the envy of the world; massive funding for science and technology that produced the semi-conductor industry, large-scale computing, the Internet and the global positioning system. When we look back in 20 years, what investments will we point to that created the next generation of growth for the next generation of Americans?
The President also called for this kind of investment in his National Security Strategy report — identifying the US economy and the health of the middle class as a vital national security issue.
In my book, the gravity switch must be turned on when it comes to out of control defense spending that has little multiplier effect for the private sector in the United States.
The Afghanistan War which will cost about $120 billion this next year represents the equivalent of hiring about 3.5 million workers in the private sector in the US. Next time the anemic job growth results the Obama administration are released, think about the offsets in the services provided in emergency response, police, health care, and teachers — but also the three and a half million jobs that might otherwise be in place for Americans.
— Steve Clemons
Editor’s Note: Image above is from article by Parag Khanna in New York Times Magazine titled “Waving Goodbye to Hegemony.” Used with permission.