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Debt Limit And Power On The World Stage

August 1, 2011

There are so many good reads today concerning the debt limit deal, and the many ramifications of this self-created crisis, that it is important to winnow them down based on the credibility of the reporters.

As such, I recommend this one written by David Sanger.

In part…

But the brush with default has added a new dimension.

It has left America’s creditors and allies alike wondering what had changed in American politics that a significant part of the country’s political elite was suddenly willing to risk the nation’s reputation as the safest place for the rest of the world to invest.

It raised questions about whether the United States now faces brinkmanship over a variety of issues between an emboldened conservative movement and a president whose authority is under challenge. And for all the talk on the right about “American exceptionalism,” especially among members of the Tea Party, it put doubts in the minds of many about whether America’s military and economic dominance is something the country is still willing to pay for — and will always survive.

The new head of the International Monetary Fund, Christine Lagarde, seemed to give voice to that concern when she noted on CNN that in the past there was always “a positive bias towards the United States of America, towards Treasury bills.” The events of the past few weeks, she said delicately, are “probably chipping into that very positive bias.”

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Part of the problem in the debate over the relationship between America’s debt and its power is that there are at least two camps — and the Obama administration (and many Republicans) have a foot in each of them.

One camp repeats versions of the argument put most bluntly by Adm. Mike Mullen, the departing chairman of the Joint Chiefs of Staff, who reminds interviewers regularly that “the most significant threat to our national security is our debt.”

Over time, he fears, cuts in the defense budget could hollow out the military and leave little for the development of a range of new technologies like advanced drones and cyberweapons that are needed for modern-day confrontations.

Traditional hawks in the Republican Party, chief among them Senator John McCain of Arizona, agree with him. Many in the Tea Party — a more populist bunch who contain a strain of isolationism — do not, arguing that just as America needs smaller government at home, it needs a smaller military footprint abroad.

There is another argument, though, which has less to do with American hard power than American soft power. Mr. Obama and his secretary of state, Hillary Rodham Clinton, came to office arguing that one way to avoid wildly expensive wars like those of the last decade was to invest in the remaking of failed societies. But a decade after the Sept. 11 attacks, that concept — that America must invest abroad for its own safety — is losing support fast. Mr. Obama has made clear that he has no enthusiasm for “nation building” projects in Afghanistan that go on for years or are unsustainable. They may be well intentioned, he has told aides, but they are too expensive.

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