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Chinese Power and U.S. Budget Choices

David Callahan

What will be more important in coming decades: Countering the rise of Chinese military power in East Asia or building U.S. economic strength here at home?

If that sounds like a tired guns-vs-butter dilemma, consider a new report by the Carnegie Endowment for International Peace which finds that China will be able to field enough military might in the next two decades to challenge America's longstanding dominance in East Asia, an area that is home to three close allies -- South Korea, Taiwan, and Japan -- all of whom are already feeling menaced by rising Chinese power. 

What does this have to do with U.S. budget choices? A lot. Simply put: If the U.S. chooses to fully counter China in coming years, it won't be able to downsize its expensive warfare state and may even have to expand it. But we will be able to downsize the defense sector, and focus on other priorities, if we plan to gradually allow China to assume hegemony in East Asia.

As things stand, the U.S. security sectors consumes about half of all discretionary federal spending. Under President Obama's budget plan, defense spending will fall as a percentage of GDP, but the dollar amounts laid out will still be vast: The U.S. will spend $6 trillion over the next decade on defense (a category that includes intelligence and foreign aid). Sustaining this high level of defense spending, while also controlling budget decificits, will require a historic reduction of domestic discretionary spending -- which includes things like education, science, and infrastructure -- over the next decade. 

I have argued often in this space that this is bad choice: That the U.S. can and should make bigger cuts in security spending in order to sustain and expand investments in the key foundations of prosperity and national power, such as human and physical capital, scientific research, and renewable energy. This argument reflects a geo-economic view of the future, whereby the most secure countries will be those that can compete in the global marketplace with cutting edge goods and services, limit their external debts, and achieve energy independence. 

If we don't want our kids to answer to Chinese masters, building better universities and laboratories is more important than fielding a bigger Pacific Fleet.  

Or so I have argued. 

But as the Carnegie report make clear, along with other recent analyses, China does have geo-political aspirations and is building the military power to achieve them. According to many experts, a key long-term Chinese goal is to claim the seas around East and South Asia as its natural and rightful sphere of influence. 

So the basic choice for the U.S. is this: Do we let China eventually displace the U.S. as the East Asia's regional hegemon? Or do we spend what it takes to counter rising Chinese military power for decades to come?

The Obama Administration would appear to be taking the latter route, with its much trumpeted "pivot" toward Asia and Cold War-level defense budgets for as far as the eye can see. At the same time, the President insists that he is making the investments needed to build U.S. competitiveness -- claims belied by his budget numbers which show, for example, lower education spending in real dollars by 2018 than in 2005. 

Again, that's a bad choice in terms of ensuring a high standard of living for future generations of Americans.

The United States needs to undertake a broad global retrenchment in order to focus on getting its own house in order, a point made in new books by Richard Haass and David Stockman, among others. This means not only reducing the longtime U.S. security obsession with the Persian Gulf -- now more possible than ever given the explosion of domestic energy production -- but also gradually ceding China a dominant role in East Asia. 

And why not, really? A century ago, a rising United States claimed the Caribbean and Latin America as its rightful sphere of influence, basically ejecting European powers from the Western Hemisphere. Who are we to now say that China that should indefinitely tolerate having the U.S. Seventh Fleet parked off shore and numerous U.S. military bases in the region? Indeed, can anyone imagine Washington tolerating the reverse situation: A Chinese fleet hanging around the West Indies and Chinese bases in Mexico and Canada? 

Yes, it's quite possible China will use its new hegemony in negative ways -- maybe even coercing Taiwan back to reunification. But, unfortunately, that's the way geopolitics works. Bad things happen. And a weakened United States can no longer focus on stopping every imaginable bad thing from happening and spending its national treasure on extending an expensive security umbrella in ways that defy the natural flow of global power.

We need to worry about ourselves for a while.