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Top Threat of the Future: Energy Crisis or High-Tech Military Foe?

David Callahan

Here is a question you shouldn't have to think on too hard.

What is a more likely scenario in the next ten or twenty years: A) the United States economy is dealt a grievous blow by an energy crisis that, say, is brought on by a disruption of oil supplies from the Persian Gulf; or B) the U.S. faces a military showdown with a foe that possesses more advanced weaponry than we do?

Some China alarmists may choose B, wrongly imagining that a country that now spends a seventh of what America does on defense is anywhere close to catching up with the U.S. militarily and also making the unduly pessimistic assumption that the U.S. and China will inevitably become geopolitical adversaries.

But many of us would choose A, the energy crisis, and for lots of good reasons. For one thing, such a crisis could, in fact, be only months away as the showdown with Iran escalates. The price of oil has recently surged above $100 a barrel on Iran fears -- an increase that analysts say could derail the fragile economy. And this spike is just from saber rattling and rumors. If Israel attacks Iran's nuclear facilities, and Iran retaliates by closing the Straights of Hormuz, we could see a super spike in oil prices to $140 a barrel or much higher -- enough to seriously disrupt the U.S. economy. 

And that's just the crisis of the moment. Who knows what other bad things might happen in the Persian Gulf region in coming years. And who knows how much energy prices will soar even without a crisis thanks to the rise of China, India, Brazil and other emerging powers. Oil prices neared $150 a barrel in 2007, the last time the global economy was firing on all cyclinders.

Next question: If an energy crisis is a more likely threat to America's way of life than a high-tech adversary, why is the Obama Administration proposing to spend almost ten times more on military research and development ($71.2 billion next year) than on R&D to develop clean energy?

The answer to this question, alas, does not have much to do with a clear-eyed assessment of future threats. Big spending on military R&D is largely a legacy of the Cold War and, even twenty years after the collapse of the Soviet Union, old priorities live on. One place where critics of government make a good point is that once spending gets going it can be hard to pull the plug for political reasons. Defense R&D spending has a strong constituency in industry and in Congress -- the fabled military-industrial complex. Energy spending has no similarly strong constituency (although that is starting to change).

The United States spends more on just military R&D than Russia spends on its entire defense establishment. Our defense R&D budget is also bigger than the military budgets of Japan, Germany, and the U.K. That sure sounds like overkill to me.

It's a good thing that the Obama Administration keep proposing more increases in energy R&D spending, pushing back against deficit hawks who would under-invest in America's future. But let's be clear: The administration has barely touched the bigger challenge of reallocating government R&D dollars more broadly to prepare for the most likely threats facing the nation.