The Coming Fiscal Tsunami Dooms America's Global Empire

Doug Bandow

Security, Economics, United States

Federal debt will skyrocket in the coming decades, and taxpayers will no longer shell out to defend irresponsible allies.

Those who dream of a permanent American imperium dismiss any difficulties or challenges. The U.S. remains strong, other nations aren’t likely to overtake America.

Most important, with work, Washington can maintain its military edge. So what if Americans have to sacrifice to sustain the force structure necessary to impose Washington’s will on other states? It is Uncle Sam’s destiny to rule the globe. People should cheerfully pay.

Yet for most Americans the more relevant destiny is living longer and facing the challenge of paying for ever more expensive health care. Federal deficits are back on the rise. There isn’t going to be much money for the national government to spend on “discretionary” items, including underwriting wealthy allies, rebuilding failed states, and enforcing international norms.

So far ignored in a presidential race most notable for the improbable candidacy of Donald Trump, America’s fiscal position is deteriorating sharply. Earlier this year the Congressional Budget Office (CBO) forecast that the federal deficit was back on the rise in 2016, with steady increases likely over the next decade.

The latest report finds a sharp jump just since the earlier report in March. Now CBO expects this year’s deficit to run $590 billion, or about a third more than last year. The only good news in the agency’s estimate is that the cumulative deficit over the next decade will be a bit lower than previously predicted because CBO expects the Federal Reserve to continue holding down interest rates. If that changes, or if the Fed no longer finds that it can keep rates down close to zero, this good news will disappear.