America isn’t broke. Nor is it on the verge of a government debt crisis (whatever “crisis” even means for a nation whose debt is printed in a currency that is both its own and the world’s reserve). America is not in decay, and the last thing the U.S. should do is rashly withdraw from a dangerous world because of those mistaken beliefs.
This should be especially clear after the Belgium terror attacks.
Yet retreat is just what Donald Trump seems to be proposing. In an interview with The Washington Post editorial board Monday, Trump questioned the U.S. role in NATO and presence in Asia due to the financial burden they require:
I mean, we pay billions — hundreds of billions of dollars to supporting other countries that are in theory wealthier than we are. … When you look at the kind of money that our country is losing, we can’t afford to do this. Certainly we can’t afford to do it anymore…. I think we were a very powerful, very wealthy country. And we’re a poor country now. [Trump]
Looks like we finally found something Trump is in favor of off-shoring: America’s security.
Now, it’s certainly legitimate to evaluate the mission and cost of America’s overseas military commitments and posture. But that’s a different thing than scrapping our military alliances — or threatening to do so as some ham-handed budget negotiating tactic. Leading the free world, reassuring allies, and deterring aggression have little overlap with the skills needed to drive a hard bargain with a potential tenant in Trump Tower.
And yet, Republicans might give Trump’s defense policy ideas more of a hearing than they deserve because of their persistent debt fears. After all, it’s mainstream GOP economic thought that U.S. finances are precarious. How could they not be given the $19 trillion federal debt — $22 trillion if you include state and local government? These are figures Trump always mentions, as do many Republican politicians. They provide handy justification for arguing we can’t afford to invest in science, repair and upgrade our infrastructure, or bolster wages for low-income workers.
But here’s the thing: The U.S. is far from a poor nation. American households entered 2016 with a net worth of nearly $87 trillion, according to the Federal Reserve. To put that ginormous number in some context, China’s private wealth has been estimated at $23 trillion. Even if you factor in America’s debt-laden public sector and China’s large state-owned companies, the U.S. still has a $45 trillion wealth edge.
There are other ways of looking at national wealth that also show America’s riches. The value of U.S. intellectual capital has been estimated at around $9 trillion, with the value of the intangible assets — such as patents, copyrights, and general business methods — at nearly $15 trillion. And given Trump’s appreciation of brands — he generously values his own at $3 billion — you would think the businessman would appreciate America’s, which has been valued at close to $20 trillion.
Maybe all this wealth is one reason global financial markets don’t seem so worried about the U.S. debt. Well, that and the U.S. tax burden being one of the lowest in the developed world. The dollar is strong, and interest rates are low, as are inflation expectations. None of this is to say the U.S. should be a spendthrift in either defense or social spending. Without entitlement reform, Medicare and Social Security will require massive tax increases to keep their promises. Yet Trump would leave them untouched, vowing implausibly to fix their fiscal problems through higher economic growth alone.
The U.S. isn’t bankrupt. Our pockets aren’t empty. We aren’t a pauper nation.
But, of course, you can’t promise to make America great again without arguing that it currently isn’t.
By: James Pethokoukis, The Week, March 23, 2016
Filed under: Donald Trump, Economic Policy, Foreign Policy, National Security Tagged: Belgium Attacks, China, Debt Crisis, GOP, Infrastructure, National Wealth, NATO, Republicans, Science, Wages
