New Obama security strategy hardens economic resolve

By Alister Bull – Analysis

WASHINGTON (BestGrowthStock) – President Barack Obama has deployed a time-honored U.S. political strategy by casting his economic goals in terms of national security, and it may boost his chances of success in cutting the massive U.S. deficit.

Calls for economic renewal and fiscal discipline are woven throughout Obama’s new National Security Strategy, released last Thursday, in which he emphatically states America’s strength in the world is determined by domestic prosperity.

Echoing President Dwight Eisenhower’s characterization of the U.S. interstate highway and federal education in the 1950s as national security priorities, Obama links sustaining power abroad to curbing the budget deficit, boosting the economy and reforming energy policy, education and innovation.

“I think this will help (his agenda), particularly in dealing with the deficit problem,” said Lawrence Korb, a senior fellow at the Center for American Progress, a Washington-based think-tank.

“He is laying the foundation for an argument that ‘as part of our deficit reduction I have got to reduce defense spending and this will make us safer’,” said Korb,

Obama is pushing lawmakers to act on his policy agenda and has gathered a bipartisan debt commission to recommend ways to cut the $1.4 trillion budget deficit and be more disciplined in the future. It is due to render its opinion by December 1.

The solution is likely to incorporate a mixture of spending cuts and tax increases. Other analysts agree linking economic strength at home with national security, while constantly emphasizing the need to prioritize, helps the national security strategy create a basis for defense budget cuts.

“The discussion of the need to make hard choices in general … and promising to give citizens all the facts so that they could judge the costs of ongoing military operations, sounds like the administration is stockpiling talking points for cutbacks in the security budget,” said Lou Crandall, chief economist at financial research firm Wrightson ICAP in Jersey City, New Jersey.

Defense spending, at $660 billion, accounted for almost 18 percent of the federal budget in fiscal year 2010.

Obama’s debut declaration of national security goals, required by law of every president, extends a bipartisan hand by leaning on Eisenhower’s justification for expanding the federal government by citing national security.

The Republican president’s 1956 law clearing massive federal spending on statewide highways was called the National Defense Highways Act. Likewise, federal funding of education was approved under the National Defense Education Act of 1958.

CHANNELING EISENHOWER

In fact, Obama in December directly invoked his predecessor during a speech at West Point outlining a new Afghan strategy which was itself a coded reference to budget cuts.

“I’m mindful of the words of President Eisenhower, who — in discussing our national security — said, “Each proposal must be weighed in the light of a broader consideration: the need to maintain balance in and among national programs,” Obama told the assembled U.S. Corp of Cadets.

Obama’s defense document emphasizes soft power, distinguishing it from the focus on fighting terrorism and preemptive war laid out in President George W. Bush’s defense strategy after the September 11 attacks on the United States.

In contrast, Obama’s vision carries the clear imprint of an administration governing in the wake of the 2008-2009 global financial crisis, which forced him to aggressively expand public spending to restart growth.

Obama’s $787 billion emergency stimulus package, together with the impact of the worst recession in 50 years and the cost of fighting wars in Iraq and Afghanistan, has pushed the U.S. national debt above $12 trillion.

U.S. Secretary of State Hillary Clinton explicitly connected deficit reduction with national security in remarks after the Obama strategy was released.

“We cannot sustain this level of deficit financing and debt without losing our influence, without being constrained in the tough decisions we have to make,” Clinton said, adding that it was time to “make the national security case about reducing the deficit and getting the debt under control.”

Sustaining confidence of foreign investors in the might of world’s only superpower is also vital to financing its debts.

Foreign creditors hold $3.9 trillion of U.S. government debt, led by China’s $895 billion stake, which potentially saps U.S. leverage over a powerful rival with whom it could clash.

This is particularly true of Taiwan, where China claims sovereignty and which the United States has pledged to defend.

“It affects the whole image of the United States and of U.S. power around the world if the U.S. is heading toward becoming an economic basket case,” said Reginald Dale, senior fellow at the Center for Strategic and International Studies, a Washington think-tank.

“If you owe all this money you become less independent in the broader sense because you have to worry about where you are going to raise the next loan,” he said.

Stock Market Money

(Reporting by Alister Bull; Editing by David Alexander and Eric Walsh)

New Obama security strategy hardens economic resolve