Dismantling the Empire

Nonetheless, military coups, however decorous, are not part of the American tradition, nor that of the officer corps, which might well worry about how the citizenry would react to a move toward open military dictatorship. Moreover, prosecutions of low-level military torturers from Abu Ghraib prison and killers of civilians in Iraq have demonstrated to enlisted troops that obedience to illegal orders can result in dire punishment in a situation where those of higher rank go free. No one knows whether ordinary soldiers, even from what is no longer in any normal sense a citizen army, would obey clearly illegal orders to oust an elected government or whether the officer corps would ever have sufficient confidence to issue such orders. In addition, the present system already offers the military high command so much—in funds, prestige, and future employment via the famed “revolving door” of the military-industrial complex—that a perilous transition to anything like direct military rule would make little sense under reasonably normal conditions.

Whatever future developments may prove to be, my best guess is that the United States will continue to maintain a façade of constitutional government and drift along until financial bankruptcy overtakes it. Of course, bankruptcy will not mean the literal end of the United States any more than it did for Germany in 1923, China in 1948, or Argentina in 2001–2002. It might, in fact, open the way for an unexpected restoration of the American system—or for military rule, revolution, or simply some new development we cannot yet imagine.

Certainly, such a bankruptcy would mean a drastic lowering of our standard of living, a further loss of control over international affairs, a sudden need to adjust to the rise of other powers, including China and India, and a further discrediting of the notion that the United States is somehow exceptional compared to other nations. We will have to learn what it means to be a far poorer country—and the attitudes and manners that go with it. As Anatol Lieven, author of America Right or Wrong: An Anatomy of American Nationalism

, observes,

U.S. global power, as presently conceived by the overwhelming majority of the U.S. establishment, is unsustainable. . . . The empire can no longer raise enough taxes or soldiers, it is increasingly indebted, and key vassal states are no longer reliable. . . . The result is that the empire can no longer pay for enough of the professional troops it needs to fulfill its self-assumed imperial tasks.

In February 2006, the Bush administration submitted to Congress a $439 billion defense appropriation budget for fiscal year 2007. As the country entered 2007, the administration was preparing to present a nearly $100 billion supplementary request to Congress just for the Iraq and Afghan wars. At the same time, the deficit in the country’s current account—the imbalance in the trading of goods and services as well as the shortfall in all other cross-border payments from interest income and rents to dividends and profits on direct investments—underwent its fastest ever quarterly deterioration. For 2005, the current account deficit was $805 billion, 6.4 percent of national income. In 2005, the U.S. trade deficit, the largest component of the current account deficit, soared to an all-time high of $725.8 billion, the fourth consecutive year that America’s trade debts set records. The trade deficit with China alone rose to $201.6 billion, the highest imbalance ever recorded with any country. Meanwhile, since mid-2000, the country has lost nearly three million manufacturing jobs.

To try to cope with these imbalances, on March 16, 2006, Congress raised the national debt limit from $8.2 trillion to $8.96 trillion. This was the fourth time since George W. Bush took office that it had to be raised. The national debt is the total amount owed by the government and should not be confused with the federal budget deficit, the annual amount by which federal spending exceeds revenue. Had Congress not raised the debt limit, the U.S. government would not have been able to borrow more money and would have had to default on its massive debts.

Among the creditors that finance these unprecedented sums, the two largest are the central banks of China (with $853.7 billion in reserves) and Japan (with $831.58 billion in reserves), both of which are the managers of the huge trade surpluses these countries enjoy with the United States. This helps explain why our debt burden has not yet triggered what standard economic theory would dictate: a steep decline in the value of the U.S. dollar followed by a severe contraction of the American economy when we found we could no longer afford the foreign goods we like so much. So far, both the Chinese and Japanese governments continue to be willing to be paid in dollars in order to sustain American purchases of their exports.