If you want to pinpoint when the United States became a global power, you could do worse than pick 1917. \u00a0That was when U.S. government first received a Triple-A bond rating. \u00a0The rating is now in jeopardy and could be lost by the beginning of next year \u2013 but not for reasons that the Obama administration claims.<\/p>\n
It is hard to overstate how critical the Triple-A rating has been to our national security. \u00a0Through two world wars, the Cold War, and the current family of conflicts, it allowed us to do more for less than any of our opponents. \u00a0It offset the waste that our government seems so proficient at generating. \u00a0It enabled us to take on global responsibilities without crippling our economy.<\/p>\n
Imagine the past 94 years without this not-so-secret American advantage. \u00a0Imagine the nation carrying the weight of extra borrowing costs into all those conflicts. \u00a0For all its spending during World War II, the Roosevelt Administration kept its eye on the money costs of the conflict more closely than most Americans recognize. \u00a0Major strategic decisions repeatedly went to the option that carried the lowest price tag.<\/p>\n
The same was true throughout the Cold War, including during the Reagan defense buildup that brought that period to an end. \u00a0In its final stage, the long twilight struggle became a fundamentally financial contest. \u00a0The Reagan Administration pushed the Soviet opponent into bankruptcy. \u00a0Critical to this strategy was taking advantage of the very low interest rates the United States government could command to spend the Soviets over the brink. \u00a0True, the Soviets had their empire, which in sophisticated and not so sophisticated ways they plundered. \u00a0But plunder had its price, including in pushing up the cost inflicted by internal resistance. It is a fair bet that the funds the Soviets extorted from their Eastern European vassals came at a higher rate than those the U.S. borrowed on the open market.<\/p>\n
The financial struggle has, of course, been central to dealing with post 9\/11 challenges. \u00a0Among the Bush Administration\u2019s first acts after the attacks was to start identifying and cutting off the sources of al Qaeda funding.<\/p>\n
In other words, costs are critical to national security and no cost so much as the one that is incorporated into every purchase, the cost of money.<\/p>\n
Now imagine the next 94 years without that advantage. \u00a0The current struggle will presumably be resolved in the next four years, whoever is president. \u00a0It must be, for there is a major danger gathering in the increasing financial strength and, as a result of it, military strength of the Peoples Republic of China. \u00a0In the short term, one of the central features of the Pax Americana<\/em> \u2013 freedom of the seas \u2013 is under increasing Chinese challenge.<\/p>\n Much like the Triple-A rating, freedom of the seas is an unseen foundation of global prosperity, particularly American prosperity. \u00a0It has allowed a knitting together of the international economy, increasing incomes everywhere and countering incentives for conflict with the incentives of trade.<\/p>\n China has recently been asserting a claim on the longtime open waters of the South China Sea, among the busiest shipping sectors of the world. \u00a0The U.S. has been working with the Philippines, Vietnam, and others to frustrate those claims. \u00a0But it is clear that the Chinese military would like to push the U.S. out and assert hegemony over navigation in the region.<\/p>\n What I am saying is, if only for reasons of national security and global peace, we will need that Triple-A rating in the century ahead.<\/p>\n