I prefer to call it Restraint, but let’s be clear, by whatever label America is pulling back. The formula is cut taxes, increase social spending, and increase defense spending to get a soaring deficit and a return to a saner American security policy. President Reagan stumbled upon the basics. He came to office determined to cut taxes, cut social program spending, and increase defense spending. Taxes were cut and defense spending increased, producing what is known as the Reagan Buildup, which many on the Right claim forced a Soviet collapse as they tried to compete militarily and gave us the happy end to the Cold War. But Reagan discovered he could not manage to cut social spending directly, the opposition by the Democrats being too stout. The combination of high defense spending and reduced taxes, however, produced a substantial government deficit that came to dominant American national politics and soon led to a flattening of spending on social programs, good enough for most Republican.
The by the end of the Clinton years expanding budget surpluses were at hand, as the political pressures to deal with the Reagan induced deficit had generated increased taxes, tamed social spending (some serious welfare reform), and with the end of the Cold War, the opportunity for substantial reductions in defense spending, about a third of the defense budget in total. The surpluses gave President George W. Bush the possibility to respond to the 9/11 attacks and the brief recession that followed them by dramatically increasing defense spending while cutting taxes and ignoring increases in social spending, especially health care spending, that the Democrats had built into future budgets during the 1990s. Social spending received further boosts from the aging of the American population, advances in medical technologies which boost health care costs, and George W, Bush’s desire to gain reelection through compassionate conservativism revisited –government giveaways at taxpayer expense such as a new drug benefit for the elderly and increased federal spending for local and state provided education. The wars in Afghanistan and Iraq were conducted without tax increases, their costs largely transferred to future generations. In fact, the now haunting second round of Bush tax cuts followed as did a very severe recession that further reduced government revenues and forced huge efforts to save the banks and other parts of the financial system imploding.
Gone were the surpluses that Clinton bequeathed. Bush ran through them and much more. Barak Obama was elected with his own particular agenda, but came to follow tightly the Bush formula. The wars continued with cutbacks in Iraq more than matched by increased costs in Afghanistan, the surge in troops and the deficit. Obama had his signature health care reform to enact which combined with additional stimulus spending so upset Republicans that they mobilized to win control of the House of Representatives in the succeeding congressional election, forcing the renewal of the Bush tax cuts. The ballooning deficit is the core issue in the politics of today. Although America has no difficulty in financing the deficit, it is the club by which both political parties bludgeon each other. The Democrats want to protect social programs and thus demand tax increases and/or defense cuts though the later is more quietly expressed than the former as Democrats still worry about their perception as anti-war types. The Republicans want to enact more tax cuts and decrease spending for social programs while protecting the defense budget (an old weapon against Democrats). Together they have so frightened the public that choices will have to be made. People feel that disaster lies ahead unless the deficit is controlled. Normal growth plus withdrawal from Afghanistan would do much to right the situation were not the recovery from the current severe recession delayed by the uncertainty of which side will win.
The likely outcome is defense cuts and a pulling back from at least some of the international meddling that tempts the United States. With an aging population social programs can only expand as many of them serve the American middle class which is the bulk of the American population, Republican or Democrat. The middle class also pays the bulk of the taxes and believes that it is burdened too much by taxes. The American political system is quite responsive if a bit chaotic. Americans want subsidized retirements, housing, and health care and do not want to be taxed for it. Defense is a subsidy, at least in part, for middle class Europeans and Asians to avoid having to pay for their security. They do not get much of a vote in American elections as disappointing as that might be to some. Make deficits the central issue in American politics and defense cuts will be the outcome. The bigger the deficit issue, the bigger the cuts. The bigger the cuts, the more we cannot afford the forward presence, the constant management of regional security far from American borders, and the free riding of friends. The oceans are big and protect America from much of the world’s turmoil. Being on American side of them is cheaper than being on the other side and wiser too. America is coming home thanks to the government’s budget deficit.