David P. Calleo

David P. Calleo is an American scholar—a student of European and American politics, history and political economy—based at the Johns Hopkins University Nitze School of Advanced International Studies, where he is the Dean Acheson Professor. He also holds the title of University Professor.

Talk

Morbid Decline

Is the United States a nation in decline? For over five decades this has been a recurring topic of American political discourse. The subject is sensitive and unsettling, and continues to raise discordant and inflammatory questions. For example: If America is in decline, is that decline inevitable? If it is not inevitable, who is to blame for it? Have successive leaders been wrong-headed or otherwise incompetent? Is national power being undermined by unfriendly critics? Or is policy bemused by unrealistic visions?

There are, of course, basic analytical issues: How do we measure decline? To what extent should the indicators be economic or military? A still more basic issue, what do we mean by decline? Do we mean absolute decline, where power is lessening in comparison with some earlier measure? Or do we mean relative decline, where power, even if robust by past standards, is diminishing in relation to the power of others – perhaps countries “catching up” from a lower base? Decline, however, often connotes something beyond absolute or relative decline: decline as a disease where some pathological syndrome drains a nation of its vitality, perhaps as the consequence of prolonged bad habits or mistaken policies, or inappropriate visions of the future.  This form of decline might be called morbid decline. The notion of a morbid economy is not directly linked to an economy’s changing size. It refers less to the economy’s rate of growth than to the essential character of that growth; above all, whether or not it is sustainable without damaging the organism itself. In effect, morbid decline, like the ancient concept of the body politic, borrows its imagery from the organic world of medicine. In this model, growth may be good or bad, depending on the overall consequences for the entire organism.

Since, by economic measurements, the United States has been confronting a rather severe relative decline, the question of whether that relative decline (or growth) is also morbid grows increasingly salient. It is perhaps most easily approached through the nation’s economic indicators. Taking a long view, stretching back to the Second World War, it seems indisputable that America’s relative economic position has declined. An obvious indicator is its diminishing share of the world’s gross product.

In 1960, US GDP (in current $US) was 40% of the world’s total economic output. By 2011, it was around 21%. Over this same period, the European states have been transforming themselves into an economic and political bloc. By now there is the European Union and a still more closely integrated Eurozone. In the past three years, the Eurozone’s share in the world’s total economic output has dropped below the US’s, however, accounting for about 19% of the world economy in 2011, the Eurozone comprises about the same proportion of the world economy as the US. If we count all the countries of the EU as a unit, – not just the Eurozone – their combined GDP in 2011 is around 25% of the world’s total.So, from this perspective the United States is no longer absolutely the world’s biggest economy. Europe had in fact already reached rough parity with America by the early 1980s. Since then the United States has, broadly speaking, stopped declining vis-à-vis the Eurozone economies. Instead both the United States and the European bloc have been declining vis-à-vis the Asian countries, most notably the Japanese and the Chinese – which have now have risen to about 8% and 10% of the global economy, respectively.[1]

Trade figures suggest a more dramatic American relative decline. In 1960, the United States accounted for around 16% of global merchandise exports. By 2011, the American share had sunk to 8.5%. US export of services has held up better but still dropped significantly over the past three decades.[2] What is particularly arresting is how radically unbalanced America’s external accounts are with the rest of the world. The US current account deficit stretches back to the early 1980s (in between only in 1991 did the US current account record a surplus) and reached an astounding $677 billion in 2008 before shrinking to a still-colossal $382 billion in 2009, after which it started increasing again up to $466 billion in 2011 and (is expected to have) increased further in 2012. After running a surplus as late as 2005, the European Union too acquired an external deficit, but in 2010 its current account once again was in surplus. Japan’s trade balance, while declining in recent years, still has a large annual surplus and in 2011 amounted to $119 billion. China’s current account surplus reached over $400 billion in 2008. By 2011, it had dropped from this all-time high, but was still in excess of $200 billion.[3] 

During the 1980s, the last decade of the Cold War, America’s big external deficit was generally accompanied by a domestic twin: a federal budget deficit. Two big deficits called for heavy borrowing. Not surprisingly, America’s government debt held by the American public has grown significantly— from 26% of GDP in 1980 to over 70% at the end of 2012. It is projected by some to reach 90% by 2022. [4

In the 1980s, a whole school of “declinist” critics began interpreting the twin deficits as, in effect, a sign of what I call America’s morbid decline. This decline was seen as the result of growing macroeconomic indiscipline –an overstretch combining an excessive combination of civilian and especially military spending, which the public supported but for which it was unwilling to pay. The growing debt, declinists argued, indicated that America’s hegemonic role was growing unsustainable and would sooner or later lead to a precipitous fall of the dollar, with a global financial collapse to follow.[5]

Of course, America’s Cold-War finances can be interpreted more sympathetically. America’s special role in the world gave it a schizophrenic identity. It was a global hegemon, whose outsized military spending was defending the Free World, but it was also an advanced Western democracy with the usual inclinations for welfare spending. Moreover, America’s hegemonic geopolitical role, even if it did contribute greatly to provoking the deficits, also greatly facilitated financing them.[6] Since the U.S. global military role was a vital public good for Europe and Japan, they were willing to absorb America’s external deficits decade after decade.[7] The unique role of the dollar as the world’s reserve currency provided a further explanation for America’s ability to finance large deficits. Thanks to its hegemonic monetary role, the United States could pay its foreign bills in dollars, which it could create at will, and which allies found awkward to refuse, not only because the United States was defending them but also because there was no alternative reserve currency. In other words, America’s hegemonic military role fed its debt, and its hegemonic monetary role provided the cash by which others could finance that debt. In effect, the Cold War’s international monetary system coaxed the Europeans into paying for their own defense. By the 1980s, however, the increasingly restive Europeans began to get serious about creating a reserve currency of their own.[8] The end of the Cold War gave fresh impetus to that goal.

It is interesting to speculate on where America’s mounting Cold War debt might have led after the 1980s, had not the economic disarray of the Soviets proved far more advanced than that of the Americans. As it happened, Soviet decline precluded American decline, at least for a time. The implosion of its Soviet rival provided the United States with an enormous “peace dividend,” permitting a sharp reduction in military spending. By the end of the Clinton administration, the federal budget deficit had disappeared.[9] But, its awkward twin, the current account deficit, grew larger and larger.[10] Such a big deficit with the rest of the world indicated that the U.S. economy was absorbing (investing and consuming) substantially more than it was producing. To finance the debts from its “over-absorption,” the world’s richest country was commandeering the rest of the world’s savings, which were, of course, held for the most part in dollars. Justifying this state of affairs posed a serious intellectual challenge to Clinton’s economists. A common solution was to attribute America’s current account deficit to “oversaving” in the rest of the world. Oversaving Europeans invested their accumulated dollars in America’s dot.com boom. Oversaving Chinese bought American bonds to keep their own currency from appreciating and thereby lessening the competitiveness of their exports. As a result, foreign-owned dollars flooded the American economy, where their presence cheered on the booming stock market and helped make credit cheap and abundant for America’s hyperactive consumers.[11] In the new post-Cold War global economic system, America’s role, according to the Clinton gurus, was to be the world’s principal center of innovation. In its innovating role, the United States produced the dot.com boom. Although the administration itself rejected the idea, it was also popular among some economists to see the U.S. as the world’s consumer of last resort.  In its free-spending consuming role, the United States was seen to be spreading its own rapid growth throughout the world.[12]

At the end of the Clinton era, the stock market boom collapsed, thus also removing a major incentive to America’s high consumer spending. But the newly elected George W. Bush administration used tax cuts to keep up the high absorption of the Clinton years.[13] In due course, 9/11 and the Iraq War raised military budgets to a level, in constant dollars, higher than at the peak of the Cold War.[14] Fiscal deficits returned.[15] The Federal Reserve proved ready to accommodate with cheap credit.[16] Its anxious largesse helped encourage a new bubble: a gigantic housing boom. With mortgages offering real interest rates near zero, even poor Americans were encouraged to purchase houses on the expectation that real-estate values would rise indefinitely, a forecast with disastrous consequences. At the height of the crisis in 2009 mortgages failed on a record 2.82 million homes, leaving behind uncollectable debts wrapped in mysterious financial products, difficult to evaluate.[17] Frightened banks hoarded their assets. Only heroic injections of cash by the Fed prevented a general rout.[18] The mortgage crisis has been all the more precarious given the country’s increasingly unequal income distribution. For most of the population in this supposedly prosperous era, real earned income has stagnated. Between 1983 and 2007 the income earned by the bottom 80% of the population grew less than 10%. Over the same period, the income of the highest-earning 20% of the population grew by 60%.[19] By now, the wealthiest 5% of Americans own more than 70% of the nation’s capital (aside from family homes), with nearly 43% concentrated in the top 1% of the population, an imbalance not seen since just before the crash of 1929. [20]

What does this narrative tell us? It suggests that America’s rising GDP in recent decades has been based in part on speculative bubbles[21]. America’s middle class has been able to share the new wealth by buying into the bubbles while the assets were inflating. When the bubbles popped, however, much of the new wealth disappeared and investors saw their capital greatly diminished. Dreams of comfortable retirement have faded away. The crisis is still very much with us. While the recession in the real economy may be slowly reversing itself, unemployment, while falling slowly remains at very high levels (7,8% in December 2012, 7.5% in April 2013). The financial mess is far from over. Given the massive government borrowing already needed to shore up faltering banks, the government’s own credit may begin to seem questionable. The worst may thus be yet to come. There is a widespread expectation that future generations of Americans will be substantially poorer. In summary, recent decades suggest a pretty convincing story of America’s morbid decline.

The crisis, however, is global. Which countries will suffer the most remains to be seen. At the moment, America’s old economic partners and competitors, the Eurozone Europeans, are in the middle of a debt crisis that reflects their own disabling political divisions and over-indulgent welfare systems, symptoms of the morbid elements behind Europe’s own relative decline. For some Americans, bewailing Europe’s problems seems to provide relief from contemplating their own. Analysts vie with each other to present a gloomy picture of Europe and its currency. Continental Europeans do, nevertheless, have some important advantages over their American cousins. Their infrastructure is in better shape. Their income distribution is less lop-sided.[22] They have learned to provide some vital services, health care above all, with substantially less cost.[23] In many other respects, they may be ahead in learning to share better and do more with less. And while American critics find European states dangerously weak militarily, European foreign policies may be better suited to coaxing a world of rising new powers into peaceful coexistence.[24]

America’s less developed rivals – countries such as China, India, or Brazil – may have better prospects. They may continue to enjoy their substantial real growth vis-à-vis the Unites States and Europe, indefinitely. China, in particular, may be able to continue channeling its once-frozen savings into its own domestic development. If so, China may emerge as one of the great winners of the new era. After two centuries of humiliation, China may regain some of its historical prosperity.

Of course, no one can really say where the new century will take us. The trends of recent decades do, nevertheless, suggest a more plural world, with no single global hegemon. The future may well see a variety of great powers, probably with strong regional systems built around them. If so, the vision of a closely integrated world, led by the United States as unipolar hegemon, seems a dangerously dysfunctional guide for American national policy. Indeed, the persistence of this unipolar fantasy in a plural world system is probably the most reliable guarantee of morbid American decline. It has now grown increasingly fashionable to say this – not surprising, given a budget deficit exceeding one trillion dollars for the fourth consecutive year in 2012. But it remains to be seen whether such worries are merely adroit adjustments of rhetoric rather than resolute changes in the nation’s foreign and economic policy.

Elementary prudence might suggest that today’s financial crisis is an ideal occasion for America’s long-overdue retreat from geopolitical overstretch, a time for bringing America’s geopolitical pretentions into harmony with its diminishing relative resources and expanding domestic needs. The opportunities for geopolitical saving appear significant. According to the Congressional Budget Office (CBO), the annual cost of carrying out the Department of Defense’s plans would rise (in 2013 dollars) from $574 billion in 2017 to $633 billion in 2022 and $645 billion in 2030, resulting in an average annual $610 billion over the period 2013–2030.[25] As the CBO notes, such projections exceed the peak budgets of the Reagan administration’s military build-up of the mid-1980s.[26] They presume a military budget consuming 3.0 percent of GDP by 2017 and 2.5 percent by 2030. [27] Moreover, figures comparing US military spending in recent years with that of other major countries are troubling. In 2010 US defense expenditures (as a percentage of GDP) amounted to 4.77 percent, while the United Kingdom percent, France, Russia and China spend 2.57, 2.03, 2.84 and 1.30 percent, respectively. [28]

The history of the past two decades suggests, in short, that adjusting to a plural world is not easy for the United States. The lingering pretension to be the dominant power everywhere has encouraged the United States to hazard two unpromising land wars, plus a diffuse and interminable struggle against “terrorism.” Paying for these wars and the pretensions behind them confirms the United States in a continuation of Cold War finance, with very large deficits, financed by creating and exporting more and more dollars. The consequence is today’s restless mass of accumulated global money. Hence, whereas the value of all global financial assets in 1980 was just below 110% of global GDP; by 2008, even after the worst of the financial implosion, that figure amounted to 309% of global GDP and, over the past years, it rose up to 356% in 2010.[29] This excess of volatile money can create the semblance of vast real wealth for a time, but can also (with little notice) sow chaos in markets, wipe out savings, and dry up credit for real investment. What constitutes a morbid overstretch in the American political economy thus ends up as a threat to the world economy in general.

To lead itself and the world into a more secure future the United States must put aside unmeasured geopolitical ambitions that demand unlimited cheap credit. Instead, the United States needs a more balanced view of its role in history. But America’s post-Soviet pundits have, unfortunately, proved more skillful at perpetuating outmoded dreams of past glory than at promoting the more modest visions appropriate to a plural future.

What about Obama? So far, Obama’s administration has made use of its crisis to promote an unprecedented expansion of welfare spending.[30] Much of the spending is doubtless good in itself and certainly serves the need for strong counter-cyclical measures. But at some point the pressure to pass from expansion to stabilization will very likely prove inescapable. Budgetary cuts will have to be found somewhere; demographic trends suggest that drastic reductions in civilian welfare spending are unlikely. From March 1 2012, the automatic cuts known as Sequester started as a consequence of Congress’s inability to find a compromise. The arbitrariness of the cuts causes problems.

Thus, while the financial crisis has certainly made Americans fear for their economic future, it does not yet seem to have resulted in a more modest view of the country’s place in the world, or a more prudent approach to military spending. Despite occasional bursts of presidential wisdom, the relentless worldwide expansion of American military engagement appears to go on apace. Indeed, the Pentagon now visualizes the globe as six military districts, each with its American commander and massive pool of resources.[31]

In short, the unipolar vision is a poisoned legacy passed on all too firmly to the new generation of American leaders. Not only does it repeatedly entrap the nation in unworthy adventures but it makes it likely that America’s inevitable relative decline will also be eventually turn morbid.

 


[1] Note: GDP here is measured in current US$. For global GDP share data, see the World Bank, World Development Indicators (WDI) databank. [available at: http://data.worldbank.org/data-catalog/world-development-indicators].

[2] Ibid.

[3] See the International Monetary Fund, World Economic Outlook Database, October 2012 [available at: http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx].

[4]These figures reflect US debt held by the public, rather than the more dramatic gross debt figures. The non-partisan Congressional Budget Office (CBO) prefers to use debt held by the public rather than gross debt, which includes debt the government essentially owes to itself. For discussion of gross debt versus public debt, see Congressional Budget Office, “Federal Debt and the Commitments of Federal Trust Funds,” Long Range Fiscal Policy Brief, No. 4, October 24, 2002 [available at: http://www.cbo.gov/doc.cfm?index=3948&type=0]. For debt figures and projections see Congressional Budget Office (CBO), “Updated Budget Projections: Fiscal Years 2012 to 2022,” August 2012, pp. 1 – 3.

[5] For the “declinist school”, see Peter Schmeisser, “Taking Stock: Is America in Decline?,” The New York Times, April 17, 1988 [available at: http://www.nytimes.com/1988/04/17/magazine/taking-stock-is-america-in-decline.html]. For typical works, see Paul Kennedy, The Rise and Fall of Great Powers: Economic Change and Military Conflict from 1500 to 2000, (New York: Random House), 1987; David P. Calleo, Beyond American Hegemony: The Future of the Western Alliance, (New York: Basic Books), 1987. There was a wide diversity of views among the several other authors labeled as declinists.

[6]See David P. Calleo, The Bankruptcy of America: How the Federal Budget Is Impoverishing the Nation, (New York: William Morrow & Company), 1992.

[7]In 1984, Germany and Japan were the largest holders of US debt, accounting for over 32% of US debt held in foreign portfolios (approximately 16% each; the UK was the third largest at 8.4%). By 1989, Japan held 26.4%, Germany 8.6%, and the UK 7.2%. Data from US Department of the Treasury “Treasury International Capital System Part A: Foreign portfolio holdings of US securities,” April 30, 2010 [available at: http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/fpis.aspx].

[8]See David P. Calleo, Rethinking Europe’s Future, A Century Foundation book, (Princeton: Princeton University Press), 2001, Chapter 11.

[9] The US budget entered surplus in 1998 and remained in surplus until just after Clinton’s departure from office in 2001. For data, see: US Department of Commerce, Bureau of Economic Analysis (BEA) National Income and Product Accounting (NIPA) Tables, Table 3.1, [available at: http://www.bea.gov/national/nipaweb/index.asp]. Military spending as a percentage of the federal budget declined precipitously, from nearly 24% just after the fall of the Berlin Wall to 16.5% when Clinton left office. For data, see: Office of Management and Budget (OMB), The President’s Budget for Fiscal Year 2013, Historical Tables: Table 3.1 – Outlays by Superfunction and Function: 1940–2017. [Available at: http://www.gpo.gov/fdsys/pkg/BUDGET-2013-TAB/xls/BUDGET-2013-TAB-3-1.xls]

[10]The current account deficit grew over 700% between 1992 and 2000, from less than 1% of GDP to over 4%. See US Department of Commerce, BEA National Economic Accounts, Current-dollar and ‘Real’ GDP [available at: http://www.bea.gov/national/xls/gdplev.xls] and US Department of Commerce, Bureau of Economic Analysis International Economic Accounts: Balance of Payments [available at: http://www.bea.gov/international/xls/table1.xls].

[11] Between its first year and its last, the Clinton administration presided over a 500% increase in foreign capital inflows. See data from BEA Balance of Payments. For the magnitude and significance of European investments in the United States, see Daniel S. Hamilton and Joseph P. Quinlan, The Transatlantic Economy 2006, 2007, (Washington, DC: The Center for Transatlantic Relations). For the nature and implications of Chinese investment in the United States, see Niall Ferguson and Moritz Schularick, “Chimerica and the Global Asset Market Boom,” International Finance 10:3, 2007, pp. 215-239.

[12]On the US role as consumer of last resort, see David E Sanger, “Clinton Toughens Stance on Trade,” International Herald Tribune, November 12, 1998, p. 13. See also “Rubin Says US Cannot be ‘Consumer of Last Resort,’” AFX News, February 1, 1999.

[13] While reducing US tax revenues significantly, the efficacy of Bush’s efforts to stimulate the economy is open to question. See Peter Orszag and William Gale, “Evaluating President Bush’s Tax Stimulus Package,” Brookings Institution, October 9, 2001 [available at: http://www.brookings.edu/~/media/Files/rc/papers/2001/1009taxes_gale/20011009.pdf]. See also Ray Suarez, Martin Anderson, Joseph Stiglitz, Transcript of NewsHour with Jim Lehrer, Aired January 3, 2003 [available at: http://www.pbs.org/newshour/bb/economy/jan-june03/econ_1-08.html] and Alan Reynolds, “Bush’s Stimulus Flop,” The Wall Street Journal, January 22, 2008 [available at: http://www.cato.org/pub_display.php?pub_id=9109].

[14]After reaching a low of 16.4% of federal government spending in 2001, U.S. spending on national defense returned to 20.7% of the federal budget by the time Bush left office. This was the highest level since 1990. See Office of Management and Budget (OMB), The President’s Budget for Fiscal Year 2013, Historical Tables: Table 3.1. Including the budget from the Department of Homeland Security and the National Intelligence Program adds between 2-3% to these figures, with some uncertainty owing to the classified nature of the intelligence budget. For on Department of Homeland Security see The President’s Budget for Fiscal Year 2013, Historical tables, Table 4.1—Outlays by Agency: 1962–2017 [available at: http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/hist04z1.xls]. For data on the National Intelligence Program see Office of the Director of National Intelligence, DNI Releases FY 2012 Appropriated Budget Figure for the National Intelligence Program, Office of the Director of National Intelligence, October 30, 2012 [available at: http://www.dni.gov/index.php/newsroom/press-releases/96-press-releases-2012/756-dni-releases-fy-2012-appropriated-budget-figure].

[15]The $236,241 million surplus of Clinton’s final full year in office had given way to a $458,553 deficit in Bush’s final year. See Office of Management and Budget (OMB), The President’s Budget for Fiscal Year 2013, Historical Tables: Table 1.1—Summary of Receipts, Outlays, and Surpluses or Deficits: 1789–2017

[Available at: http://www.gpo.gov/fdsys/pkg/BUDGET-2013-TAB/xls/BUDGET-2013-TAB-1-1.xls]

[16]For a discussion of Fed policy during the Bush administration and alternative interpretations of its accommodating stance, see Martin Wolf, “Fixing Global Finance,” (Baltimore: Johns Hopkins University Press), 2008, particularly Chapter 4’s weighing of the “Savings Glut” versus “Money Glut” hypotheses.

[17] RealtyTrac, “Year-End 2009 Foreclosure Market Report,” Jan 14, 2010. [Available at: http://www.realtytrac.com/content/foreclosure-market-report/].

[18]The US seasonally adjusted monetary base increased more than 100% in 2008. See Federal Reserve Bank of St. Louis, “St. Louis Adjusted Monetary Base (BASE)”, Federal Reserve Economic Data (FRED), data accessed on January 27, 2013.[Available at: http://research.stlouisfed.org/fred2/].Along with the European Central Bank and other central banks, liquidity injections during the height of the crisis have been estimated at $2.5 trillion, representing the largest monetary intervention in world history. See Roger C. Altman, “The Great Crash 2008: A Geopolitical Setback for the West,” Foreign Affairs, 88:1, January-February 2009, p. 2.

[19] Figures adjusted for inflation. See:Edward N. Wolff,Recent Trends in Household Wealth in the United States:

Rising Debt and the Middle-Class Squeeze—An Update to 2007,” Levy Institute of Economics, Working Paper No. 589, March 2010, p. 46.

[20] Recent figures from Wolff, 2010. Pre-1929 figures from Edward N. Wolff, Top Heavy: The Increasing Inequality of Wealth in America and What Can Be Done About it, (New York: The New Press), 1996.

[21]See Thomas I. Palley, “America’s Exhausted Paradigm: Macroeconomic Causes of the Financial Crisis and Great Recession,” Institute for International Political Economy Berlin, Working Paper 02/2009, particularly “The Neoliberal Bubble Economy,” p. 9-12 [available at: http://www.ipe-berlin.org/fileadmin/downloads/working_paper/ipe_working_paper_02.pdf].

[22] The US has a substantially less equal distribution of wealth than the EU as a whole and its member states. See “Distribution of Family Income – Gini index,” CIA World FactBook, [available at: https://www.cia.gov/library/publications/the-world-factbook/fields/2172.html].

[23]Total expenditure on health care (as a % of GDP) in past years has consistently been higher in the US than in France, Germany, and the United Kingdom. For instance, in 2010 the expenditures were, respectively, 17.6 % vs. 11.6%, 11.6% and 9.6% (See Organization for Economic Cooperation and Development (OECD), “Total expenditure on health – As a percentage of gross domestic product” OECD Health Statistics, 2012. [Available at: http://dx.doi.org/10.1787/hlthxp-total-table-2012-2-en]. Despite all of the latter offering universal coverage and have more practicing physicians per 1000 patients (see Organization for Economic Cooperation and Development (OECD), “Practising physicians (doctors) – Density per 1 000 population” OECD Health Statistics, 2012. [Available at: http://dx.doi.org/10.1787/doctors-table-2012-2-en].

[24]For a further development of some of these arguments, see David P. Calleo, Follies of Power: America’s Unipolar Fantasy (Cambridge and New York: Cambridge University Press), 2009, chapters 6 and 7.

[25]Congressional Budget Office (CBO), “Long-Term Implications of the 2013 Future Years Defense Program,” July 2012, pp. 4-7. [Available at:

http://www.cbo.gov/sites/default/files/cbofiles/attachments/07-11-12-FYDP_forPosting_0.pdf]

[26]Congressional Budget Office (CBO), “Long-Term Implications of the Fiscal Year 2010 Defense Budget,” January 2010. pp. 1.

[27]Congressional Budget Office (CBO), Long-Term Implications of the 2013 Future Years Defense Program,” July 2012, pp. 9-10.

 

[28]International Institute for Strategic Studies (IISS), “The Military Balance 2012”, (London: Routledge), 2012. pp. 463-476. Budget estimates, especially those of states like China and Russia, can be difficult to ascertain. IISS relies on “official budget” figures at the market exchange rate.

[29] Figures from 1980 to 2006 retrieved from “Mapping Global Capital Markets: Fourth Annual Report,” McKinsey Global Institute, January 2008, pp. 10. [Available at: http://www.mckinsey.com/insights/mgi/research/financial_markets/mapping_global_capital_markets_fourth_annual_report]. For more recent figures from 2008 – 2010 see “Mapping global capital markets 2011” McKinsey Global Institute, August 2011, pp. 2. [Available at:

http://www.mckinsey.com/insights/mgi/research/financial_markets/mapping_global_capital_markets_2011].

 

[30]The government debt held by the public is expected to reach 90% of GDP by 2022. See CBO, “Updated Budget Projections: Fiscal Years 2012 to 2022,” August 2012, pp. 3.

[31] US Northern Command, US Southern Command, US Pacific Command, US Europe Command, US Central Command, and US Africa Command. See “Unified Command Plan,” United States Department of Defense [available at: http://www.defense.gov/specials/unifiedcommand/].