The United States’s ballooning national debt might prove more costly than people realize. Far from being just a domestic matter, our debt has national security implications.
Jerome Powell, the chairman of the Federal Reserve, recently told CBS News that “the U.S. is on an unsustainable fiscal path.” Powell pointed out that “the debt is growing faster than the economy.” It is, he noted, “hardly controversial” to say as much. Indeed, in a lamentable first, the U.S. national debt surpassed $34 trillion in early January 2024. Powell’s comments attracted widespread attention from major news outlets. Less noticed, however, is the impact that America’s dire fiscal situation will have on the nation’s foreign policy.
According to historian Niall Ferguson, empires usually collapse when the costs of servicing their debt exceed the costs of defending their interests. “Any great power that’s spending more on debt service than defense is probably not going to be great for much longer,” he warned.
Consider the example of the United Kingdom. The British emerged from World War II victorious but deeply in debt. Shortly after the war’s end, the U.K. was forced to make difficult decisions, eventually downsizing not only its vast imperial holdings but its global influence, as well. This had tremendous implications for the global order, with the U.S. becoming the senior partner and leading the West in the battle against communism and other foes.
Yet should the U.S. be forced to diminish its global presence, there is no other friendly power that can step in. Countries hostile to Western interests and the U.S.-led international order, such as China, Russia, Iran, and North Korea, would be emboldened.
The iceberg is fast approaching. Some estimates indicate that debt servicing will exceed defense by 2029, if not sooner. America faces the very real risk of losing the ability to project power across multiple theaters — and soon. This will have very real ramifications for Washington’s alliance system.
The U.S. would likely find itself relying on allies to share more of the defense burden. Consequently, the very nature of how Washington approaches alliances will have to change. Washington will likely have to apply pressure to encourage allies to step up and do more. The status quo, in which nations like Germany free-ride, counting on America to provide the bulk of their defense, is unsustainable.
The U.S. will also have to prioritize certain theaters, and certain threats, over others. This is hardly a bad thing, however. Indeed, prioritization is a hallmark of sound strategy and was key to American and Allied victories in World War II and the Cold War.
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But at the height of the Cold War, in 1953, U.S. defense spending accounted for as much as 11% of GDP. For most of the next several decades, it hovered between 5% and 10%. Projected forecasts for 2024 indicate that defense spending will account for a mere 2.7% of GDP. This seems unlikely to change significantly in the immediate future.
The U.S. faces immediate threats, from Beijing to Moscow to Tehran. To deter and defeat them, American grand strategy will have to account for fiscal realities.
Sean Durns is a Washington, D.C.-based foreign affairs analyst. His views are his own.
