Index Table of Contents

Econ - Leadership Impact

Competiveness underwrites US global leadership

Some believed it sent the wrong signal to the world. But the president was and is correct to focus on the connection between our domestic strength and our national security. Making progress on fixing domestic issues will have far-reaching strategic effects that will make America stronger and more secure.

Over the last few years, national security leaders have started to explore this connection. Admiral Mike Mullen, former chairman of the Joint Chiefs, has famously declared the national debt the greatest threat to U.S. security. And Hillary Clinton, during her time as secretary of state, gave a series of the speeches on “economic statecraft.” But few have laid out the specific mechanisms that connect domestic vibrancy to American power.

That connection exists on two levels. First, there are the practical effects. A broad range of efforts on education, health care, infrastructure, immigration, energy and tax reform, among other issues, will bolster American competitiveness. Increased competitiveness will fuel shared prosperity and provide the innovation, dynamism and funding that underwrites America’s global role.

For example, without the world’s best scientists and engineers, the United States will slip behind its adversaries in creating and deploying the next generation of defense technologies. Not only will success in these priorities help renew American economic strength, but it will favorably position America to sustain its geopolitical preeminence even as other powers rise.

Renewing U.S. competitiveness cannot be done via isolationism--it requires a global perspective. The United States is in the midst of an energy revolution at home. According to the International Energy Agency, the nation will overtake Saudi Arabia as the world’s leading oil producer around 2017 and will become a net oil exporter by 2030. That trend will affect U.S. foreign policy as much as it does U.S. domestic policy, and the solutions must work together.

Increasing exports and trade can help create good jobs, as the president’s successful effort to double U.S. exports by 2014 has shown. Ninety-five percent of customers globally live outside the United States, according to the International Trade Association. The IMF estimates that 87 percent of worldwide economic growth will take place outside the United States.

Effective tax reform must be shaped for the global competitive environment; the same goes for infrastructure and immigration. Finding a sensible solution to unsustainable long-term debt will determine whether the U.S. dollar will remain the world’s reserve currency. Just because the solutions must come from American cities and not Baghdad, Beijing or Bamako do not make the implications any less international.

Second, solving big problems at home will have a psychological effect, helping to ease doubts about America’s staying power globally. Resolving big issues can reassure our allies and force potential adversaries to think twice about challenging the rules-based global order. The financial crisis and the contraction in the American economy fueled narratives of American decline as much as U.S. troubles in Iraq and Afghanistan.

Finally, the realities of shifting focus towards the home front hardly means isolationism. While the defense budget will go down over the next decade, the U.S. will remain the world’s pre-eminent military power by a large margin. America will retain a capability and a willingness to counter threats and defend its interests where necessary. As the National Intelligence Council wrote in its Global Trends 2030 report, “The potential for an overstretched U.S. facing increased demands is greater than the risk of the U.S. being replaced as the world’s pre-eminent political leader.”