Those are the words of the current American President, Barack Obama. If this statement is true, which of course I believe it largely to be (prosperity = money= power, simple, but hard to argue with), than the charts below should worry all Americans and those around the world that depend on it as the guarantor of their security.

These two charts layout the projected deficits facing the US in the next ten years based on the Obama administration’s just released budget for 2010 and beyond. David Sanger of the New York Times and Gerald Seib of the Wall Street Journal are only the latest to warn how these deeply red numbers, which showcase a new ‘normal’ level of US debt around 5% of GDP, will have a negative impact on the US’s ability to defend itself and project power abroad. Here is Seib’s bleak assessment:

The U.S. government this year will borrow one of every three dollars it spends, with many of those funds coming from foreign countries. That weakens America’s standing and its freedom to act; strengthens China and other world powers including cash-rich oil producers; puts long-term defense spending at risk; undermines the power of the American system as a model for developing countries; and reduces the aura of power that has been a great intangible asset for presidents for more than a century.

Seib, Sanger are not alone as Richard Haass, President of the Council on Foreign Relation, states that “We’ve reached a point now where there’s an intimate link between our solvency and our national security. What’s so discouraging is that our domestic politics don’t seem to be up to the challenge. And the whole world is watching.”

So the US is pretty deep in debt and is not likely to get out from under it anytime soon (Las Vegas…’put it on black! Come on, come on. big money!…… Double Zero! What!… Mr. President, Mr. President….What?! It’s President Hu on the line. He wants to talk about the late interest payments. Uh….tell him to talk to Biden, I’m now the President of Mexico’), but the US has had serious debt issues before (Civil War, WWI, WWII, 1980s) and was able to keep growing economically and militarily. Is this time different? I think it really could be, but don’t count me as one of those ‘it’s only a matter of time before we fall flat on our faces. Many aspects of our debt (social security, medicare) are as difficult to penetrate as a rock inside of diamond that was swallowed by General Patton, but it’s not like other great powers don’t have similar or even more challenging problems themselves. Nevertheless, a growing deficit will have consequences and America will have to face them sometime.

Seib lists four of the ways that budget deficits threaten American’s national security; let’s take a look:

1. They make America vulnerable to foreign pressures.

China is what is on everyone’s mind here, but we must remember that this goes both ways, as it is in China’s interest to have their held reserves stay stable and strong. A recent story regarding Russia’s attempt to dump their Fannie and Freddie Mac holdings during the Georgia-Russian war in 2008 makes this a little more scary though.

2.  Chinese power is growing as a result.

Beijing’s ability to combine budget surpluses with American deficits no doubt puts itself in a more favorable position, but what it can actually do with this situation is less known. China has definitely shown itself to be a more confident and aggressive international power player in recent months.

3. Long-term national-security budgets are put at risk.

This is what worries me the most. If one believes in Paul Kennedy’s theory that great powers fall when they overextend themselves and can no longer support the large national security/power projection apparatus they have built, they have to start scaling back their global ambitions in concrete ways. All aspects of the American state budget will be looked at for cutting, the defense department’s included. A real way to save some money is to close foreign bases, bring troops home, and cut expensive weapons programs. All of these can be detrimental to US national security and international stability.

4. The American model is being undermined before the rest of the world.

If the US can’t keep its house in order, why should other states follow it? A good question and one definitely worth following, but I find this to be the weakest of the four. After all, the US has been deep in the red before and only came out stronger. Not many other countries have this record.

So how important are these current and projected budget deficits to US national security/power projection and to international security? Are these latest numbers just another downturn in otherwise American ascendancy and global power or are they portending the beginning of the end of the US as the world’s sole superpower? Something in between?

Tags: budgets, deficits, economy, global economy, Hu Jintao, national security, Obama