In today’s precarious and delicate global geopolitical environment, the United States must be able to rely on a strong financial foundation. This foundation could take the form of a robust balance sheet capable of accommodating increased military and related expenditures if necessary, or a fully stocked Strategic Petroleum Reserve ready to address genuine emergencies. The United States must be fortified to ensure that all options remain open.
Regrettably, the current situation falls short of this ideal. The International Monetary Fund (IMF) has explicitly stated what its analysis has implied for some time: the United States’ current financial position is unsustainable. This should not come as a surprise, as this concern has been echoed by various sources, including the Treasury, the Congressional Budget Office (CBO), and virtually anyone in touch with reality.
This state of financial unsustainability presents not only an economic security risk but also a national security concern for the United States.
Over the past four years, the government has significantly expanded in size, pushing the public debt-to-GDP ratio well above 120%. To put this in perspective, previous analyses by the IMF and others have suggested that a sovereign balance sheet becomes unwieldy at around 70-80% debt to GDP.
Such a balance sheet might lead to a currency crisis if the United States were an emerging market. However, the fact that the United States holds the world’s reserve currency and enjoys a relatively stable position compared to other nations (often described as the “cleanest shirt in the laundry”) has prevented this outcome and allowed those managing the country’s finances to continue with potentially reckless actions.
The ongoing global conflicts are undeniably linked to the perceived overall weakness of the United States on the international stage. The president’s actions and persona project weakness, ranging from releasing oil from the strategic reserves not for genuine emergencies but as a political maneuver to artificially and temporarily suppress prices, to the relaxation of sanctions on Iran and the recent provision of an additional $6 billion in cash.
Furthermore, the Biden administration’s management of the southern border has allowed millions of people to enter the country without a clear understanding of their origins or their intentions, which poses a significant challenge to national security.
Countries worldwide aiming to weaken the economic and overall influence of the United States have been actively working to exploit the existing weaknesses. It’s not coincidental that in August, when the Wall Street Journal reported that “Officers of Iran’s Islamic Revolutionary Guard Corps had worked with Hamas” to plan an attack on Israel, the BRICS alliance (comprising Brazil, Russia, India, China, and South Africa, though heavily influenced by China) officially invited Iran, along with Saudi Arabia, the UAE, and other countries, to join them.
The perception of U.S. weakness is emboldening nations, including many aligned with BRICS, to act on multiple fronts, such as targeting the U.S. dollar as the world’s primary reserve and trade currency and supporting groups involved in conflict and violence.
Furthermore, the situation is compounded by the weakness of key U.S. allies. For instance, France recently entered a 27-year agreement with Qatar to purchase liquefied natural gas (LNG). It becomes challenging to take a tough stance on a country that houses the head of Hamas when the same country is a significant energy supplier.
The United States urgently needs to strengthen every aspect of its foundation, including border security, energy independence, the ability to secure critical supplies amidst geopolitical uncertainty, and addressing its financial deficits and balance sheet.
The financial negligence exhibited by the current administration, Congress, and associated parties has not only created economic security issues but also poses a national security threat. To face the challenges ahead, those in positions of influence must enact necessary reforms; otherwise, we will all bear the consequences.