Second, by engaging in expansionary Keynesian policies, the federal government (successfully) aided in the deleveraging of the private sector.
Third, this demand for fiscal austerity is two years out of date. Indeed, as the Congressional Budget Office recently reported, the budget deficit as a percent of GDP has dropped faster in recent years than at any time in postwar economic history. The contrast with the far more severe, and far less successful British exercise in austerity is rather stark.
New York Times columnist Paul Krugman recently argued that many austerians advocate these policies because of "the urge to see economics as a morality play." Haass, and the rest of the Turning Inward crowd, seem to fit this accusation all too aptly.
STRENGTH: HIGHLIGHTING THE RIGHT WEAKNESSES
If you only paid attention to news coverage out of Washington right now, you would conclude that the greatest domestic threats facing the United States are homegrown terrorism, overregulation, corruption, and fiscal laxity. All of those are problems, but weaknesses in America's infrastructure and K-12 education system are more serious. It is to Haass's credit, for example, that even though he wants a smaller federal budget, he simultaneously calls for a hike in the gasoline tax to pay for better roads and bridges. He also advocates for a longer school year.
WEAKNESS: CONTEMPT FOR DOMESTIC POLITICS
When foreign-policy wonks analyze the United States, they get easily frustrated because, to them, the solutions seem so simple and the politics seem so hard. So they start focusing on gerrymandering and outside money and special interests and the Internet and How Much Better Things Used to Be. Haass manages to avoid the gerrymandering trap, but he does fall prey to some of these other tropes.
This nostalgia for an age of pre-partisan politics makes a few errors. First, as Larry Summers pointed out last month in the Financial Times: "Throughout American history, division and slow change have been the norm rather than the exception. While often frustrating, this has not always been a bad thing.... The great mistake of the gridlock theorists is to suppose that all progress comes from legislation and that more legislation consistently represents more progress." Indeed, two of the major trends favoring the U.S. economy over the long run -- the domestic energy boom and the revival of manufacturing -- had little to do with the federal government.
Second, compared with its peers, the U.S. system of government has been surprisingly nimble. In the five years since the financial crisis, Congress has passed legislation that saved the U.S. financial system, rescued the auto sector, enacted the largest fiscal stimulus program in the world, overhauled its financial regulation, passed ambitious health-care legislation, and then took steps to rein in deficit spending. As I type this, the House and Senate are moving forward on comprehensive immigration reform. Next to either the European Union or Japan, the United States has been a hive of productive political activity.
It is certainly true that the United States has seen its share of rancorous domestic debate -- but the Turning Inward crowd mistakes this for complete paralysis. Which it isn't.
Most members of the foreign-policy community embrace economic globalization, and believe firmly in David Ricardo's principle of comparative advantage. The problem with the Turning Inward crowd isn't that they are completely wrong about what ails the United States. It's that they, compared with those policy wonks who work on American political economy, simply don't know as much. So while the grand strategy of Turning Inward has its appeal, perhaps this clique should take a cue from Ricardo and maintain its focus on the rest of the world.