Echoes of 1914

A strange, dangerous, and oddly familiar era -- of declining American power, global rebalancing, and profound inequality -- is upon us.

We think we can predict the future -- though as physicist Niels Bohr noted years ago, prediction is very difficult, especially about the future. But in the first days of 2014 -- a year that happens to mark the 100th anniversary of the start of World War I -- some of the coming conflicts and challenges are pretty clear. We will hear a lot about the Syrian civil war, the fate of the Iranian nuclear program, conflict in Iraq, the departure of U.S. forces from Afghanistan -- not to speak of what applecart Vladimir Putin plans to upset next, whether the North Korean regime will implode, and whether China and its neighbors intensify their conflict over the rocky outcroppings they all want to own.

As we reflect on this anniversary year, however, there are deeper rumblings afoot, rumblings that will color and shape many of these conflicts. The same was true 100 years ago. The Edwardian era that preceded the Great War celebrated a pervasive view that war might be obsolete, and a blithe lack of concern among the wealthy about the rising tide of unhappiness at the gap in resources and power between rich and poor.

At the start of that new century, however, the shape of world politics was about to transform, while class conflict rose and shook the very foundations of the monarchies of continental Europe. Between these two forces, they would wipe out the Austro-Hungarian Empire, remove royalty from power in Germany, bring revolutionary turmoil to Russia, undermine the colonial systems established by France and Germany, and bring a new power -- the United States -- to the center of the world stage.

For all the differences in the current historical moment (and there are many), there are two eerily similar challenges that lie beneath the surface of these predictable conflicts today. Both will be hard for policymakers to manage, and both could usher in dramatic change to the international system over the next decade.

The first of these is the clear decline in the ability of the world's most powerful country -- the United States -- to act as the indispensable nation, particularly as the influence of other countries rises and the global system rebalances. The second is the yawning economic gap between rich and poor, both in the United States and internationally. Systemic geopolitical rebalancing and the wealth gap are already substantially reshaping the international system in ways that are hard to predict, just as the statesmen and politicians of the last century could barely see the conflict that would break out in 1914.

The power shift and rebalancing of the international system is even harder for many to adjust to. The United States appears to remain the most powerful country in the world. But it is a power measured today largely in one dimension -- the possession of the world's only truly global hard security capabilities: military force and intelligence. That's the surface reality. But something is clearly going on underneath the reality of that military power that is weakening the hold the United States had over the international system.

The decline in the role of the United States as system integrator, manager, and, for some, global hegemon (a trend I have already noted) continues to manifest itself at an accelerating pace. It is reflected most recently in widening disregard for expressed American desires and goals -- such as whether Japan should increasingly arm itself and extend its military reach beyond its own shoreline. It is found in the growing distance between Washington and its long-time ally in Ankara, as the struggling Turkish government blames the United States for its internal corruption problems and struggles to assert an independent regional role. Meanwhile, India attacks the United States for allegedly mishandling an Indian diplomat in New York, and reduces the privileges it had provided to American diplomats in New Delhi. Likewise, another traditional ally, Saudi Arabia, grows increasingly unhappy with U.S. policy in the Gulf region and becomes querulous and critical.

Each incident, taken on its own, might be explained away as diplomatic feather-ruffling, simply business as usual. But together they are becoming a trend, forcing Secretary of State John Kerry to flit from country to country, trying to dampen the fires. There seems to be some recognition that things are fundamentally changing -- just look at the apparent reluctance of the Obama administration to use its power to intrude into the myriad of conflicts that beset the Middle East and Africa. Leave peace enforcement in Africa to the African Union, the United Nations, or the French. Don't send the Marines. Stay at the edges of the Syrian conflict, not at the center. Encourage a peaceful solution to the disputes over the seas off the Chinese coast, but do not promise to send U.S. warships steaming into the middle of tense waters. And so on.

I don't think Washington has yet come fully to grips with the reality of systemic change. There is not yet a clear strategy to deal with a world in flux. But some of this reality seems to have penetrated, nonetheless. First, there seems to be a realization that, despite the global superiority of the U.S. armed forces, military intervention has lost what international popularity it ever had, partly as a result of the failed use of force in Iraq and Afghanistan. In neither country has stability been created, democracy implemented, or economic development established -- while regional security around these countries is less stable today than before the U.S. intervened with force. Other countries, and their populations, cast a more jaundiced eye today than they once did about American leadership, intentions, and capabilities.

This global skepticism about Washington's use of its hard power has been exacerbated by the exposure of the reach of U.S. "silent power" in the intelligence arena. The Snowden flakes that keep falling documenting the extent of America's global intrusion into private, public, and governmental communications have only accelerated. And the fallout is real: First, Brazilian President Dilma Rousseff cancels a state visit to the White House because the NSA was eavesdropping on her personal communications. Traditional allies in Germany and France are equally upset. Other governments are searching for ways to protect their information and communications systems from U.S. intrusion.

Second, not unlike the negative international reaction to America's power projection abroad, there has been a significant shift in domestic opinion about the nature of U.S. foreign policy and public willingness to countenance more hard power deployments into foreign conflicts. The latest Pew poll on these issues is dispositive. More than half of those polled think the United States "should mind its own business internationally and let other countries get along the best they can on their own." This exceeds the previous polling summit on this question in 1976, which was right smack in the post-Vietnam era. And 70 percent recognize that the United States has lost respect internationally, virtually as high as the Bush-era numbers in 2008.

What we see here is an opinion shift well within the historic American view of its global role -- a reassertion, not of isolationism, but of a more realistic engagement of a different sort. Rather than send the Marines overseas "in search of monsters to destroy" (about which John Quincy Adams warned back in 1821), the American people seem to be saying that we should engage through the power of example, diplomacy, and, especially, through economic means. In other words: Keep our noses out of other people's business, solve our problems here at home, and keep our military powder dry. Even the soldiers who fought to free Fallujah from terrorists just a few years ago agree -- the United States needs to stay out, today.

Inevitably, the realization that rebalancing requires rethinking U.S. policy and the nature of U.S. engagement is not universally popular here at home. To advocates of "muscularity" like Sens. John McCain and Lindsey Graham, the hesitation in the Obama administration's practice is a political fault to be criticized, not a global reality. Time to talk tough, send arms to Syria, assert some leadership here, tell others what they should do, for goodness sake.

The problem with muscularity as an answer is that we are in a period of system change, not business as usual. President George W. Bush tried the muscular thing and not only failed to reach his goals, but, in trying, simply accelerated the trend toward rebalancing. Trying to restore the "ancien régime" would not only be self-defeating, but dangerous, exacerbating global concern about the wisdom and intentions of the U.S. role. The world has changed. And being the muscle-bound bully will only lead to getting global sand kicked back in America's face, to military conflicts that it did not anticipate getting into. The "historical rhyme" (perhaps apocryphally attributed to Mark Twain) here of 100 years ago is pretty clear: Look to the presumed security European nations thought they would obtain by arming up in the years before 1914. The system was rebalancing, but the old order could not be preserved by arms.

The other eerie similarity to the era of 100 years ago is the revival of sharp distinctions in the national and global economies. The Pulitzer Prize winning author Hedrick Smith is not alone in documenting the major shift in income and wealth between the very rich in the United States in his 2013 book, Who Stole the American Dream? The disappearance of the American middle class is an economic, sociological, and, in the end, political phenomenon of enormous significance, one that upends the dominant American mythology of the 1950s and 1960s. It has increasingly divorced the very rich from the rest -- the so-called 99 percent. The gap has driven the United States down the global list of countries ranked by income disparity. Today, income inequality in America, measured by Palma ratios (the gap between the richest 10 percent and the poorest 40 percent) ranks the United States 44 out of 86 countries, well below most industrialized countries -- even below Nigeria, India, Iran, and, Egypt.

A similar trend in inequality is found in other countries around the world, which many analysts believe will lead to a rising tide of global unrest. Slowing economic growth in India could risk destabilization. Fissures over the unequal distribution of income and wealth in China are linked to provincial instability. And anger across the Middle East can be linked not only to religious and political tensions, but to the stubborn resistance in the region's economies to allow for the kind of growth that could create opportunities for millions of educated, but unemployed, youth.

In the Edwardian era, rising wealth was seen as a positive trend, one that would usher in an era of broad economic well-being. Instead, it reflected what Princeton professor Samuel Hynes described as a world of "estrangement and anxious uncertainty," in which a British upper class of "irresponsible rich, living in a new vulgarity and a strange new poor, living in new ugliness, were replacing the old class division of gentry and peasantry." Social conflict was the inevitable outcome.

We are clearly entering a time of global political and economic transition, where the shoreline of apparent stability is receding in the distance. We are on the waves of change, with the new shoreline -- the emerging international balance and the global economy -- not yet clear. It is going to make for hard sailing for U.S. foreign policy in 2014 and well beyond. Some will want to hang on to the apparent stability provided by U.S. military power; in a world of "uncertainty," they will say, military dominance is the best instrument of power.

But holding on to that instrument could well lead directly to destabilizing conflict. And the failure at the same time to deal, nationally and internationally, with the economic gap could exacerbate that conflict in unpredictable and dangerous ways. Welcome to the new year.

/AFP/Getty Images

National Security

The Little Budget Deal is a Big Deal

What's good for the country is even better for the Pentagon -- stability.

As night fell on Dec. 12, the U.S. House of Representatives passed the two-year budget deal carved out by Sen. Patty Murray and Rep. Paul Ryan -- but the fallout is not nearly over. It is rapidly changing the atmosphere in Washington, D.C. about budgeting. And it is a gift, of sorts, to the Pentagon, as they have quickly realized.

Sure, there are waves of disappointment from the congressional Tea Party advocates of shutting down the government and their moneyed supporters in the Club for Growth, Heritage Action for America, and others. And yes, there are still warnings that the budget negotiators had better not lose sight of the pressing need for long-term deficit reduction and debt control.

But, miracle of miracles, this agreement has passed the divided House and will get through the Senate, giving the appropriators a set of numbers to write actual appropriations for this fiscal year. Even more miraculous, it provides numbers for next year, too.

I'm not sure why so many folks are calling this an "interim" or "short-term" deal.

The advocates for the "long term" are disappointed because the Budget Control Act caps are not only retained in this agreement but extended for another two years, into 2023, and the Murray-Ryan agreement does not replace them with a long-term budget deal. .

The "long-termers" are living in a dream world. Haven't they been watching for the last three years? For a Congress that has been alternately limping and fighting from quarter to quarter, bickering about debt ceilings, shutdowns, and sequesters, two years is a very, very long-term deal.

In fact, this "little" deal is turning out to be a very big deal. Not because the details are so important; they are the classic representation of green eyeshade budget negotiating, not the Ten Commandments. But because it's upended the atmosphere for budget discussions and changed budgetary politics for several years to come -- precisely because it reflects the way Congress actually does business, as opposed to how some people want it to behave.

The fight for the long-term deal is over, at least for now. It is over because it was unachievable. And it is over because, don't tell anyone, the deficit is coming down, way down. The Congressional Budget Office (CBO) estimates that by 2015, the deficit will have fallen from a high of 10.1 percent of gross domestic product (GDP) to 2.1 percent, well within the sustainable range historically. For 2015, CBO estimates that the deficit will be under $400 billion, something that hasn't happened for seven years.

Of course, that doesn't change the reality that the federal debt continues be a high share of GDP and, as the baby boomers grasp at their Social Security and Medicare benefits, the federal deficits and the debt will continue to rise, posing problems 10 years from now. But, you see, that's the real long-term, which is not what Congress does.

What this little deal does, however, is get back toward getting back to business. It is a smack-down to the Tea Party, underlined by Speaker John Boehner, who finally found the guts to call the Tea Party funders "ridiculous," for criticizing the agreement. "They're using our members and they're using the American people for their own goals," he said. My colleague Stan Collender says it is equally a rejection of the deficit hawks, writ large: "not only was their position almost completely rejected, after years of being seen as the voice of angels, the deal makes them voices in the wilderness for some time to come."

The deal says to these "long termers": enough, already. We cannot get there the way you want us to. Budget plans, tax reform, mandatory reform are going to take time, baby steps, and gradual measures; there will be no big bang.

And in my bailiwick -- defense -- the little deal actually looks like it will be a big deal, as well. Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff welcomed it: "I support the legislative proposal, as I understand it, which provides relief to the immediate and urgent readiness problems we face. I hope this is the beginning of a conversation on the longer-term challenge to the capability and capacity of our force that is developing over time because of sequestration." Secretary of Defense Chuck Hagel hurriedly chimed in: "While this agreement doesn't solve every budget problem facing DoD, it will help address our military readiness challenge by restoring funding for training and procurement -- especially in fiscal year 2014."

The Pentagon has every reason to be happy. The deal does not provide budget growth, but it gives the Pentagon something it has been seeking for the last three years: budget stability. It is a flat budget for FY 2014 and 2015, which is a dose of reality, but it could have been worse. At least the numbers for the next two years are now clear.

The little deal gives the Pentagon something else. That little change from a looming sequester to an agreed budget number puts DoD planners back in a zone they would rather be in, where they can balance program A and readiness requirement B and actually do some trade-offs related to real choices, not arbitrary slices in the procurement and research budgets.

And when the Pentagon wants to scratch that readiness itch (it is overstated, but they love to scratch it), they will find a welcome tool in their holiday stocking. Although none of the media coverage of the budget agreement has mentioned it, the Pentagon asked for, and is likely to get, an additional $90 billion, give or take, in funding for what they call Overseas Contingency Operations (OCO) -- the war budget.

That $90 billion -- on top of the roughly $495 billion they can expect from the "little" deal -- isn't chicken feed, that's real dollars. It has been the Pentagon's secret fiscal escape hatch for more than a decade, even as we left Iraq and drew down in Afghanistan. For the last few years, the OCO budget has routinely had more funds in it than the military needs in the war zones.

And that $90 billion doesn't really go to a separate budget. It is money appropriated to the same accounts as the regular (they like to call it the "base") budget. Most of it is in the "operations and maintenance" accounts, where the Pentagon's readiness, and its "back office" live. Funds put there are very flexible -- they can move from activity to activity with little or no notification to the Congress or anybody else.

No wonder the Pentagon loves this deal; they should. Sequester is kicked away for two years. Congress, being devoted once again to the short-term, is now likely to be kicking this budgetary device off into the future forever. Nobody knows what will happen two years from now, but you can bet that sequester is deader than a doornail.

For the Pentagon, however, the budgets are flat, no inflation adjustments, and in the "long term" there is no correction upwards. That means all those plans they made for $500 billion more in funding over the next nine years have got to be trimmed, as my colleague Russell Rumbaugh has pointed out. Not as hard as you think. From 1985 to 1998, the Pentagon "lost" more than $1.5 trillion -- they lost it because budget growth went away and they did not even get increases for inflation. But the budgets they got were plenty healthy to keep the military sharp and ready, as the takedown of Saddam Hussein showed in 2003.

It will be all too tempting for the Pentagon to try to sit this one out and hope for sunny fiscal days somewhere out in the near future. Watch out for that illusion, too. Unless serious choices are made now, those gradually shrinking "real" dollars won't buy everything and they will be back to the squeeze they are in now.

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