This time, however, might not turn out as well for America, some analysts worry, because the trends eroding America's pre-eminence run deeper. "It's not simply that we've run into a rough patch, shaking our self-confidence," warns Andrew Bacevich, an international affairs specialist at Boston University and author of this year's The Limits of Power: The End of American Exceptionalism. "It's different this time." That there is some sort of big change is widely accepted, even mainstream. Defense Secretary Robert Gates now speaks of a "multipolar world." In its 2007 annual survey, the International Institute for Strategic Studies referred to "the profound loss of authority suffered by the United States since its invasion of Iraq."
Diminished dominance. Yet more troubling was the vista painted by Thomas Fingar, the U.S. intelligence community's top analyst. Foreshadowing a conclusion of a coming report called "Global Trends 2025," he said in September that "American dominance will be much diminished over this period of time" and "will erode at an accelerating pace with the partial exception of the military." In future competition, he added, the military will be "the least significant" factor. Fingar labeled U.S. pre-eminence since World War II a "truly anomalous situation." Indeed, shifts in economic and military power—played out slowly, over decades and centuries—are the norm, as Yale historian Paul Kennedy pointed out in his 1988 work, The Rise and Fall of the Great Powers. Some analysts conclude that if the reality of America's power position has changed, so must American attitudes. "We should disenthrall ourselves from the idea that the well-being and security of the United States can only be attained by seeking to maintain primacy," says Bacevich.
In any case, the new financial shock is rattling a load-bearing pillar of American strength—its role as global financial superpower, including its privileged position as issuer of the world's favored reserve currency, the U.S. dollar. The dollar's special role has been critically important. It allows the federal government to affordably cover budget and current account deficits. The Feds are selling about half the new national debt to foreign investors, including governments like China's and sovereign wealth funds like those in Abu Dhabi and Kuwait. That has bridged the yawning U.S. fiscal gap, financing, in effect, global military activities and domestic spending without sparking inflation or driving up the interest cost of such monumental borrowing. It has also allowed Americans to maintain a notoriously low net savings rate.
Critics point to the hazards inherent in racking up some $10 trillion in public debt—exacerbated now by fresh doubts over American solvency. Says historian Kennedy, "The crisis will confirm in the minds of Asians not to be so fiscally dependent on Uncle Sam." Those foreign investors, suggests Chas. W. Freeman Jr., a former U.S. diplomat in China and Saudi Arabia and president of the Middle East Policy Council, will conclude, "We're not going to finance your improvidence indefinitely." One other vulnerability also looms larger than in the past: energy imports. When Jimmy Carter was urging energy conservation in 1980, the United States imported 37 percent of oil consumed; last year, it was 58 percent.
Something else is different about the current debate over U.S. decline. Without any contraction of its daunting military firepower or the size of its economy, other nations are bound to assume more influential positions. The world geo-political map is being redrawn: Several powers are rising, some rapidly. China takes top billing on the list. Back when economic reforms began in 1978, China contributed but 1 percent of the world's GDP and its trade. Last year, it reached 5 percent of world GDP and 8 percent of trade. China's growth has hummed along at nearly 10 percent annually—for three decades. That is three times the global average.
China's "peaceful rise," as officials call the strategy, aims to restore China to the status it had enjoyed for many centuries: the world's largest economy. A recent Goldman Sachs report has bumped up the time by which China's economy is expected to surpass America's in size to 2027. China's growth is fueling a rapid expansion of military capabilities and, in effect, promoting a model competing with that of the United States—authoritarian capitalism.