During the last several years it seems as if every major book or article on American grand strategy contains the observation that the United States is more powerful than any international actor since the Roman Empire was at its zenith. At the same time, however, the U.S. failures to suppress the insurgency in Iraq and to stabilize Afghanistan have caused many foreign policy analysts to ask, "Why is it that the United States with all its hegemonic power cannot seem to get its way and attain its objectives in places like Iraq and Afghanistan, and in its disputes with powers like Iran and North Korea?"

There is a paradox between the magnitude of American power and Washington's inability to use that power to always get what it wants in international politics. There are many factors that limit the exercise of U.S. power. Some of these are obvious, others less so.

By all accepted measures the United States is an extraordinarily powerful global actor. The United States dominates the global economy with a Gross Domestic Product (GDP) of about $11 trillion. China, usually cited as America's most likely future great power rival, has a GDP of approximately $1.4 trillion. Not only is the U.S. economy big, it is also at the forefront technologically. The dollar remains the primary reserve currency for the international economic system--a huge advantage for the United States, since other nations keep propping up the dollar for fear that a major drop in its value would negatively affect their own investment portfolios. U.S. economic power is also reflected in Washington's dominance of key international economic institutions such as the World Bank and International Monetary Fund.

Economic strength and technological prowess go a long way toward explaining America's military dominance. The sheer magnitude of the U.S. economy means that Washington is easily able to spend over $500 billion annually on defense. This is more than the rest of the world combined spends on defense, but only about 4 percent of the U.S. GDP, which means that even at this enormous absolute level of expenditure, defense spending is far less of a burden on the American economy than was the case during the Cold War.

The United States, indeed, is a global hegemon and has formidable tools at its disposal, and it can wield its power effectively to attain important policy objectives. For example, the sheer magnitude of America's lead in military power over its closest would-be rivals has a potent effect in dissuading them from trying to emerge as great powers and to challenge the United States's dominant role in a unipolar world. Events since 9/11 have illuminated other ways in which the United States has been able to utilize its hegemonic power. Thus, American military prowess was showcased by the quick collapse of the Taliban and Saddam's Iraq. Moreover, the economic incentives the United States could proffer were vitally important in persuading a reluctant Pakistan to allow itself to ally with the United States in the battle against Al-Qaeda. Central Asian states offered the United States the opportunity to establish military bases--and Putin's Russia acquiesced to this. And the very fact that the United States could defy the United Nations (and major powers such as France, Germany, Russia and China) and carry out the invasion of Iraq (essentially) unilaterally proved--if proof is needed--that the rest of the world could not do much to constrain the United States.

But hegemony is not omnipotence. Back in the 1960s, Thomas C. Schelling made an important distinction in the purposes for which power could be used: He differentiated between deterrence and compellence.

Deterrence involves the use of power to persuade another state to refrain from taking an action that the United States does not want it to take. Compellence, on the other hand, involves the coercive use of American power to compel another state (or substate actors) to act, against its own preferences, in ways that Washington wants it to act.

The United States has had a high degree of success using its military power to deter other states from attacking the American homeland, or U.S. allies abroad, even though deterring terrorists is much harder than deterring states. It has been far less successful at compellence. This helps to explain, for example, why American military power stops North Korea and Iran from attacking their neighbors but is seemingly ineffective in persuading them to give up their nuclear weapons programs.

Viewed from this perspective, it is not a surprise that the United States is foundering today in the Iraqi morass and failing in Afghanistan. Occupying and pacifying another country once it has been defeated is a difficult task for two reasons. First, as the United States learned in Vietnam and now is learning again in Iraq (and Afghanistan), wars pitting indigenous insurgents against outside occupiers are marked by an important asymmetry that works to the external power's disadvantage. The stakes always matter more to the indigenous forces, and they are more highly motivated. They need not win militarily because all they need to do is to survive and prolong the conflict in order to wear down the external power's political will. As counterinsurgent wars drag on, and their costs rise, political debate in the external power inevitably focuses on the issue of why it should continue expending its blood and treasure in a war that is not vital to its security. As Andrew Mack has written, in the external power, "A war with no visible payoff against an opponent who poses no direct threat will come under increasing criticism as battle casualties rise and economic costs escalate."1

The second reason occupiers have difficulty imposing their will on foreign societies is that they invariably find themselves on the wrong side of one of the most powerful factors in international politics: nationalism. And in the Middle East, America's ability to use its power to successfully achieve its objectives is also limited by the religious and cultural divides that separate the Islamic world from the West. This explains why the United States has failed to achieve its broader political ambitions there. The United States is not trying to deter Iraqi insurgents or Afghan warlords from attacking the United States. Instead, it is trying to compel them to accept the imposition of a sweeping domestic political and economic--and cultural--transformation.

Iraq and Afghanistan are illustrative of an important reason that America's hegemonic power appears illusory: because it is often employed in the pursuit of objectives that are unattainable, such as nation-building and democracy promotion. Both neoconservatives and so-called liberal imperialists seem to believe that the world is like a piece of clay and that the United States can remake other nations--and cultures --in its own image. Although the United States has a long list of failure in such efforts, it keeps trying--most recently in Afghanistan and, of course, Iraq. Before the invasion, administration officials pretty much believed that the processes of democratization and nation-building in Iraq would be a piece of cake. They frequently invoked the examples of post-1945 Germany and Japan as "proof" that the United States could export democracy to Iraq without undue difficulty. For at least three reasons, they should have known better: the use of military force by outside powers to impose democracy rarely works; military occupations seldom are successful; and the preconditions for a successful democratic transformation did not exist in Iraq.

Those who have studied military occupations know that the odds of success are stacked against occupying powers. As David Edelstein observes:

""Military occupations usually succeed only if they are lengthy, but lengthy occupations elicit nationalist reactions that impede success. Further, lengthy occupation produces anxiety in imperialist occupation powers that would rather withdraw than stay. To succeed, therefore, occupiers must both maintain their own interest in a long occupation, and convince an occupied population to accept extended control by a foreign power. More often than not, occupiers either fail to achieve those goals, or they achieve them only at a high cost.2""

The United States has long been addicted to Wilsonian crusading to remake the world, but as realists long--and rightly--have argued, it lacks the material, psychological and spiritual resources to succeed in this effort. It is naive to imagine that America's democratic values can flourish in countries that have no indigenous democratic tradition, and that lack the social, cultural and economic foundations upon which the United States's own democratic institutions rest. America's inability to refashion other states does not mean it is not a hegemon. It does mean that it is not omnipotent: U.S. power is not infinite, but the United States is still positioned to have a preponderant effect on international politics. How long the United States can retain its hegemony, however, is an open--and important--question.

There already are indications that things are changing: American hegemony is beginning to wane and new great powers already are in the process of emerging. This is what the current debate about the implications of China's rise is all about in the United States. But China isn't the only factor in play, and transition from U.S. primacy to multipolarity may be much closer than primacists want to admit. For example, in its survey of likely international developments up until 2020, the CIA's National Intelligence Council's report Mapping the Global Future notes:

""The likely emergence of China and India as new major global players--similar to the rise of Germany in the 19th century and the United States in the early 20th century--will transform the geopolitical landscape, with impacts potentially as dramatic as those of the previous two centuries. In the same way that commentators refer to the 1900s as the American Century, the early 21st century may be seen as the time when some in the developing world led by China and India came into their own.3""

In a similar vein, a recent study by the CIA's Strategic Assessment Group projects that by 2020 both China (which Mapping the Global Future pegs as, "by any measure a first-rate military power" around 2020), and the European Union will come close to matching the United States in terms of their respective shares of world power.4 For sure, there are always potential pitfalls in projecting current trends several decades into the future (not least that it is not easy to convert economic power into effective military power). But if the ongoing shift in the distribution of relative power continues, new poles of power in the international system are likely to emerge during the next decade or two. The real issue is not if American primacy will end, but how soon it will end.

In answering this question the key factor may well be whether the United States can afford economically to maintain the overwhelming military superiority necessary to dissuade other states from emerging as peer competitors.

Paul Kennedy's 1987 book, The Rise and Fall of the Great Powers, ignited an important debate about the sustainability of American primacy. In a nutshell, Kennedy argued that the United States was doomed to repeat a familiar pattern of imperial decline, because the excessive costs of military commitments abroad were eroding the economic foundations of American power. An important backdrop to Kennedy's book was the so-called "twin deficits": endless federal-budget deficits and a persistent balance-of-trade deficit.

The late 1980s debate about possible American decline was terminated abruptly, however: first, by the Soviet Union's collapse, and then by U.S. economic revival during the Clinton Administration, which also saw the yearly federal budget deficits give way to annual budget surpluses. This had led many of the proponents of American hegemony to assert that the American economy is fairly robust and that, as a result, the United States can afford this grand strategy.

 These claims might come as news to most Americans, however. When a company like General Motors--historically one of the flagship corporations of the U.S. economy--teeters on the edge of bankruptcy and sheds some 126,000 jobs, rosy descriptions about the strength of the U.S. economy ring hollow. Similarly, the notion that the U.S. economy is healthy certainly would not be shared by the hundreds of thousands of U.S. workers who have lost their jobs in America's ever-contracting manufacturing sector--often because their jobs have been outsourced to China or India. Even more worrisome, future outsourcing of
American jobs is not likely to be confined just to blue collar workers. Rather, an increasing number of high skill and high education jobs will flow from the United States to other countries. Another warning sign that all is not well with the U.S. economy is the "middle class squeeze"--the fact that middle class incomes in the United States have been stagnant since the early 1970s. The hollowing out of America's manufacturing industrial base, the outsourcing of American jobs, and stagnant middle class incomes are flashing red lights, warning that all is far from well with the U.S. economy.

Indeed, the economic vulnerabilities that Kennedy pinpointed in the late 1980s may have receded into the background during the 1990s, but they did not disappear. Once again, the United States is running endless federal budget deficits, and the trade deficit has grown worse and worse. The United States still depends on capital inflows from abroad--with China fast replacing Japan as America's most important creditor--to: finance its deficit spending; finance private consumption; and maintain the dollar's position as the international economic system's reserve currency. Because of the twin deficits, the underlying fundamentals of the U.S. economy are out of alignment. The United States cannot continue to live beyond its means indefinitely. Sooner or later, the bill will come due in the form of sharply higher taxes and interest rates--and, consequently, economic slowdown. And, as the United States borrows more and more to finance its budget and trade deficits, private investment is likely to be "crowded-out" of the marketplace, with predictable effects on the economy's long-term health. In a word (or two), the United States is suffering from "fiscal overstretch."5

During the Cold War, Japan (and, during the 1970s, West Germany) subsidized U.S. budget and trade deficits as a quid pro quo for American security guarantees. It will be interesting to see if an emerging geopolitical rival like China--or, for that matter, the European Union--will be as willing to underwrite American primacy in coming decades. Second, there have been big changes on the economic side of the ledger that cast a long shadow over America's long-term economic prospects. For one thing, the willingness of other states to cover America's debts no longer can be taken for granted. Already, key central banks are signaling their lack of confidence in the dollar by diversifying their currency holdings. There are rumblings, too, that OPEC may start pricing oil in euros, and that the dollar could be supplanted by the euro as the international economy's reserve currency. Should this happen, the United States no longer could afford to maintain its primacy.

The domestic economic picture is not so promising, either. The annual federal budget deficits are just the tip of the iceberg. The real problems are the federal government's huge unfunded liabilities for entitlement programs that will begin to come due about a decade hence. Moreover, defense spending and entitlement expenditures are squeezing out discretionary spending on domestic programs. Just down the road, the United States is facing stark "warfare" or "welfare" choices between, on the one hand, maintaining the overwhelming military capabilities upon which its primacy rests, or, on the other hand, discretionary spending on domestic needs, and funding Medicare, Medicaid and Social Security. Here, the proponents of U.S. hegemony overlook a huge change in the U.S. fiscal picture. They assert that the United States can afford to maintain its hegemony because defense spending now accounts only for about 4 percent of U.S. GDP. This is true, but very misleading.

Why? Because under the Bush II Administration, the norm in the allocation of federal discretionary spending that prevailed throughout most of the Clinton Administration has been reversed: the Pentagon's share of discretionary spending in the federal budget once again exceeds domestic spending. What really matters is not the percentage of GNP absorbed by defense spending, but the Defense Department's share of discretionary federal spending. Coupled with mandatory spending on entitlements (and debt service), defense spending is squeezing discretionary federal spending on domestic programs. Given the long-term unsustainability of federal budget deficits, coming years will see strong pressures to reduce federal spending. However, because defense, entitlements and debt service together account for 80 percent of federal spending, it is obvious that--as long as U.S. defense spending continues at the high levels mandated by the need to preserve U.S. hegemony--the burden of federal deficit reduction will fall primarily on the remaining 20 percent of the budget--that is, on discretionary domestic spending. In plain English, that means that the United States will be spending more on guns and less and less on butter--"butter" in this case meaning, among other things, federal government investments in education, infrastructure and research, which all are crucial to keeping the United States competitive in the international economy. Sooner rather than later, Americans will be compelled to ask whether spending to maintain the United State's hegemonic role in international politics is more important than spending on domestic needs here at home.

In fact, if anything, the costs of the American hegemony are likely to increase in coming years. There are two reasons for this. First, there is the spiraling cost of the Iraq quagmire. Some estimate that the direct and indirect costs of the war to the U.S. economy will end up between $1,026 billion and $1,854 billion.6

The second reason that defense spending is likely to increase is that simple fact that the U.S. military is not large enough to meet all of America's commitments. Since the Cold War's end, the United States has shown every sign of succumbing to the "hegemon's temptation"--the temptation to use its military power promiscuously--and Iraq, along with the simultaneous crises with Iran and North Korea, have highlighted the mismatch between America's hegemonic ambitions and the military resources available to support them. To maintain its dominance, the American military will have to be expanded in size, because it is too small to meet present--and likely future--commitments. No one can say for certain how long significant U.S. forces will need to remain in Iraq (and Afghanistan), but its safe to say that substantial numbers of troops will be there for a long time. At the same time, in addition to the ongoing War on Terror (and the concomitant requirements of homeland defense), the United States faces possible future conflicts with North Korea, Iran and China.

During the past 15 years or so since the Soviet Union's collapse, the United States was able to postpone the need to grapple with the painful issues Kennedy raised in 1987. However, the chickens are coming home to roost, and those questions soon will have to be faced. At some point, the relative decline of U.S. economic power that is in the offing will bring American primacy to an end. In the shorter term, however, the United States can prolong its primacy if Americans are willing to pay the price in terms of higher taxes, reduced consumption, and curtailment of domestic programs. But, of course, there is a treadmill-like aspect to preserving American hegemony because perpetuating it will hasten the weakening of the economic base upon which it rests.

The United States is a very powerful state, and will remain so even if it no longer is a hegemon. Hegemony is not only a costly grand strategy, but also one that ultimately is unsustainable. America's real realists--George F. Kennan, Hans Morgenthau, Walter Lippmann and Kenneth Waltz--always warned of the dangers that a hegemonic United States would over-reach itself and, by asserting its power heavy-handedly, provoke opposition to it. They understood that the world is not malleable and will not respond to American-imposed social engineering. They not only recognized that a wise grand strategy must balance ends and means, but also that it must differentiate between desirable objectives and attainable ones. Most of all, the real realists have understood the true paradox of American power: Precisely because of its power and geography, there is very little the United States needs to do in the world in order to be secure; yet the very fact of its overwhelming capabilities has been a constant temptation for American policymakers to intervene abroad unwisely in the pursuit of unattainable goals (nation building or democracy promotion). Real realists like Lippmann, Kennan, Morgenthau and Waltz have highlighted the dangers that await if the United States gives in to the temptations of hegemonic power and have counseled instead that the United States pursue a grand strategy based on prudence and self-restraint. Americans would do well to pay heed to these admonitions as they debate how the United States should alter its grand strategy as the unipolar era inexorably draws to a close.

1 Andrew Mack, "Why Big Nations Lose Small Wars: The Politics of Asymmetric Conflict", World Politics, Vol. 27, No. 2 (January 1975), pp. 185.

2 David Edelstein, "Occupational Hazards: Why Military Occupations Succeed or Fail", International Security, Vol. 29, No. 1 (Summer 2004), pp. 50-51.

3Mapping the Global Future: Report of the National Intelligence Council's 2020 Project (Washington, dc: Government Printing Office, December 2004), pp. 47.

4 The Strategic Assessment Group's analysis of current and projected world power shares was based on the International Futures Model developed by Barry Hughes. For a discussion of methodology and summary of the Strategic Assessment Group's findings, see Gregory F. Treverton and Seth G. Jones, Measuring National Power (Santa Monica: rand Corporation, 2005), pp. iii, ix-x.

5 See Niall Ferguson and Laurence J. Kotlikoff, "Going Critical: American Power and the Consequences of Fiscal Overstretch", The National Interest, No. 73 (Fall 2003).

6 See Martin Wolff, "America Failed to Calculate the Enormous Costs of War", Financial Times, January 11, 2006, pp. 15