This is a guest post by Patrick Frost, a Senior Blogger at FPA:

In the past couple days, the world’s great powers have been busy courting and challenging the Middle East’s prospective regional power, Iran. To most people’s surprise, the leaders of Turkey and Brazil reached an agreement with Tehran to transport and hold about half of Iran’s enriched uranium, but the details are still thin. In the deal, it is believed that there are no limits to how high Iran can continue to enrich their kept uranium and unlike the US/European/Russia led deal which Tehran reneged on last year, it would allow Iran to still keep enough uranium to make a nuclear weapon. This announcement has been followed by Secretary of State Hillary Clinton’s proclamation that the UN Security Council 5 permanent members plus Germany have reached an agreement on a fourth round of sanctions on Iran. It is unknown how extensive the sanctions are as Russia and China have likely watered them down. In any case, it is hoped that if the sanctions are passed, they could be followed by additional individual pressure from the US and European states.

Are these two great power plays contradictory or compatible? The real fear about the Turkey-Brazil-Iran deal is that it will allow Iran to continue its nuclear weapon buildup while having the cover of international legitimacy bestowed on it by Rio and Ankara. Unfortunately, nearly the same thing can be said about the sanctions. The US/EU/Russia/China can look like they are ‘doing something’ to stop Tehran’s nuclear pursuit, but the bottom line is that the Islamic Republic is still in the drivers seat. From what I’ve read, the Turkey-Brazil-Iran deal does not do enough to really stop Iran’s nuclear efforts. As Greg Scoblete of Real Clear World stated: ‘this is the kind of deal that is okay to countries - like Brazil and Turkey - that aren’t terribly concerned with Iran’s nuclear program.’ If this is true, then the deal made could really cause problems for the US, Israel, Europe, Egypt, and all others who fear a nuclear Iran. Apparently, the Obama administration tacitly supported Brazil and Turkey’s rapprochement to Tehran on this issue, but they surely are backtracking now. Clinton has been timid in her remarks about the 3-way deal and stated that ‘the details matter’.

There is hope that the UNSC sanctions are indeed a strong step forward in this process and can lead to further steps that can push Iran into a deal that can keep Iran from weaponizing and a physical confrontation from occurring. Of note, both Turkey and Brazil are currently 2 of the 10 non-permanent members of the UN Security Council and along with the 5 permies, 5 more votes will be needed to pass the sanction resolution. Even if the resolution passes without Turkey and Brazilian support it will suffer some international legitimacy and the Islamic Republic leaders can yak and yak about being unfairly targeted after they already made a ‘fair deal’.

If Turkey and Brazil indeed push against the UNSC sanctions and actively promote their Iranian deal as the only way forward it will be quite the gamble. In effect, they will be choosing the side of Iran. Turkey’s government has been lurching towards south and east and away from the US, Europe, and Israel so this is not that surprising, but Brazil’s choice in the matter is a bit more puzzling. Brazil has a not insignificant amount of trade with Tehran and has butted heads with the US on several minor issues (Honduras election, Colombia basing rights), but this move could really put it on the opposite side of the US on a major foreign policy issue that could become a crisis.

Alas, these moves are still in their early stages and it would not be surprising to see Brazil and Turkey come back into the fold during the coming UNSC resolution debates. We shall see.

 

I don’t agree at all with the Economist’s leader this week, which suggests that Barack Obama’s presidency was headed for failure until his health care victory last week.  The health care victory was the icing on the cake, coming fourteen months into Obama’s first term, after he rescued the planet from an economic meltdown in a cooperative effort with other G-20 leaders, pulled the Security Council behind him in a tougher stance toward Iran, negotiated nuclear arms reductions with the Russians, and improved America’s image in the world.  Bravo, Mr. President!

Politically, this fella is no slouch.  Obama may well avoid what happened to Bill Clinton in ‘94, a massive mid-term reversal, with the likes of Newt Gingrich snickering in the hall, John Boehner today looking  like a dim photocopy of the Newt.  Sure, the president has been aided by the Republican victory in Massachusetts.  Yes, that’s right — aided by the Republican victory, a wake-up call that came ten months before the mid-term elections, just in time to deflate the egos of many in the West Wing, to cobble together a realistic health care victory, and to lay the foundation for a multi-month comeback to a mid-term election victory, or at least a less-nasty defeat.   Such a Democratic upset this November seems more likely now, given the current state of the know-nothing Republican Party, as hamstrung by their defunct ideology and mediocre leadership now as they were in October 2008 when they couldn’t understand that capitalism would be saved by government intervention.

Let’s not underestimate the dimensions of this political success.  I, not knowing much about Barack Obama in 2008, underestimated the mettle of this (at the time) inexperienced, leftish, mediocre legislator with barely any time outside the Illinois legislature.  He is one of those lucky bets that is paying off.  

Obama, his advisers, and dare I say it, the Democratic leadership of Congress, played this thing like a symphony.  Right on the heels of the Mass. election, which I wrote about in January, it would have been highly unpopular to ram health care reform through, utilizing the funky procedures they are employing right now.  Steny Hoyer had to button his lip in January.  Now, the country has barely noticed how the Democrats are passing this thing.  The Dems realized that not passing health care reform would be worse than stealing it in the middle of the night.  President Obama can claim that he has done something for the American people, something big, and yes, controversial.  But this accomplishment will be remembered as such, and everyone will forget how it was done.  Brilliant insight on the part of the Democratic leadership.

Even better, the president held that mock-bipartisan discussion with the Republicans right after the Mass. election, providing fodder for his future argument on the hustings, that “I reached out to them and they bit my hand.”  Now, he can dispense with the facade of bipartisanship (something he has never really exhibited), just when you want to dispense with bipartisanship, that is, in the run-up to an election.  The gloves are off, folks, and the Democrats are towering over a party in disarray, drifting to the right, and sipping tea.

Now, what do you do with this victory?  This is the question the Economist asks.  Undoubtedly, the Obama people will answer, “Get re-elected.”  And for starters, this means doing as well as possible in the mid-terms, to allow for a legislative foundation to pass more of the Obama agenda, though no one is quite sure what that is.  Then, run in 2012 as the early 21st century’s FDR, the remnant of the right quivering in their jack-boots.

To keep up the momentum, the President just jaunted off to Afghanistan, to underscore his key foreign policy priority and to make indelible his new-found image of toughness.  Having sustained criticism for dithering and allowing others to lead him, whether Democrats in Congress or foreign leaders, Obama is in pursuit of a victory abroad to match the massive, bloody victory he just won on the homefront.

I opposed health care reform in this blog.  Not that I oppose health care reform per se.  In fact, I am for it.  It is the fair and right thing to do in America, and one of those important actions, so intangible yet so necessary, that underpins social peace and the fabric of our society. However, I oppose health care reform, an expansion of government entitlements, at this time.  I still feel that America’s gravest fiscal crisis in history — the one we are in, which is set to get worse —  is no time to expand entitlements.  Entitlements — unemployment insurance, medicare, medicaid, social security, health care, etc. – could undermine America’s finances, if a medium-term fiscal plan is not put forward that puts government debt (now approaching an unhealthy 90% of GDP) on a downward trajectory.  On this, I concur with the Economist.

I was impressed that the CBO found a way to fully fund health care reform, albeit with uncertainty that the revenues will be there.  Cost containment is another uncertainty.  Hats off to the Democrats for seeking a way to expand entitlements without further busting the budget.  I do feel that some credit for this is due to those of us who put pressure on the party in power to respect fiscal rectitude, including many in the party of “no”.  Democracy works.  

I was a country risk analyst for fifteen years.  Country risk analysts are a breed that understands what is at stake with a deterioration in America’s public finances.  Country risk analysts assess the likelihood that a sovereign government will pay back its debts in full and on time.  Rating agencies, where I was a managing director for sovereign ratings for much of the past decade, assign letter ratings — AAA, BBB, BB, etc. — that rank countries by their sovereign credit risk.  Alas, the US is now in danger of losing its cherished AAA rating — the highest rating, the lowest risk — if the deterioration is not reversed in public finances (not to mention the trade deficit, which is driven in part by government deficits).  I wrote on these matters last fall — a piece on fiscal policy and one on trade – and earlier this year on the prospect of the US losing its AAA.

Americans are spoiled.  Never having experienced a real sovereign debt crisis, similar to what was experienced in Mexico after 1994, in Thailand, Korea, Indonesia and Russia after 1997-98, and in Argentina after 2001, Americans don’t worry about their governments’ finances.  Most argue today that the US, wealthy as it is, can afford health care reform.  But they don’t want higher taxes to pay for it.  There has never been a worry about the safety and soundness of US government bonds.  There have not been lines in America outside of defunct banks of depositors seeking their money since the Great Depression.  This is why the backlash against the bank bailout last  year was so strident…and so ill-informed.  Country risk analysts know better and understand that America has bought some time with its stimulus package and bank rescue, but had better balance its books in short order.  My worry is that the president and his inner circle are not as on top of these risks as the average country risk analyst is.  Hopefully, Geithner and Summers and others will bend the president’s ear regarding fiscal rectitude, if they are allowed to remain in power.

America’s economy remains strong and large.  The US dollar remains the world’s reserve currency. American competitiveness in high-technology, education, services, agriculture, defense and other industries remains intact.  It would take some serious further mismanagement for the US economy to lose its position of number one.  In 1905, Argentina had one of the leading economies in the world.  Through over a hundred years of mismanagement, Argentina became the number one sovereign financial pariah, with a massive sovereign bond default in 2001.

The US has a ways to go before becoming Argentina, or even Greece or Britain, the latter more likely to lose its AAA than the US.  But, such intangibles as credibility of the US dollar and US assets could evaporate quickly.  Right now, those with cash in the world do not have a lot of options better than US dollar investments — euro investments look dodgy at best, yen investments are not so attractive, and other currencies do not provide the depth and safety to handle multiple trillions of investment dollars that pour into US, European and Japanese markets.  Not yet at least.  Watch this box on the Rising Powers to learn more about the risks and opportunities in the major Emerging Markets. 

The US economy and US power are in decline, for sure.  Don’t gnash your teeth or get panicky.  We’re talking about relative decline, which is inevitable.  With $45,000 in per capita income, versus China’s $3,500, America will not grow as fast as China.  The Chinese economy will overtake America’s in a matter of decades.  US power too – that is, America’s ability to influence events in the world — will also decline in relative terms. 

It is not time to move to Beijing.  What is critical is the manner and speed of America’s decline.  If America ensures that the Rising Powers remain cooperative members of the liberal interational world order – characterized by free trade, currency convertibility, market economies, democratization, the generally peaceful resolution of disputes, and cooperation among the world’s great powers — then America can decline with peace of mind.  Moreover, if America’s declining economic position does not occur suddenly and rapidly, producing dislocation and popular anger at home, then America can maintain its still-powerful, yet diminished position in the world with grace, proud of having led the most prosperous, fairest, least-bloody world order since humans stopped swinging from trees.

The surest way to protect the world’s liberal institutions and to co-opt the Rising Powers is for America to stay strong.  So, American policy makers must see every policy option through the lens of American power.  Balance must be sought between achieving a more equitable American society and reinforcing the pillars of American power.  That is why I opposed health care reform at this time, while I fully understand the political imperative of doing it now.  Those Democratic majorities won’t last forever.   

Flush with his health care success, President Obama’s first priority no doubt will be to win elections — first in 2010 and then in 2012.  To that end, he will attempt to chalk up victories in his chosen priorities.  He will seek tangible victories in Afghanistan, some movement in the Arab-Israeli conflict, and progress on jobs and financial re-regulation.  Nothing wrong with these priorities.  The only thing missing perhaps is this lens of American power.  Will such-and-such a policy bolster American power over the longer-term or not?  If not, do not expend political capital on it.  Is there anyone in the White House looking through this lens?  I hope so.    

Restoring fiscal soundness, which means cutting spending and raising taxes, should be priority number one, Mr. President.  The president, who has sought to recast his leftish record as a centrist, should embrace centrism — and its centerpiece, sound finances — wholeheartedly.  But he won’t.  No one believes that centrism wins elections.  I suspect if he did embrace centrism, he might be surprised that it could win elections.  As the first truly centrist American president, Barack Obama would be on his way to achieving another first, following his most recent first — health care reform.

…even under Barack Obama.  Nice piece in the FT on European angst about American power, and the continent’s inability as yet to offer a unified foreign policy with punch.  Ideally, EU foreign and defense policies could serve as a counterweight to the G-2, read: China and the U.S.  The latest flare-up of this angst involved a French official complaining about U.S. heavy-handedness in managing relief in Haiti.  Alleged American heavy-handedness – and not from W, but from Barack Obama.  Have a read…

One of the problems the Europeans have had since the end of WWII is their happy laziness with being a “free rider” under the American security umbrella.  No one in Europe wants to increase defense spending so that they would actually be taken seriously as an alternative force in the world.  After tens of millions dead in the first half the 20th century at the hands of European geopolitics, is it simply that they still do not trust themselves?  Probably not.  More likely that it is easy and cheap to remain a free rider.

Planet Earth’s critical issue this decade will be whether American power will erode — and if so, what the implications will be for the liberal world order we erected after WWII.  The Obama administration’s fiscal stimulus package cum bank bailout, building on the Paulson-Bush-Geithner-Bernanke efforts of 2008 and the unprecedented coordination of economic policy globally, constituted a brilliant, stage-managed rescue of our planet, nothing less.  However, such a Herculean effort has created its own problems — huge debts, gaping goverment deficits, and a government intrusion in the economy that will be hard to reverse.  As yet, no plans to solve these problems have been offered.

Students of power and prosperity from Paul Kennedy on down know that imperial overextension accelerates the decline of great powers.  From this dynamic, the US is not immune.  While the relative decline of the US has been in place since the 1950s, its rapidity and consequences are far from inevitable.  A too precipitous, disorderly, angry decline that would occur if America does not right its fiscal ship soon would not only injure American prosperity, but would also put at risk our global institutions — the UN, the IMF and World Bank, NATO, the WTO, the G-20, etc.  These institutions have fostered cooperation and peaceful solutions to the world’s problems. 

The symbolic end to this Pax Americana, which has raised billions out of poverty and offered countless millions broader political participation, could be the loss of the AAA rating on US government bonds.  According to Brian Coulton, head of Global Economics at Fitch Ratings, this could occur later this decade if an aggressive fiscal consolidation program is not implemented by the Obama administration (see note below).  A narrow tax base, low discretionary spending (the kind of spending that is easiest to cut) and huge entitlements — including the $900 billion health “reform” up on Capitol Hill, the continued current account deficits in spite of sluggish GDP growth, and our dependence on foreigners for financing together spell a potentially rapid decline of America’s place in the world. 

So, who will fix this?  President Obama has chosen the nerd pictured above.  He is reportedly a bright, driven man.  I am not sure how hard it is to preside over the most massive expansion of entitlement spending in history and to oversee the distribution of hundreds of billions of dollars of stimulus spending to groveling constituencies.  But that was just his first year.  The president’s chief of staff Rahm Emanuel was reported in the New York Times to have said that Office of Management and Budget Director Orszag has “made nerdy sexy,” perhaps with some jealousy.  The Times article this Sunday highlighted Orszag’s loose love life and questions about his commitment to his families.  I am all for keeping a public servant’s private life out of politics in principle, but one wonders how so extravagant a player can be entrusted with the most difficult fiscal consolidation in human history.  I don’t think rating agencies take into account the social life of a sovereign’s budget director in making their rating decisions, but one wonders sometimes if they should.    This seems to be part of the hubris we have seen sometimes in this White House.  I hope he knows what he’s doing, because the stakes couldn’t be higher.

Fitch Affirms United States at ‘AAA’; Outlook Stable   

11 Jan 2010 8:31 AM (EST)

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Fitch Ratings-London/New York-11 January 2010: Fitch Ratings has today affirmed the United States’ (US) Long-term foreign and local currency Issuer Default Ratings (IDRs) at ‘AAA’, respectively. The rating Outlook on the Long-term ratings is Stable. Fitch has simultaneously affirmed the US’ Country Ceiling at ‘AAA’ and the Short-term foreign currency rating at ‘F1+’.

“The near-term risk to the United States’ ‘AAA’ status is minimal given its exceptional financing and economic flexibility and the US dollar’s role as the world’s predominant reserve currency. However, difficult decisions will have to be made regarding spending and tax to underpin market confidence in the long-run sustainability of public finances and the commitment to low inflation,” said Brian Coulton, Head of Global Economics and the Primary Analyst for the US at Fitch.

“In the absence of measures to reduce the budget deficit over the next three-to-five years, government indebtedness will approach levels by the latter half of the decade that will bring pressure to bear on the US’ ‘AAA’ status,” added Coulton.

The US government remains exceptionally creditworthy - supported by its pivotal role in the global financial system and a flexible, diversified and wealthy economy that provides its revenue base - despite an unprecedented deterioration in fiscal performance. The government’s unparalleled financing flexibility enhances debt tolerance even relative to other large ‘AAA’-rated sovereigns, and has allowed the government to take aggressive counter-crisis and counter-cyclical policy measures, which now appear to be working in terms of restoring stability to the US financial sector and the economy.

However, the government faces significant medium term fiscal challenges with a sizeable structural deficit, a narrow tax base, limited expenditure flexibility and exposure to potential interest rate shocks due to the short duration and maturity of US government debt and a heavy reliance on foreign investors. Public debt on a general government (i.e. consolidated federal, state and local) basis is expected to rise to 89% of GDP in 2010 and 94% in 2011 from 79% of GDP in 2009, which would mark the highest level among ‘AAA’-rated sovereigns. Public debt was just 57% at end 2007.

The general government deficit - estimated by Fitch at 11.4% of GDP in 2009 and forecast at 11% in 2010 and 8.5% in 2011 - contains, in Fitch’s opinion, a sizeable structural component that will not be eliminated by the economic recovery and the unwinding of stimulus measures. Corporate taxes, in particular, collapsed in 2009 having been boosted by artificially strong financial sector profits and asset price gains in the years before the recession began and are unlikely to show a strong recovery. Fitch anticipates the economic recovery will be weak by the standards of previous recoveries and less dynamic than assumed in the latest official medium term fiscal forecasts. Deleveraging will continue to weigh on private sector demand, while rising long-term unemployment and the fall in investment through the recession could adversely affect supply side performance. In addition, while TARP related fiscal outlays have been lower than anticipated, fiscal risks relating to the financial sector remain, particularly with regard to Fannie Mae (’AAA’/'F1+’/Outlook Stable) and Freddie Mac (’AAA’/'F1+’/Outlook Stable).

Public debt levels compare particularly poorly with ‘AAA’-rated peers when expressed relative to fiscal revenue. General government debt was equivalent to 330% of revenues at end 2009 (even higher at 437% on a narrower central government basis), the highest among ‘AAA’-rated sovereigns and compared to a long-run ‘AAA’ average of 118%. Amongst high grade sovereigns, only Japan (’AA’/'F1+’/Outlook Stable) and Ireland (’AA-’/'F1+’/Outlook Stable) have higher debt-to-revenue ratios. Debt interest payments are expected to rise to nearly 11% of revenue by 2011 and nearly 13% on a central government basis. Fiscal flexibility is also reduced by the limited scope for sizeable structural reductions in public expenditure, given low discretionary outlays and pressures on entitlement spending.

Both the dollar’s role as the predominant global reserve currency and the benchmark status of US Treasuries significantly reduce the scope for destabilising interest rate shocks. But the economy’s high external debt burden, the ongoing current account deficit and the high share of non-resident holdings of government debt (close to 50%) increase the potential for volatility in US asset prices if foreign investors were to become concerned about public debt sustainability or risks to the credibility of the monetary policy framework. With the average maturity of federal debt having shortened sharply over 2008 and 2009, rising interest rates would feed through to the budget relatively quickly.

Applicable criteria available on Fitch’s website at www.fitchratings.com: ‘Sovereign Rating Methodology’, dated October 16, 2009.

Contact: Brian Coulton, London, Tel: +44 (0) 20 7682 7497; David Riley, + 44 (0) 20 7417 6338; Shelly Shetty, New York + 1 212 980 0234.

“The multipolar world has become a global reality, recognized as a near certainty by no less an authority than the U.S. intelligence community,” writes Elizabeth Dickinson in the latest issue of Foreign Policy. While missing the complexities of the debate about the global balance of power, the article details some of the historical moments when a multipolar world was discussed.

“For most of its geopolitical life, ‘multipolar’ has been a synonym for America-bashing, whether by erstwhile allies in the Cold War or an anxious Russia grappling with its post-superpower status…today, Secretary of State Hillary Clinton promises to tilt the balance ‘away from a multipolar world and toward a multipartner world.’”

“1987: In The Rise and Fall of the Great Powers, Yale University historian Paul Kennedy predicts the balance of military power will shift over the coming 20 to 30 years, creating a truly multipolar world around 2009. ‘If the patterns of history are any guide, the multipolar economic balance will begin to shift the military balances,’ he later tells the New York Times.

“December 25, 1991: The Soviet Union ceases to exist, eliminating the second Cold War ‘pole’ and launching a debate about the new world order. ‘Global politics,’ Samuel Huntington argues later in Foreign Affairs, ‘is now passing through one or two uni-multipolar decades before it enters a truly multipolar 21st century.’

“April 23, 1997: Fear of U.S. unipolarity inspires China and Russia to sign a ‘Joint Declaration on a Multipolar World and the Establishment of a New International Order’ in Moscow.

“February 2, 2000: Secretary of State Madeleine Albright, who earlier dubbed the United States the ‘indispensable nation,’ claims the U.S. is not looking to ‘establish and enforce’ a unipolar world. Economic integration, she says, has already created ‘the kind of world that might even be called ‘multipolar.’’

“January 26, 2007: A New York Times editorial describes the ‘emergence of a multipolar world,’ with China taking ‘a parallel place at the table along with other centers of power, like Brussels or Tokyo.’

“November 20, 2008: In its ‘Global Trends 2025’ report, the U.S. National Intelligence Council declares the advent of a ‘global multipolar system’ as one of the world’s ‘relative certainties’ within two decades.

“2009: U.S. President Barack Obama takes office with what many deem a multipolar worldview, prioritizing rising powers such as Brazil, China, India, and Russia. ‘We will lead by inducing greater cooperation among a greater number of actors and reducing competition, tilting the balance away from a multipolar world and toward a multipartner world,’ Secretary of State Hillary Clinton says in a July address.

“July 22, 2009: ‘We are trying to build a multipolar world,’ U.S. Vice President Joseph Biden declares in a speech in Ukraine.”

Photo from AP.

What would President Monroe say?

An Economist article discusses the growing presence of Great Powers, especially China, in Latin America, flouting nearly two centuries of U.S. dominance in the region, since the articulation of the Monroe Doctrine in the early 1820s.  In the near term, this worry is overdone.  Longer-term, if the U.S. continues to damage its sovereign creditworthiness, i.e. by not putting in place a medium-term fiscal consolidation program (that is, to reduce America’s rising government debt) – a program that should include putting health care reform on hold, then America’s relative decline will accelerate and this will affect its projection of power in the Western Hemisphere. 

In the 1820s, as revolution in Spain led to unrest in its colonies in the Western Hemisphere, the Holy Alliance of autocratic east European courts – Russia, Austria and Prussia, threatened to intervene in these colonies.  President Monroe in 1823, backed by the British Navy, warned Europe that any extension of European power to the Western Hemisphere would be “dangerous to our [U.S.] peace and safety.”

Nowadays, as the world moves increasingly toward a multipolar system, power projection in Latin America is largely in the form of commerce.  China, India and others seek, above all, the region’s raw materials to fuel their rising economies.  True, with economic influence comes political influence.  True as well, such powers as Russia and Iran seek direct political influence through arms sales and energy deals with the likes of Chavez’s Venezuela, Cuba, and Evo Morales’s Bolivia.  But these countries are on the fringe.  More of interest to U.S. policymakers are China’s economic relations with the major economies of the region, notably Brazil.  China’s economic relations with Brazil have been hand in glove — raw materials fueling a manufacturing juggernaut, while with Mexico, they have been competitive.  Brazil is also a manufacturing nation and will one day find China an unwelcome competitor. 

So, the thrust of the foreign “intervention” is commercial and good for Latin America.  This is good for the United States as well, insofar as China supports growth in the region and the U.S. no longer has to be relied on so heavily as the source of demand and investment for the hemisphere.  In previous U.S. downturns, Latin countries hovered on the brink of default (or in fact defaulted), whereas this crisis they have weathered, due in part to demand from China and elsewhere. 

China, for its part, is “intervening” in Latin America as a rule-abiding member of the global capitalist system, wrought by the U.S. and its allies.  This should not worry American policymakers.  Sure, they should keep an eye on the mischief-making of countries like Iran and Russia that seek to upset the U.S. in its own backyard, much as Krushchev did with Cuba in the middle of the last century (however less dramatic and threatening the current mischief-making is).  Again, the smartest thing U.S. policymakers can do is get America’s fiscal house in order – by first of all, postponing health care reform — and revive the formidable U.S. economy — upon which the country’s power projection is based — not least through continued banking overhaul, workout of real estate loans, policies to increase household savings, and a reform of monetary policy (by discarding Greenspan’s discredited approach).