Burden of Debt Undercuts Our Power Around Globe

Late last month a number of congressman wrote the President urging him to launch “a multi-year, multi-national, multi-billion-dollar Marshall Plan” to save the government of Corazon Aquino in the Philippines.

By invoking the memory of the Marshall Plan, launched 40 years before to save the government of Greece, the congressmen raise historic parallels that point up new limits on America’s power.

In 1947 it was to Britain, not the United States, that Greece first turned for aid. Britain had at different times colonized or held a protectorate over Greece. Moreover, Britain had a long and illustrious record as head of an empire, center for manufacturing and trade, hub of international finance and world-dominant naval power.

In 1947, however, Britain was broke. It had been ruined in World War II, but the war had only capped an economic decline that had begun around the turn of the century and had already required liquidation of the empire, scaling back of leadership in monetary and currency affairs, and concentration on regional at the expense of global commitments.

The United States, by contrast, was at war’s end the world’s great productive center, each year creating within a single country more than half the world’s product. Given their financial exhaustion, the British had no choice but to invite the United States to take up the role as the leading force in the eastern Mediterranean. Drawing from its vast earnings, the United States easily provided the needed aid to Greece. In the following months America took up broad responsibilities in Europe without straining its resources.

In 1987 the Philippines looks to the United States. But America, like Britain 40 years ago, finds itself in no financial condition to help. The congressmen call for an extra $1 billion each year for five years. Given the amount of current aid, about $300 million per year, that means a total of $6.5 billion. No less is sufficient; indeed, this amount would do little more than keep up payments on the Philippine debt.

Where will America find $6.5 billion to send to the Philippines? This is a time when $30 billion is all that the President and the congressional leadership can wring out of a 1988 budget that is already $160 billion in the red. The American national debt is closing on $400 billion, and we have already deferred needed investment in our national physical plant.

There are excellent reasons for giving the Philippines a huge infusion of emergency aid. But, after six years of deficit spending, the resources are not there. We find ourselves in Britain’s dilemma. And, just as Britain had to look to us in 1947, we today must look to Japan, the country with the expanding economy, the one so productive that it yields surpluses that it can distribute as it pleases. This is why the letter to the President asked for “a multi-national Marshall Plan”--shorthand for “maybe the Japanese will pay for it.”

We are seeing America cast for the first time in the British role. We may, like the British in 1947, have no choice but to cede leadership to those who are financially prepared to exercise it. And if the nations with the surpluses prove less than eager to assume new responsibilities, we may have to abandon our intentions or, embarrassingly, coax others to take up prerogatives that once were ours.

This small example makes one thing clear: Deficits have consequences. Indebtedness clamps real limits on power. Financial failings undercut global ambitions. Weakness is not strength.