Today, Admiral Gary Roughead argues that the United States should remain engaged in the defense and use of commercial shipping lanes in the Middle East; Nadia Schadlow reexamines the old idea of strategic depth in the light of contemporary technological innovations in warfare; and Joshua Rauh, Daniel Heil, and Benjamin Jaros assess America’s fiscal “scorekeepers” and preview possible reforms “to restore confidence in the official scoring of legislation, without which the political process loses its compass for understanding the true effect of legislation on the federal government’s worryingly large debt and deficits.”
Determining America’s Role in the World
Distinguished Military Fellow Admiral Gary Roughead writes in The Caravan about the future of maritime commerce and security in the Middle East. Noting that the American view of the region has been “too terrestrial and too militarized for too long,” Roughead—one of only two US Navy officers to have commanded both the Pacific and Atlantic fleets—suggests that maritime corridors will play a vital role in the region’s economic future. He argues that “throughout history, navies [have been] fundamentally about protecting and expanding commercial interests.” Middle Eastern sea lanes will be central in the flow of critical minerals from Africa and manufactured goods from across Asia. But new and smaller threats to commercial vessels and naval assets are emerging, as shown by the Houthi targeting of western ships. To remain relevant in this “pivotal geography,” Roughead says, the United States “must reassert itself in the region commercially.” Read more here.
In a piece for the First Breakfast Substack reproduced at the Hudson Institute website, National Security Visiting Fellow Nadia Schadlow examines the idea of “strategic depth” and proposes new aspects of the concept in modern strategy and warfare. Schadlow makes the case that technological innovation “has devalued the traditional advantages conferred by strategic depth,” which historically concerned geography. As she writes, “Strategic depth now applies to cyberspace, outer space, and our defense industrial base.” Schadlow then argues that to enhance American strategic depth, the US should allow “frontline states” such as Ukraine, Israel, and Taiwan to robustly defend themselves and sap adversary resources. Finally, she proposes a policy of “distraction by design,” or intentional creation of challenges for adversary states to divert their attention and resources from expanding influence. Schadlow concludes that while “strategic depth is about resilience,” the concept is “also about shaping the global environment in ways that give the United States time and space to act—and deny that same advantage to others.” Read more here.
Answering Challenges to Advanced Economies
Writing at the Liberty Lens Substack, Senior Fellow Joshua D. Rauh, Policy Fellow Daniel Heil, and Research Fellow Benjamin Jaros offer an introduction to Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) analysis of federal spending bills. They write, “The JCT is responsible for providing estimates of the budgetary impact of tax legislation, which the CBO then incorporates into broader cost estimates. Revenue estimates by these scorekeepers play an important role in shaping how representatives, voters, and agencies understand and react to potential legislation.” The authors note that inaccurate cost estimates for the Inflation Reduction Act and Affordable Care Act raise “important questions about whether current scoring frameworks and statutory limitations allow these agencies to adequately capture the true fiscal impact of major spending expansions.” Worse yet, past scoring errors have not led to procedural reforms, diminishing trust in cost estimates. Future posts from the authors will “suggest reforms to improve transparency and trust in the scoring process.” Read more here.
What is dollar dominance, and how does it play out in today’s economy? Is dollar dominance coming to an end, and if so, will it fade gracefully or end with a bang? To unpack these questions, Hoover Senior Fellow and Director of Research Steven J. Davis speaks with Kenneth Rogoff about the dominant role of the US dollar in the international monetary and financial system, drawing on Rogoff’s new book, Our Dollar, Your Problem. They review how the dollar became preeminent, the benefits and costs, the relationship to US monetary policy, and the forces that could undermine dollar dominance. These include geopolitical tensions between the US and China, the US fiscal outlook, and threats to central bank independence. Watch or listen here.
What’s the most likely outcome for President Trump’s tariff strategy—trading partners capitulating, America’s economy and exceptionalism crumbling, or something in the middle? For the latest episode of Matters of Policy & Politics, Hoover Visiting Fellows and economists Michael D. Bordo and Mickey D. Levy discuss a recent paper they’ve published on the history of tariff impositions and four possible outcomes they envision for the present trade shake-up (none of them are good). Their conclusion: the odds favor a “less-worse” case of 12–14 percent tariffs and deals with Canada and Mexico, with a “small but cumulative impact” on longer-run potential growth (maybe a mild recession) while the US retains its global dominant status. Watch or listen here.
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