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Joel Rubin
Former Deputy Assistant Secretary of State, Democratic Strategist, and Jewish Political Activist

A US default would put both American and Israeli security at risk

An end to global economic dominance would create an opportunity for Russia, Iran, ISIS, and China to step into the breach

The odds of a first-ever American debt default continue to rise as we get closer to June 1, as Congressional Republicans resist paying America’s debt obligations despite the risks involved. If America defaults, this could create profoundly negative consequences for both American and Israeli security.

Remember, Congressional Democrats supported President Trump – who now irresponsibly calls for a debt default – three times in raising the debt ceiling. That was the right policy by Congressional Democrats during the Trump Administration, and it should be the right policy for Congressional Republicans during the Biden Administration.

If a default were to occur, it wouldn’t just be catastrophic for American national security, but would also be extremely dangerous for Israel. This is because, as the saying goes, when America sneezes, the world gets a cold. For Israel, if there’s an American default, Israel will catch the flu. 

Let’s be clear: an American debt default would pose a direct economic, diplomatic, and physical threat to American national security. It would undermine our economic power, create financial chaos for our allies, and give our adversaries a diplomatic opening to exploit. It would also directly defund the multiple US government agencies responsible for maintaining our security. Israeli security would be an innocent victim of America’s default, but a victim, nonetheless.

From a national security perspective, if America were to default, there would be severely negative consequences.

First, America’s economic power in the service of its security would be severely damaged. Our ability to use economic muscle to advance our national security goals through the most aggressive non-military tools at our disposal – financial sanctions – would be severely weakened. Our banking sector, which is the source of our sanctions strength, would no longer be globally dominant, which is what enables the US to impose strong unilateral sanctions as well as to lead multilateral sanctions efforts. In short, a debt default would undermine our sanctions weapon, harming our efforts to penalize countries like Iran and terrorist organizations like Hezbollah, giving them more economic power at precisely the wrong moment.

Second, a debt default would create a strategic diplomatic opening for both America’s and Israel’s adversaries, one that they would be all too eager to exploit. America’s economic power since World War Two has enabled the US to build tight relationships with countries around the world through trade and investment. Multiple adversaries, including but not limited to China, Russia, and Iran, have been waiting for the moment where American economic hegemony is no more. A default would give them that opportunity, enabling them to effectively claim that the US dollar should no longer be the global reserve currency and that depending upon the American economy is not a smart move. This is an opportunity that these countries have been longing for, but unable to create; the self-inflicted wound of a debt default would do just that.

Third, a debt default would dramatically impact America’s physical defenses and harm the morale of the personnel whom both we and Israel depend upon for our security. If a debt default were to occur, there would be an urgent need for the US Treasury Department to pay the most critical obligations first, with whatever amount of liquid funds are available from pending tax revenues. The Biden Administration would be responsible for making these horrific choices and would likely be faced with choosing to pay down a portion of required interest payments, non-discretionary entitlements such as Social Security, and perhaps some Defense-related obligations tied to maintaining our nuclear security. After that, funding for the other discretionary national security accounts, such as the State Department, Intelligence Community, and Homeland Security Department, may be put in abeyance. Veterans’ health care benefits – a sacred obligation – would also likely be curtailed, as would the military aid program to Israel, now worth nearly $4 billion annually. 

It’s worth noting that these latter funds for Israeli security are discretionary and would likely have to stop flowing so that more urgent American financial obligations would be paid. That is a high risk for Israel. 

The bottom line of a potential American debt default is that America’s security – as well as Israel’s – would become vulnerable. For those who are eager to exploit American security weaknesses (think Russia, Iran, ISIS, and China), a debt default would be providing them with an economic, diplomatic, and physical security opening to exploit that they could have never dreamed of.

It’s therefore past time to prevent this security gap for both the US and Israel from opening. This means that America must pay our debts. Now. The alternative to not paying them is unacceptable and is a scenario with dangers for both the United States and Israel that Congressional Republicans should not allow.

About the Author
Joel Rubin is a National Security Expert, Democratic Strategist, and Jewish Political Activist. The President of Washington Strategy Group and a Partner at Democracy Partners, he's a former Obama Administration Deputy Assistant Secretary of State for Legislative Affairs, was the Executive Director of the American Jewish Congress, and was a Democratic Candidate for Congress in Maryland.
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