Domestic Trends in the United States, China, and Iran
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This electronic representation of RAND intellectual property is provided for non-commercial use only. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. Permission is required from RAND to reproduce, or reuse in another form, any of our research documents for commercial use. For information on reprint and linking permissions, please see RAND Permissions. This product is part of the RAND Corporation monograph series. RAND monographs present major research findings that address the challenges facing the public and private sectors. All RAND mono- graphs undergo rigorous peer review to ensure high standards for research quality and objectivity. Domestic Trends in the United States, China, and Iran Implications for U.S. Navy Strategic Planning John Gordon IV, Robert W. Button, Karla J. Cunningham, Toy I. Reid, Irv Blickstein, Peter A. Wilson, Andreas Goldthau Prepared for the United States Navy Approved for public release; distribution unlimited NATIONAL DEFENSE RESEARCH INSTITUTE The research described in this report was prepared for the U.S. Navy’s Office of the Chief of Naval Operations, Assessment Division (N81). The research was conducted in the RAND National Defense Research Institute, a federally funded research and development center sponsored by the Office of the Secretary of Defense, the Joint Staff, the Unified Combatant Commands, the Department of the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community under Contract W74V8H-06-C-0002. Library of Congress Cataloging-in-Publication Data How domestic trends in the U.S., China, and Iran could influence U.S. Navy strategic planning / John Gordon IV ... [et al.]. p. cm. Includes bibliographical references. ISBN 978-0-8330-4562-1 (pbk. : alk. paper) 1. United States. Navy—Planning. 2. Strategic planning—United States. 3. Social prediction—United States. 4. Economic forecasting—United States. 5. Social prediction—China. 6. Economic forecasting—China. 7. Social prediction—Iran. 8. Economic forecasting—Iran. I. Gordon, John, 1956– VA58.4.H69 2008 359'.030973—dc22 2008044846 The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. R® is a registered trademark. Cover Photo Credits: AP Images/Greg Baker; AP/Vahid Salemi Cover Design by Carol Earnest © Copyright 2008 RAND Corporation All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from RAND. Published 2008 by the RAND Corporation 1776 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138 1200 South Hayes Street, Arlington, VA 22202-5050 4570 Fifth Avenue, Suite 600, Pittsburgh, PA 15213-2665 RAND URL: http://www.rand.org To order RAND documents or to obtain additional information, contact Distribution Services: Telephone: (310) 451-7002; Fax: (310) 451-6915; Email: [email protected] Preface This book examines the future of the United States, the People’s Repub- lic of China, and Iran. Specifically, it reviews how important domes- tic trends—such as changes in the economy, demographics, and the environment—may influence the priorities of these three nations in the future. This research is the second in a series of strategic studies the RAND Corporation conducted for the U.S. Navy’s Office of the Chief of Naval Operations, Assessment Division (N81). The initial research was conducted in the summer and fall of 2006. Entitled “Evolving Strategic Trends, Implications for the U.S. Navy,” that first study was intended for a select Navy audience. It identified likely major global strategic trends in the next decade and how they might influence Navy planning. Although the present book focuses primarily on domes- tic trends, it also explores how events in the so-called near abroad of each nation may influence how the three principal nations view their strategic situation. Based on the insights gained during their research, the authors provide conclusions and recommendations that will be of interest not only to the study’s sponsor, the U.S. Navy, but also to a wider range of policymakers and academics in the United States and elsewhere. This research was sponsored by the U.S. Navy’s Office of the Chief of Naval Operations, Assessment Division (N81), and conducted within the International Security and Defense Policy Center (ISDP) of the RAND National Defense Research Institute, a federally funded research and development center sponsored by the Office of the Secre- tary of Defense, the Joint Staff, the Unified Combatant Commands, iii iv Domestic Trends in the United States, China, and Iran the Department of the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community. For more information on RAND’s International Security and Defense Policy Center, contact the Director, James Dobbins. He can be reached by email at [email protected]; by phone at 703-413-1100, extension 5134; or by mail at the RAND Corpora- tion, 1200 South Hayes Street, Arlington, Virginia 22202-5050. More information about RAND is available at www.rand.org. Contents Preface ............................................................................. iii Figures ............................................................................. ix Tables .............................................................................. xi Summary .........................................................................xiii Acknowledgments ............................................................. xxv Abbreviations ..................................................................xxvii CHAPTER ONE Introduction and Objectives .................................................... 1 Introduction ........................................................................ 1 Study Approach .................................................................... 1 Organization of This Monograph ................................................ 4 CHAPTER TWO Strategic Trends in the United States ......................................... 5 Summary ............................................................................ 5 Introduction ........................................................................ 6 U.S. Demographic Trends ........................................................ 6 Gross Domestic Product .......................................................... 9 The Federal Budget ...............................................................10 Federal Revenues ................................................................11 Federal Spending ................................................................11 Social Security ...................................................................12 Medicare and Medicaid ........................................................13 Interest on the National Debt .................................................15 Federal Spending ................................................................15 v vi Domestic Trends in the United States, China, and Iran Discretionary Spending ........................................................16 Nondefense Discretionary Spending .........................................17 Natural Disasters ................................................................17 Energy ............................................................................. 20 Defense Spending ................................................................ 24 Conclusions ....................................................................... 26 CHAPTER THREE The United States’ Near Abroad ..............................................29 The Current Situation ............................................................29 Future Trends and Possibilities in Northern South America ................31 Future Trends and Possibilities in the Caribbean .............................32 An Overview of Future Trends in the Region ................................ 34 The Special Case of Mexico ......................................................35 CHAPTER FOUR Strategic Trends in the People’s Republic of China .......................37 The Current Situation ............................................................37 China’s Energy Future ............................................................39