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Is America About to Lose Its "Superpower" Status?

F-35 Lightning II. Photo: Lockheed Martin via Northrop Grumman.  

The definition of a "superpower" varies across different sources, but one thing most agree on is that a superpower is a nation or state that has a superior military. For America, that's a problem. Here's why, and how it could affect you.

The cuts keep coming
Last week, Congress passed a fiscal 2014 omnibus spending bill, which includes $572 billion for defense. However, the bill reduces defense research and development funding by almost $7 billion, compared with 2013 levels, and is more than $6 billion less than what the White House requested for Pentagon weapons procurements.

That might not seem like a significant blow to America's military superiority, but it absolutely is. In addition to affecting much-needed weapons procurements, the continuing cuts to defense R&D could have a devastating, and lasting, impact on America's technical superiority.

According to Defense News, Frank Kendall, undersecretary for acquisition, technology, and logistics, said, "I'm very concerned about eroding technological superiority and where we're headed." He also stated, "Unless sequester is reversed, nations such as China and Russia could become more militarily powerful than the United States." 

Boeing's KC-46A. Photo: Boeing.

A lost superpower?
One of the factors that drive innovation and technology is R&D funding. Yes, individual companies have their own R&D funds, but when it comes to defense, and costly weapons systems -- like Lockheed Martin's (NYSE: LMT  ) F-35, and Boeing's (NYSE: BA  ) KC-46A -- the government's R&D investment is vital. Consequently, reducing government-funded R&D hampers weapons development, which over time, erodes technological superiority.

Further, the eroding of technical superiority could become a vicious cycle: As America's weapons prowess wanes, lucrative weapons sales dry up and go to better systems, further affecting R&D and technological innovations.

More importantly, defense R&D often leads to advancements in consumer technology. For example, Ivan Getting, and the U.S. Department of Defense invented the Global Positioning System, or GPS, and without the Defense Advanced Research Projects Agency, or DARPA, the Internet may not exist. Moreover, DARPA also had a hand in the technology that led to the World Wide Web, Google Maps, Windows, the cloud, Siri, and a number of other technologies, according to PC Pro.

What this means
The loss of R&D funding is a significant problem, and if it continues, there's no doubt that America's military prowess will suffer. That in turn, could affect America's superpower status. Further, defense contractors, including the two I mentioned, depend on R&D funding, especially for large-scale weapons systems. As such, without adequate funding, they, too, may suffer a loss of technical ability. That could dampen profits, which could affect their stock price. Last, but certainly not least, defense R&D has led to some truly impressive advancement. Thus, it'll be a sad day if that avenue of innovation dries up. Consequently, investors should keep a close eye on any budget Congress passes, and, specifically, continuing cuts to R&D.

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Read/Post Comments (21) | Recommend This Article (9)

Comments from our Foolish Readers

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  • Report this Comment On January 26, 2014, at 2:33 AM, Vector wrote:

    China and maybe Russia are still 25 years out from coming even close to American Military power. It would not be a bad thing to let China become the only Super Power. This will allow them to send their own troops to the World's Hot spots and let the US concentrate on their own people.

  • Report this Comment On January 26, 2014, at 2:39 AM, Mandog wrote:

    Sounds like the defense contractors wrote this article! The US still spends way more than the next 5 countries together!

  • Report this Comment On January 26, 2014, at 2:46 AM, Computerworgen wrote:

    So, Tax payer money is used to come up with technologies like Google Maps, Windows, the cloud, & Siri, so PRIVATE corporations make Billions in Profits while The people paying for it are Getting SHAFTED by the very same corporations. This is as bad as Tax Money & Donations being used to Subsidize medical research, so that when a Cure/Treatment is found, We have to pay for it again so they can make Billions with Little Investment. Tax payer payers financing for the R&D of the Rich Corporate elite needs to stop. So, yeah, No More Tax Money for R&D!! Let Lockheed & every other stinking Tax Dodging Corporation pay for their own R&D & stop sucking off the Taxpayers teats.

  • Report this Comment On January 26, 2014, at 3:03 AM, mansourg54 wrote:

    China's area is slightly smaller than the US and has very little to no natural resources like oil, gold, silver, gas etc. It has 3-4 times more people than the US and half of them live in poverty. China will never be able to reach the same military strength as the US because it needs the money to feed its people. Economically China is doing good because many American companies have operations in China that create jobs. If the US directs these companies to move to Vietnam or somewhere else and the US stops buying Chinese goods 90% of the Chinese people will fall under the poverty line.

  • Report this Comment On January 26, 2014, at 4:44 AM, daverhall wrote:

    Our stature will continue to erode as long as companies keep outsourcing jobs to overseas like China and Russia and keep giving away our technology. If companies would smarten up and bring all those jobs back to the US tomorrow and do the work within the US, then we would have more families earning their support and pay taxes to help our country. But until these companies and this President and Congress become dedicated to America instead of their pocketbooks then we will keep sliding down that 75 degree decent until we collapse, which is not far from now. Is Communism that much more appealing to business and Congress and the administration than a strong America is?

  • Report this Comment On January 26, 2014, at 4:59 AM, daverhall wrote:

    I think one idea that when implemented would help all of America out. That is to have every one sign up for the military draft and no one gets out of it. right now 100 % of our leaders have no military experience to teach them about allegiance to the United States and to value 'freedom'. Only a couple have served in the military, but so long ago that they have lost contact with those memories and do not use wisdom when working with any part of the military and don't realize what it requires to make it work properly. Bring back the draft for everybody and bring back all outsourced jobs to America immediately or sooner.

  • Report this Comment On January 26, 2014, at 5:49 AM, bmmohio wrote:

    Historically a country after war cut military spending. The problem we have now is the money is getting directed to homeland security and other projects that don't contribute to a long term solution. The government has not created a solution to deal with online purchases for local communities. A good example would be paypal collecting sales taxes by full zip code so the local districts can withdraw money and data. This would also help BEA. This would also add 3-4% to are economy and additional 3-4% to bank reserves.

  • Report this Comment On January 26, 2014, at 6:13 AM, sotaibi1 wrote:

    I completely disagree. I believe this is the US government finally heeding President Eisenhower’s omen of the Military industrial complex, which exists due to the major expenditure on military R&D.

  • Report this Comment On January 26, 2014, at 7:24 AM, Jack1131 wrote:

    This is just another government propaganda piece. America stopped being a superpower when it turned fascist. Without the ability to control and manipulate foreign currency their is no superpower status. Superpower status does not rely on the military industrial complex stock values either. American fools that have been supporting commies companies like Walmart have gotten exactly what they wanted and this year when congress and Obama sign off on their secret TPP Americans will learn the real meaning of the slavery they have been supporting. Get the pig contractors out of our military and put MILITARY back into the MILITARY.

  • Report this Comment On January 26, 2014, at 8:04 AM, ilsm50 wrote:

    Misleading statistics.

    Nice pictures of the frauds: KC 46 is super sized KC 135 the KC 135 is useful for another 50 years with some recapitalization.

    The F-35 cost has more than doubled in R&D and production expenses and was supposed to have morethan a 1000 airplanes out by now.

    Reducing R&D means the F-35 is finally wasting less "designing" faulty software, on a plane that is unreilable and very expensive and dificult to repair. Ms Spence does not explain that there are 7 budget areas in the defense R&D. The largest money goes to fixing flaws in designs, and testing them while ignoring the failures to spend more R&D fixing them.

    US spends 39:9 versus China, US has allies around China who spend nearly what China does.

  • Report this Comment On January 26, 2014, at 9:15 AM, paul10101010 wrote:

    If they would stop giving away all this money we don't have maybe we would have it!

    If everyone who comes in contact with the money would stop lining there pockets maybe we would have enough to save the Economy!

  • Report this Comment On January 26, 2014, at 11:12 AM, agsb2 wrote:

    Yes, President O does not like the military and it he wants to cut something in government, it is usually the military. It usually isn't other departments in his administration. Its is "WHEN" other countries(China & Russia) will catch us.

  • Report this Comment On January 26, 2014, at 11:14 AM, rodgerolsen wrote:

    I guess the author is not one of the millions of men sent to kill and die in the name of political power. Sleeping mud and killing people wasn't all that much fun.

    The cold war is over and the entire world is getting tired of hearing "Do it my way or talk to the marines! " All the Superpower status is getting us is massive debt, the hatred of most of the world's population, and a chance for politicians to brag about how their country is the baddest in the world."

    Ending our "Superpower" status would be the best thing we could do.

  • Report this Comment On January 26, 2014, at 12:06 PM, wtbutcher wrote:

    I'ts true that we have the most awesomely powerful military in the history of the world. Yet since the end of WWII more often than not we come home from our adventures with our tail between our legs. Or worse still, we don't come home at all. Instead we leave our troops recklessly stationed all over the world. We spend unconscionable amounts of money on defense while ignoring the very real needs of millions of our own struggling citizens. My entire life we have possessed enough nuclear weapons to annihilate the entire world many times over.

    My only comment is: Who has formulated this absurd policy? Whoever it is, lets not listen to them any longer! They are not patriots. Why do we have to be an 800 lb. gorilla in a world of chimpanzees? This is insanity.

  • Report this Comment On January 26, 2014, at 12:56 PM, syzygysyzygy wrote:

    all empires degrade and US no exception

    the overall rot started in Nam

  • Report this Comment On January 26, 2014, at 2:04 PM, floydhowardjr wrote:

    America lost super power status with God and that is the biggest loss of all. As for our Government, We must all stand up and fight. The time of being too timid to stand up to this corrupt government, the media, liberal education is over. Regulation and taxes could drive all of us to have to beg at the feet of the government for survival and that is what they want. America will suffer the wrath of God! If you do not know Jesus personally there's still time! Ask Him to save you from the wrath to come!

  • Report this Comment On January 26, 2014, at 2:05 PM, ghelmz21 wrote:

    Rest assure American public Obama has this goal on fast track!

  • Report this Comment On January 26, 2014, at 3:30 PM, MaxxTheKatt wrote:

    God is the only one who can straighten this mess out! And he will! But many unbelievers will not like it!

  • Report this Comment On January 26, 2014, at 6:36 PM, puzzlepiece wrote:

    Oh please! I will believe this article when the Pentagon actually passes a budget audit. The Pentagon has no idea where a lot of the money goes - the infamous Black Budget that has no oversight.

    Just imagine how the country would improve if the US spent more in line with what other countries spend on defense and the rest on public education and infrastructure. Then we'd really be a Super Power! You want R&D? Invest in educating people so they come up with new products for industry and defense alike.

  • Report this Comment On January 26, 2014, at 10:16 PM, Kapri25 wrote:

    I wonder how many generals and admirals the author has "gotten" off for this article? Crux of the matter is that our military has enough weapons as it is let alone the best technology that goes into those weapons. I can understand trying to upgrade things but it seems to me that a lot of the money that goes towards the military budget is just wasted on things not needed. Great example...we just upgraded to the F-22. Now we must run around like chickens with it's head cut off just to get the F-35 up and running...and already billion of dollars have already been wasted into it. Another one. When looking for the new attack submarine we made the Sea Wolf class attack submarine to replace the aging Los Angeles class sub. Being that it was too damn expensive the powers that be wised up and settled for the Virginia class sub that was still better than the old Los Angeles class but less expensive to build and operate than the Sea Wolf. Hell, if NASA had half the budget that the military get we would be throwing a party on Mars by now.

  • Report this Comment On January 27, 2014, at 8:20 AM, JERRYSTR wrote:

    Before WWI, America was not a super power but was considered one at the end of the war. Prior to WWII, again America was not a super power but after Pearl Harbor, other countries found they had re-awakened the sleeping dragon. Because of Pearl Harbor and the threat of communism, the US kept its military levels on a ready level creating the current superpower status. Technology wise the US is unmatched. What makes us weak is our debts to other countries and closing our resouce and manufacturing here in America. If attacked, those resources are well known and can quickly produce again (1-2 years). The greatest resource other countries lack is agriculture. China is always on the verge of starvation. Only Russia can match the US agricultural capabilities but they are far behind in advanced technology.

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Katie Spence

Katie Spence has been a financial journalist for The Fool since 2011. She specializes in defense companies, “green" technology, autos, and robots. Follow her on Twitter for breaking news in the defense, auto, and robot industry.

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