FP's Josh Rogin ably summarizes the State Department's rollout of the first-ever Quadrennial Diplomacy and Development Review (QDDR), an exercise that was clearly inspired by the Defense Department's Quadrennial Defense Review. This was Anne-Marie Slaughter's signal achievement during her tenure as Director of Policy Planning,* which leads to the obvious question of whether it really matters.

The QDDR is dedicated to Rickard Holbrooke, who passed away earlier this week. In a revealing Financial Times article, Brain Katulis of the Center for American Progress makes a particularly telling point about the arc of Holbrooke's career:

"If you compare Holbrooke's tenure in his job as representative for Afghanistan and Pakistan and compare it to what he was able to do in the 1990s on Bosnia, you really see that the balance of power in the interim had shifted from the state department to the Pentagon," said Brian Katulis at the Centre for American Progress in Washington.

Katulis hits upon a theme that has been a source of concern here at this blog for a good long while. For at least a decade, there's been a vicious feedback loop: State loses operational authority and capabilities because of poor funding, which leads to more tasks for Defense, which leads to even more lopsided funding between the two bureaucracies, which leads to an even greater disparity in responsibilities, and so forth.

Will the QDDR change that? That's sorta the point of the whole exercise -- the phrase "civilian power" appears 281 times in the QDDR. I'm dubious -- the only way this works is through greater staffing and greater funding for U.S. foreign aid, and in this Age of Austerity, the first things that get cut are.... diplomats and foreign aid funding.

I'd love to see Hillary Clinton make the case to Congress than an extra $50 billion for State would improve American foreign policy enough to cut, say, $100 billion for DoD. I'd love a free pony too, for all the likelihood that this will happen.

I'm not the only one who's dubious. The Christian Science Monitor's Howard LaFranchi ends his story on the QDDR as follows:

[E]xperts, as well as some military officials, have pointed out that the concept of "civilian power" sounds good, but that the US diplomatic corps is not prepared and doesn't have the numbers to take over many tasks from the military.

Clinton acknowledges that the shift in priorities and organization is "a work in progress," but she also emphasizes that someone will be designated at both the State Department and at USAID to oversee implementation. "I am determined that this report will not merely gather dust, like so many others," she said. And she wants Congress to approve making the QDDR a regular and required State Department policy-review process.

Slaughter echoed those words in a humorous sum-up with reporters. "I'm pretty sure you're thinking, 'I've heard this before,' " she said - a big plan to change the way a government agency works. "But this is different."

The big difference, she insisted, is that Clinton has given the reorganization top priority: "She knows ... we can't afford to continue working in the way we have been."

Reading the QDDR, it's clear that there's a hope that Foggy Bottom will scrape together more resources through wringing greater efficiencies out of the current budget. This is certainly possible -- no one is going to label the State Department a lean, mean fighting bureaucratic machine -- but color me skeptical that there's all that much savings of "government waste" in them thar hills.

To be fair, however, one report is not going to change a dynamic that's been building for more than a decade. It's only a first step. Still first steps are better than no steps. We'll see if this remains Clinton's top priority.

*I have no inside knowledge about this, but am simply assuming that Slaughter will be returning to her academic haunts after the standard two-year leave has expired -- in other words, in early 2011.

You know, as insults go, this one is pretty bush league:

China's credit-rating agency on Tuesday downgraded its rating for U.S. sovereign debt and warned of further cuts, in a pointed move ahead of this week's Group of 20 major economies meeting.

Dagong Global Credit Rating Co. Ltd., the only wholly Chinese-owned rating agency, cut its rating on U.S. debt to A from AA, citing the Federal Reserve's move last week to initiate another round of asset buying, worth $600 billion. It also placed the U.S. sovereign credit rating on negative watch.

"The new round of quantitative easing monetary policy adopted by the Federal Reserve has brought about an obvious trend of depreciation of the U.S. dollar and the continuation and deepening of credit crisis in the U.S.," Dagong said.

"Such a move entirely encroaches on the interests of the creditors, indicating the decline of the U.S. government's intention of debt repayment," the agency said.

Sounds very, very serious, until we get to this part of the story:

The downgrade of the U.S. rating by Dagong comes just over a month after the U.S. Securities and Exchange Commission denied the firm's application to officially rate bonds in the U.S.

At that time, Dagong called the SEC's move discriminatory and said it was considering legal action.

The SEC said in denying the application that "it does not appear possible at this time for Dagong to comply with the record keeping, production and examination requirements of the federal securities laws."

Indeed, even the New York Times' now-thrice-weekly story about rising Sino-American tensions observes:

In the rest of the world, the United States is still the strongest of credit risks, and the Chinese downgrade is not expected to have much real impact....

[T]hose critics, mostly countries that fear that recent American policy will devalue the dollar and undercut their competitiveness, do not appear poised to offer an alternative to an economic order that has been led by the United States since the end of World War II, or to the role the dollar has played for decades as the de facto world gold standard.

The Chinese, who have protested that the Federal Reserve is trying to unilaterally manipulate the dollar for the purpose of creating jobs at home, have been accused of doing exactly that for years - the root of many of the world's economic tensions today, in the eyes of Mr. Obama and his economic aides.

Look, clearly China is suffering from... an insult gap. Americans have been leading the world in trash-talking for decades now. China is trying hard to catch up, but I think the authorities in Beijing need some assistance in their game of catch-up.

I hereby call on all readers to offer, in the comments, ways that Chinese authorities can really sharpen their rhetorical jabs at the United States. In the spirit of kicking off the conversation, here are a few suggestions:

"Chinese Halitosis Institute Downgrades American Fresh Breath Index to BB: 'Seriously, What's The Deal With All The BBQ,' Asks Agency Head"

"Chinese Election Monitors Accuse Obama Administration of Rampant Ballot Fraud During Midterm Elections: 'It's No Myanmar, I'll Say That' According to Chief Monitor"

"Chinese Dietary Institute says American Food Leaves Them Hungry After Only 12 Hours"

Go to it.

The past week has seen an escalating series of news stories about a looming "currency war," as country after country tries to drive their currency downward, the United States blames China as the source of original sin on this, and China pisses off yet another country responds by digging in its heels, and the IMF wrings its hands.

If you need to read one article on why things are going down the way they are, it's Alan Beattie's excellent survey in the Financial Times of how countries as responding to this situation: 

Washington is looking for allies -- particularly among the emerging economies, who complain about their own competitiveness and volatility problems -- in its campaign for exchange rate flexibility. Trying to take on Beijing single-handed makes the US vulnerable to the charge that it is a lone complainant blaming its own profligate shortcomings on the country that is kind enough to lend it money, holding the best part of $1,000bn in U.S. Treasury bonds…

Yet despite U.S. claims of broad support, backing appears sporadic…

[S]ome U.S. policymakers privately complain that European backing is patchy and tends to go up and down with the euro. In the first half of the year the euro was pushed lower by the gathering Greek crisis, by early summer falling 17 per cent below its January level. Focused on local difficulties, and with the German export machine powering ahead, European officials saw little need to take on Beijing over currencies and had little energy to do so… 

Across the emerging economies, the plan of attack seems to be to keep quiet and pass the ammunition. Despite widespread recognition of the distortions China’s exchange rate policy appear to be causing, governments have generally preferred unilateral in­tervention to a public slanging match.

True, in April the governors of the Reserve Bank of India and the Central Bank of Brazil complained that Beijing was hurting their exporters.

But recently Celso Amorim, Brazil’s foreign minister, told Reuters: "I be­lieve that this idea of putting pressure on a country is not the right way for finding solutions." Significantly, he added: "We have good co-ordination with China and we’ve been talking to them. We can’t forget that China is currently our main customer…"

With the prospect of diplomatic progress limited, currency policy in the U.S. and Europe may end up being conducted through domestic monetary policy. If, as seems possible, the U.S. Federal Reserve, the Bank of Japan and the European Central Bank return to quantitative easing in order to boost growth, their currencies are likely to weaken -- as the yen briefly did after the Bank of Japan’s announcement of looser monetary policy this week.

So, to sum up: 

1) Every country is free-riding/buckpassing on this issue, hoping that the United States can dislodge China on its own.

2) The international regimes designed to prevent free-riding like this -- namely the G-20 and the IMF -- are not up to this task. [What about the WTO? -- ed. Fuggedaboutit.]

3) The source of China's rising power is not its hard currency reserves or its command over scarce rare earths, but its burgeoning domestic market.

4) Ironically, the United States and other countries want China to accelerate the growth of its domestic market, which would in turn give it more power. Even more ironically, China doesn't want to do this right now.

5) The sum effect of all of this will be a series of uncoordinated interventions into currency markets that will increase market volatility, political posturing, and eventually lead to the erection of capital and/or trade controls. 

Developing… in a very disturbing manner. 

Yesterday, Arthur Brooks (head of AEI), Edwin Feulner (head of Heritage) and William Kristol (official badass of the neoconservative movement) launched their "Defending Defense" initiative with a Wall Street Journal op-ed. 

As FP's Josh Rogin has observed, this effort is aimed at the libertartian wing of the conservative movement just as much as the Obama administration. It also comes on the heels of Danielle Pletka and Tom Donnelly's Washington Post op-ed that explicitly took on the small-government right.

The core of Brooks, Feulner and Kristol's justification for more robust defense spending:

It is unrealistic to imagine a return to long-term prosperity if we face instability around the globe because of a hollowed-out U.S. military lacking the size and strength to defend American interests around the world.

Global prosperity requires commerce and trade, and this requires peace. But the peace does not keep itself. The Global Trends 2025 report, which reflects the consensus of the U.S. intelligence community, anticipates the rise of new powers -- some hostile -- and projects a demand for continued American military power. Meanwhile we face many nonstate threats such as terrorism, and piracy in sea lanes around the world. Strength, not weakness, brings the true peace dividend in a global economy.

We have not done enough to help our military preserve the peace and deter (and if necessary, defeat) our enemies. Americans have fought superbly in Iraq and Afghanistan, and have prevented any further terrorist attacks on the scale of 9/11. But faced with a nuclear Iran, or a Chinese People's Liberation Army that can deny access to U.S. ships or aircraft in the Asian-Pacific region, there are many missions ahead.

Yet we face those challenges with a baseline defense budget—defense spending minus the cost of the wars—that is 3.6% of GDP, significantly less than the Reagan-era peak of 6.2%. Our active-duty military is two-thirds its size in the 1980s.

Really? That's the best this trio could come up with in the way of security threats? Meh. 

Terrorism and piracy are certainly security concerns -- but they don't compare to the Cold War. A nuclear Iran is a major regional headache, but it's not the Cold War. A generation from now, maybe China poses as serious a threat as the Cold War Soviet Union. Maybe. That's a generation away, however. 

There's a reason for that Reagan-era peak in defense spending that Brooks, Fuelner and Kristol elided: the Cold War tensions of the early 1980's. 

I'm about to say something that might be controversial for people under the age of 25, but here goes. You know the threats posed to the United States by a rising China, a nuclear Iran, terrorists and piracy? You could put all of them together and they don't equal the perceived threat posed by the Soviet Union during the Cold War. And until I see another hostile country in the world that poses a military threat in Europe, the Middle East and Asia at the same time, I'm thinking that current defense spending should be lower than Cold War levels by a fair amount. 

UPDATE:  More critiques of the Defending Defense position from Andrew Sullivan, Will Wilkinson and Greg Scoblete.