The National Security Strategy released by the White House earlier this month differs from the previous congressionally mandated strategies that have been prepared every four years. The 2017 NSS is different because it emphasizes the role of the economy: “Economic security is national security,” the new NSS avers.

The end of the year is a good time to consider the risks that lie ahead of us. There are of course important economic risks, including the mispricing of assets caused by a decade of ultra-low interest rates, the shifts in demand caused by the Chinese economy’s changing structure, and European economies’ persistent weakness. But the main longer-term risks are geopolitical, stemming from four sources: Russia, China, the Middle East, and cyberspace.

Although the Soviet Union no longer exists, Russia remains a formidable nuclear power, with the ability to project force anywhere in the world. Russia is also economically weak because of its dependence on oil revenue at a time when prices are down dramatically. President Vladimir Putin has already warned Russians that they face austerity, because the government will no longer be able to afford the transfer benefits that it provided in recent years.

President Barack Obama has responded to the horrible actions by the forces of the Islamic State in Iraq and the Levant (Isis) and to the sharp turn in American public opinion by promising to degrade and eventually destroy this powerful terrorist group. But, not surprisingly, Mr Obama promises to achieve this without putting any American combat troops on the ground in Iraq or Syria and without any significant increase in military spending. What is happening in this battle reflects a more broadly misguided and underfunded US defence policy.

"A temporary rise in DOD spending on supplies, equipment and manpower should be a significant part of that increase in overall government outlays. The same applies to the Department of Homeland Security, to the FBI, and to other parts of the national intelligence community."

Martin Feldstein discusses the levels of U.S. defense spending and whether or not spending is high enough to ensure the military is capable of sufficiently protecting the United States and its allies from harm.