Two Big Questions

In response to Prof. Stephen Walt's post on the five big questions for the future, I commented the following:

As a matter of fact, the EU overtook the US already in terms of population (450 million to 320 million) and GDP (16 trillion to 14 trillion). Of course, whereas the US is a nation state, the EU is a ...let's say... a nameless beast.

However, bearing in mind the size of China or India, it is fair to say that the sheer size is not the decisive factor. So why is the US dominating the world?

First, because the US spends roughly a quarter of its budget on the military (EU average less than 2%).

Second, the world commodities, particularly Oil, are traded in US Dollars. Because of that, every nation needs dollars, which in turn stabilizes the dollar and allows the US government to borrow large amounts of money.

Hence my two biggies:

1) Will the political class in the US accept that the US is not capable of keeping the defence budget as high as it currently is? Will it accept a drastic cut, which will lead to the consequence of the US losing influence in the world? Will the US democracy survive a decline? Will some US politician gather the hundreds of thousands of Veterans and march against Washington? (Prof. Galtung wrote an interesting piece about this option)

2) When will the emerging powers of the world refuse to trade in US dollars? When will the BRIC and France go ahead with their project of an alternative world lead currency? How will the US react to this move?