The following is the text of contributor Peter Morici's testimony today before the U.S. House Committee on Armed Services during its Hearings on the Economic Consequences of Defense Sequestration. His comments represent an independent view as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( TheStreet) -- Today, I would like to discuss with you the broader economic consequences of further cuts in U.S. defense spending, as opposed to specific industry or regional impacts. These are largely systemic. Should the United States fail to maintain military strength necessary to meet its international security responsibilities, as well as those that may be posed by a surging Chinese presence in the Pacific, the international economic institutions that define the rules of the game very likely will change in ways more hostile to American economic institutions, political culture and values, diminishing prospects for U.S. economic success and independence. The United States offers the world a clear prescription for economic prosperity and the protection of human rights -- free markets and democracy. Yet, with the U.S. economy withering and the U.S. ability to project power prospectively diminished, U.S. prescriptions appear increasingly less efficacious abroad. China offers the world a very different model for economic development and personal security. Its autocratic government intervenes considerably in economic decisions to promote wide-ranging development goals, and it limits personal freedoms to ensure domestic order and stability. "Occupy Wall Street" would almost certainly not be tolerated in China and would likely not be permitted to emerge with Beijing's tight censorship of internal communications. Suppression of such movements supports its strategy for tight economic management, quite in addition to maintaining the Communist Party's grip on political power. China openly flaunts the letter and spirit of international economic rules intended to foster free and open markets, and severely limits intellectual dissent. With its state-directed economy growing at breakneck speed and America struggling, a U.S. failure to maintain a military adequate to meet China in the Pacific will almost assuredly result in other emerging nations embracing, albeit reluctantly or enthusiastically and in varying measure, China's model for economic development and governance. International institutions -- like the WTO -- are consensual and interpret and make new rules by consensus. Perforce, those rules will follow the tide of sentiment among more successful nations, and the United States and its Atlantic allies will become more isolated and somewhat marginalized. History teaches power balances do change, and often losers are preoccupied with internal squabbling and chaotic dysfunction, and ultimately surprised.