Anyone Paying Attention Now?

1 02 2010

Deficit Balloons Into National-Security Threat

Wall Street Journal – Gerald F. Seib – ‎24 minutes ago‎

The federal budget deficit has long since graduated from nuisance to headache to pressing national concern. Now, however, it has become so large and persistent that it is time to start thinking of it as something else entirely: a national-security threat.The budget plan released Monday by the Obama administration illustrates why this escalation is warranted. The numbers are mind-numbing: a $1.6 trillion deficit this year, $1.3 trillion next year, $8.5 trillion for the next 10 years combined—and that assumes Congress enacts President Barack Obama’s proposals to start bringing it down, and that the proposals work.

These numbers are often discussed as an economic and domestic problem. But it’s time to start thinking of the ramifications for America’s ability to continue playing its traditional global role.

The U.S. government this year will borrow one of every three dollars it spends, with many of those funds coming from foreign countries. That weakens America’s standing and its freedom to act; strengthens China and other world powers including cash-rich oil producers; puts long-term defense spending at risk; undermines the power of the American system as a model for developing countries; and reduces the aura of power that has been a great intangible asset for presidents for more than a century.

“We’ve reached a point now where there’s an intimate link between our solvency and our national security,” says Richard Haass, president of the Council on Foreign Relations and a senior national-security adviser in both the first and second Bush presidencies. “What’s so discouraging is that our domestic politics don’t seem to be up to the challenge. And the whole world is watching.”

In the 21st-century world order, the classic, narrow definition of national-security threats already has expanded in ways that make traditional foreign-policy thinking antiquated. The list of American security concerns now includes dependence on foreign oil and global warming, for example.

Consider just four of the ways that budget deficits also threaten American’s national security:

• They make America vulnerable to foreign pressures.

The U.S. has about $7.5 trillion in accumulated debt held by the public, about half of that in the hands of investors abroad.

Aside from the fact that each American next year will chip in more than $800 just to pay interest on this debt, that situation means America’s government is dependent on the largesse of foreign creditors and subject to the whims of international financial markets. A foreign government, through the actions of its central bank, could put pressure on the U.S. in a way its military never could. Even under a more benign scenario, a debt-ridden U.S. is vulnerable to a run on the American dollar that begins abroad.

Either way, Mr. Haass says, “it reduces our independence.”

• Chinese power is growing as a result.

A lot of the deficit is being financed by China, which is selling the U.S. many billions of dollars of manufactured goods, then lending the accumulated dollars back to the U.S. The IOUs are stacking up in Beijing.

So far this has been a mutually beneficial arrangement, but it is slowly increasing Chinese leverage over American consumers and the American government. At some point, the U.S. may have to bend its policies before either an implicit or explicit Chinese threat to stop the merry-go-round.

Just this weekend, for example, the U.S. angered China by agreeing to sell Taiwan $6.4 billion in arms. At some point, will the U.S. face economic servitude to China that would make such a policy decision impossible?

• Long-term national-security budgets are put at risk.

This year, thanks in some measure to continuing high costs from wars in Iraq and Afghanistan, the U.S. will spend a once-unthinkable $688 billion on defense. (Before the Sept. 11, 2001 attacks, by contrast, the figure was closer to $300 billion.)

Staggering as the defense outlays are, the deficit is twice as large. The much smaller budgets for the rest of America’s international operations—diplomacy, assistance for friendly nations—are dwarfed even more dramatically by the deficit.

These national-security budgets have been largely sacrosanct in the era of terrorism. But unless the deficit arc changes, at some point they will come under pressure for cuts.

• The American model is being undermined before the rest of the world.

This is the great intangible impact of yawning budget deficits. The image of an invincible America had two large effects over the last century or so. First, it made other countries listen when Washington talked. And second, it often—not always, of course, but often—made other peoples and leaders yearn to be like America.

Sometimes that produced jealousy and resentment among leaders, but often it drew to the top of foreign lands leaders who admired the U.S. and wanted their countries to emulate it. Such leaders are good allies.

The Obama administration has pledged to create a bipartisan commission charged with balancing the budget, except for interest payments, by 2015. The damage deficits can do to America’s world standing is a good reason to hope the commission works.

Write to Gerald F. Seib at jerry.seib@wsj.com

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20 responses

1 02 2010
GB

Giovanna-avoid-the facts,

So, should President Bush be held responsible for beginning two wars for which we have been borrowing money from the Chinese? It’s hard to resist the argument that our deficit is a national security threat when the President borrows money from a strategic rival to pay for military activity. When you add Bush’s entitlement program (prescription drugs), his insistence on cutting taxes while fighting two wars, and your economic policy turns a $300 billion surplus into a $1 trillion+ annual deficit and inaugurates the worst recession since the Great Depression, it’s not hard to see why our economic situation is a strategic liability. Even if President Obama’s economic policy during the first year increased the deficit (and it certainly did), isn’t it clear that by far the largest expenditure went to prevent another Great Depression which the former administration’s policies (along with Democratic and Republican congressional help) brought about?

Since these are the facts–nobody seriously disputes them–and President Bush refused to demand a balanced budget, shouldn’t you praise President Obama for working to restore the Clinton model of legally mandated balanced budgets?

Oh, and by the way, didn’t President Obama cut your taxes last year since you earned less than $250,000?

1 02 2010
Bob A

GB,

GET OFF THE KOOL-AID!!!!!!!

Whatever the financial problems, The terrorists declared war on US! You don’t leave that unanswered.
When I tried to go into business and it failed nobody bailed me out, I took the loss. In the world of capitalism, that is the risk you take. It may have surprised you to see what happened if there had been no bailout, others would have been able to hold up the economy. The poorly run companies would have bankrupted and and good companies would have filled the void they left. Investors would have lost big, but, isn’t that the risk you take when you invest?
Where is BO’s tax cut? I got my 2009 tax forms, Earned the same amount in ’09 as in ’08 and am paying the same amount in taxes!! FACT not opinion…..FACT…..FACT…FACT.

I love the his initials, BO, Body odor, cause I never met him but something smells bad. And the other name he has gone by, Barry Soetoro, well thats even better because he is full of BS!!!

2 02 2010
DCG

Oh, and by the way, didn’t President Obama cut your taxes last year since you earned less than $250,000?

NO. Just finished my taxes and I’m paying a little bit more in taxes for 09. Here’s the KICKER: I’m now working 40-50 hrs/week for 32 hr/week pay because 1) my company is trying to avoid a 4th round of layoffs, 2) there is no private/public work to support our annual revs of $13M (now down to $7M), 3) our state dems spent our rainy day fund and now the DOT is stealing work from local public agencies (which s/b going to consultants) to keep the state employees on OUR payroll. My firm is investing in working in the Middle East because this year is going to SUCK more than last year. hopeandchange…

2 02 2010
GB

Well, first, nobody said anything about not fighting the wars…but it would have been a good idea to have Americans pay for it instead of cutting taxes and borrowing money from the Chinese, right? I mean, wouldn’t that have been the fiscally responsible thing to do?

So if it was such a bad idea to keep the financial markets from imploding, why did Bush prop them up in October ’08? Maybe it’s because that’s what all the smart people said was necessary to prevent a depression…which is precisely what our economists and the numbers are showing now.

Remember, Bill…we share some the same commitments…ideas are good or bad on their merits, not because of who supports them. The Republican party, who has contracted me, recognizes they made mistakes in supporting the former President’s economic policies…we see now that, under the circumstances (some of which the President could not control, to be fair), those policies failed and have left us in a very weak position. This isn’t to say that President Obama’s policies are right or that the leadership agrees with them. But it is to say that some have worked out, even if others may exacerbate our situation.

I’m telling you that hate isn’t the answer…you can dislike the President’s policies, but argue them on the merits, not on his character…that will be a losing strategy for the GOP. The numbers, and the history of off-year elections, supports me.

2 02 2010
giovanniworld

GB,

Just out of curiosity… do you work for Sal Russo?

Gio-

2 02 2010
GB

This is a shrewd question…Sal and his group, though widely known and respected for some of their older work, are now considered dated and regressive in their approach by the new movement.

2 02 2010
giovanniworld

Sal is a man of conviction and I respect the hell out of him. He also knows that there is truly something to doing away with the old guard and governing by the Constitution by this new breed of patriot. Fortunately, this appeals to many a pissed-off voter just like me.

As far as I’m concerned, he’s miles ahead of you.

Gio-

2 02 2010
GB

DCG…I am sorry to hear about your company’s situation. The financial mess has touched the majority of people I know. I wouldn’t wish this on anyone, and I hope for you and everyone else that the economic policies we worked on with the President produce greater effects sooner rather than later.

I do hope you will consider the idea, supported by our economists and the numbers, that the current economic situation was set in motion by the prior administration. There is just no way we can avoid that fact and remain credible with enough people to win seats in the fall. Moreover, while people across the political spectrum are angry, and many disagree with the President’s policies, we no longer believe that stoking fears and promoting the idea that there is a socialist plot will be a winning strategy. Too many people just know better…and those elected on the back of that strategy will be so limited in their ability to affect any meaningful influence that those seats will be ineffective to the point of irrelevance on any issue of concern.

Just because President Obama is not responsible for this doesn’t mean that his policies will work out…but the people expect us to challenge his specific ideas on their merits instead of questioning his character.

2 02 2010
DCG

The only sector I know that isn’t feeling the pains of the economy is govt. They continue to get raises and keep their jobs thanks to The Traitor, SEIU, and other unions in lock and step with this admin.

I know what Bush started…I’m very informed thankyouverymuch. I also know that this stimulus pckge and bailouts was complete BS. As Bob A mentioned elsewhere, those companies that fail will be bought up or taken over by better run firms (heck, they should take over the fed programs). Aside from what Bush & Co started (which I didn’t support the first TARP), the policies of the admin have proven over the past year to not be interested in saving the private sector whatsoever. Obama doesn’t understand the basic concept of the private market and capitalism. And he is NOW responsible…been prez for a year. Quite blaming Bush and man up!

2 02 2010
giovanniworld

Obama man-up? I’m not sure he’s capable.

Gio-

2 02 2010
Bob A

Now I get it, Your RINOS.

2 02 2010
Bob A

correction, You’re not your.

2 02 2010
Bob A

Blame Bush Blame Bush Blame Bush

How about blaming Clinton for not doing anything in 8 years to deal with the terrorists who were running rampant during his administration while he was getting BJ’s in the oval office. If he had done his job maybe the twin towers would still be there and Bush wouldn’t have had to deal with it the way he did.

2 02 2010
giovanniworld

At first, I too thought there was some sort of Socialist plot being hatched by Obama and company. Through research done over 1.5 years, I’m now convinced that Obama is a full fledged Marxist. He uses the term “progressive” to cover for the real meaning which is marxist. I write it like this… “Progressive/Marxist”.

Gio-

2 02 2010
velenda

Gio,
HOW MUCH LONGER DO WE HAVE TO DEAL WITH gb…….. CAN WE ALL JUST CALL IT JUNE 1ST AND BE DONE WITH HIM ALREADY?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? pLEASE we promise not to hold it against you…………………….

2 02 2010
velenda

Ok have we all forgot about JOE THE PLUMBER?
The markets fell after obama let the spread the wealth out of the bag…. Fact
Everyone on the blogs, during this time said, that they were going to walking the parking lots and laying off everyone with obama bumper sticker first……..
Others said they would spend 2010 to liquidate their businesses due to tax increases under obama….
Have we not heard from dems for the last 10 years or so that illegals only have the jobs that Americans wont take because the low pay???
That tells me they rather pay unemployment then spread their wealth…….. After all, most if not all, business owners worked hard to get where they are, they have enough to support their own families and no sweat off them if they can not support anyone else….
This congress has made it a crime to be rich……. They have ALWAYS paid MORE than the fair share……. You can only bleed a turnip for so long then it dries up and you have to find another turnip……..
Change we can all believe in………. Got to love it…………

2 02 2010
Doc's Wife

Just paid our business taxes–definitely up significantly. We could hire one more office person w/ what we payed! Why work any harder just to have to give it to those too lazy to work!

2 02 2010
GB

I’m not blaming Bush…the Republican Party is. I’m just repeating the facts as they now understand them. And I have quite explicitly not claimed to be Republican. Though I am associated with the Republican House leadership at the moment, the nature of my work prevents me from registering with any party.

As for the suggestion that the Democrats alone have claimed that illegal immigrants are essentially the only ones who are willing to work for the wages paid in agriculture, construction, and landscaping…everyone says that, even if the logic isn’t sound. And to search for the truth, simply look at who hires the people in question…neither Republican, Democrat, libertarian or any other is immune from criticism here.

But since there seem to be quite a few knowledgable economists here…then please explain to me the historical average for recovery from severe recession. How long exactly does it take for a national economy to recover once a recession has ended? Is your economic education strong enough to find the answer to that basic question? (Or must you depend on someone else to tell you what to think? Maybe Glenn Beck knows, lol…maybe just take what others tell you and assume it’s fact, right?) If recovery takes X months once the recession ends, and if X depends on the length of the recession…then at what is the projection for the end of the recession?

If you can find the information and do the math, you’ll see why we aren’t using the dodge of “he’s just blaming Bush” anymore. It may be politically expedient to deflect the blame for this mess, but it’s also true…ACCORDING TO THE REPUBLICAN leadership and their economic experts (who, by the way, are libertarian!).

The important issue isn’t who is to blame, anyway…it’s what are the policies which led to this mess, and what are the policies which will enable a stable economy of moderate growth and unemployment at our historical average of +/- 5%? That’s the question we’re working on…but you people aren’t helping! Your only concern is with shouting your hate and venting your frustrations. What’s worse is that you aren’t even doing the hard thinking for yourselves…you’re simply following what someone else says–velenda mentioned Fox News at one point, and someone else referenced Mr. Beck; or your favorite atheist/abortion worshipper Ayn Rand and atlasshrugs.

You’re so tied up in logical contradictions that your influence on the national discussion is preventing people who share your values from being effective…you’re effectively telling Republican candidates and legislators that if they work with this administration or the congressional majority, you will consider them a traitor. If you think President Obama’s policies are wrong…that’s fine. I would think that you would want them to change, but how do you think that’s going to happen if Republicans can’t talk to him or work with him?

And this doesn’t even begin to dissect the insanity of believing that the majority of the country believes as you do AND that the majority voted for President Obama. Those things cannot both be true.

But I know what you’ll say…you won’t address these questions or the solid logic behind them…you’ll simply change the subject and talk about how Obama is performing abortions in the West Wing or how he’s exhumed the bones of Hitler to use in a magic potion which he’ll introduce in. Then this country will become a Nazi Marxist country…just like France and those other European countries which, according to Velenda, “don’t have a pot to piss in.” In other words, you’ll just ignore reason, move on to another insane assertion, which I’ll then dismantle by revealing its’ inherent logical inconsistency; then you’ll move on to whatever else Rush Limbaugh and Sarah Palin and Sean Hannity tell you to say.

The Republican Party will rebound with better ideas for efficient government, reasonable-but-limited taxes, personal liberty, and political, social, and financial responsibility. But we’re moving away from the hate-mongers.

Gio is fond of Dr. King’s quote about character…perhaps he would do well to reflect on Dr. King’s identification of character with a refusal to hate and the will to love: “Hatred paralyzes life; love releases it. Hatred confuses life; love harmonizes it. Hatred darkens life; love illuminates it.” Or again, “Like an unchecked cancer, hate corrodes the personality and eats away its vital unity. Hate destroys a man’s sense of values and his objectivity.” This sentiment, too, we find in the words and life of Jesus.

If you claim the values of these men, why would you allow yourself to be moved by hate?

2 02 2010
giovanniworld

“but you people aren’t helping! Your only concern is with shouting your hate and venting your frustrations.”

If your intent was to come here and piss me off, you have finally succeeded. It’s assholes like you that we are upset with. The more you type, the more I’m convinced of two possibilities. First, you are a lefty pretending to be independent. Second, you are a RINO and you are afraid you may lose a few elections in Nov. Either way, the outcome (as far as I’m concerned) is the same. Why? Because the left is trying to destroy what we have in this country, and the Republican Party has for the most part has simply wagged some fingers.

Now, about your claim of us hating…. You may be on to something there. We hate Marxists, Maoists, Anarchists, Fascists, Socialists, and those that support incorporating any of those systems into our Republic.

If the GOP wants our vote, there is one way you can get it… The GOP must make part of their platform a solid-unbreakable rule that you will always first ask the following question prior to discussing ANY legislation. And the question is only 3 words long…. “Is It Constitutional”?

Now go back to the Leadership and tell them that it’s long over-due for them to Man-up!

Gio-

2 02 2010
velenda

Gb could you just write us all off as hate mongers and be done with us….
LEAVE us behind………GO GO GO GO GO GO GO GO GO GO
But before you go PROVE you are who YOU say you are….. Post your Id badge….PROVE IT, PROVE IT PROVE IT

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