President Obama’s visit to China prompts me to write this:
By far the most important topic of discussion between the two governments is the trade relationship between China and the US. It’s simple: America has gone into hock to sustain a living standard far beyond its means. China now owns nearly two trillion US dollars, and its surplus continues to grow by a quarter of a trillion a year.
Soon, Americans - the taxpayers, the consumers, the government, i.e. all of us - will only have money left for one thing: to finance our debt. Just like what would happen to you if you owed so much on your credit card that you’d have to spend your entire paycheck on the finance charge.
Of course, China is also in a fix. Lender and borrower are inseparably joined at the hips, like Siamese twins. The devaluation of the dollar is bad for both sides. As the value of the dollar declines, Americans become poorer and inflation is soon to follow. At the same time, China’s investment in the US loses much of its value. So both sides lose, just like the banks who recently made all those bad sub-prime loans and the borrowers who shouldn’t have borrowed. The borrowers lose their homes and the banks don’t get their money back. Everyone is screwed.
I have no idea how President Obama, the Chinese leadership and the rest of the world are planning to fix things, i.e. to change course from the catastrophic direction in which the world economy is headed. But catastrophe is the only word which aptly describes the situation which President Obama inherited.
And that is what I want to emphasize: Every one of the staggering problems which are threatening our very survival were created by decades of economic mis-management and societal breakdown.
President Obama has inherited the worst conditions ever handed down to a newly elected US President: The worst economic recession in three quarters of a century; two wars; out-of-control deficits at all levels of government and in our trade with nearly every country; a collapsing dollar; a rapidly growing number of uninsured, unemployed, uneducated, unhoused; a seemingly irreversible polarization of income, with both poverty and opulent wealth still skyrocketing, while the middle-class vanishes; a brainwashed population which renders even the discussion of the only remedy - raising taxes - anathema, and which has put it its head that somehow the government, and not Wall Street, is the problem.
I am not so simple-minded as to blame the Bushites for everything (although they sure didn’t help). I understand that the seeds of our undoing were sown over a much longer period of time than the eight years of neo-conservative mismanagement. Maybe the problem is cultural. Maybe we are like ancient Rome. Maybe we are failing as a society. But I don’t want to believe this.
All I know is that it is obscene to blame the new President for these problems. His, and his team’s, efforts so far are nothing short of heroic. I don’t know whether they will succeed, but the problems they are facing are so daunting that it is miraculous to even see them try.
My French friend Paul said this to me, in a joking way, immediately after Obama’s election last fall: “You Americans drove your country into a ditch, so now of course you turn to a black man to bail you out. Figures.” leave comment here
9 comments:
Pres. Obama is neither the problem nor the solution. Our huge deficit was created by the Congress in collusion with the other two branches of the federal government. Neither Obama nor Bush made the mess, but both have made it worse by spending recklessly and increasing federal power with respect to the states.
The solution will come from downsizing federal service programs and taxes, and leaving these things to individual states--which are the size of European Countries.
The current situation in the US is like the EU totally replacing Holland's laws and economy with its own, and collecting taxes from Dutch citizens directly.
Hi Gordon,
Always the state's rights advocate. A persistent theme in your comments, and a valid one.
I do agree with you that local autonomy and grass roots politics are
better than distant, impersonal government.
Just one problem, right now, in my neck of the woods: California politics are so utterly dysfunctional that leaving things in the hands of THIS state's government may not be a great idea (right now)...
In the U.S., 12 million kids are living in poverty; they go hungry. If you cut federal service programs, there's no guarantee that all the states will provide what's needed for vulnerable citizens like them.
There is a simple solution: drastically reduce the Pentagon's budget. Then you'd have plenty for the feds to spend on our domestic programs, and you'd still be able to reduce federal spending significantly.
The budgets of domestic programs like Head Start, K-12 Education and children's health care are miniscule compared to the Pentagon's, which is more than all the other nations' military budgets combined. Why? So that the defense industry can make enormous profits, and maintain exceedingly powerful lobbies.
If you watch the famous video clip of Ben Cohen's (of Ben & Jerry's ice cream)at http://www.truemajority.com/oreos/
you can see just how drastic this disparity in federal spending really is, demonstrated in stacks of cookies. (Admittedly, it's about a year out of date now, but still worth it.) Most people would be shocked. $400 billion for the Pentagon; only $40 billion for kids' health care; only $35 billion for K-12 ed; only $8 billion for Head Start.
What will happen if we cut all federal services, and then the states with notoriously poor schools chose not to invest in education? Then we'll have an uneducated citizenry, which is not good for national elections. Are you advocating for each state to become a separate nation, as in the EU?
Currently, we all benefit or suffer to the degree that some of our citizens thrive or fail because we are all connected as a nation. The way the people of another state vote in a national election affects me for the next 4 or 8 years, and beyond.
At the current rate of spending at the federal level on current entitlement programs,there will be no money for discretionary spending (which includes head start and the Pentagon) by 2040. If you expand federal health care beyond medicare, then both the Pentagon and Head Start would be eliminated sooner.
I agree that California is in a mess. That is because it is run more like a simple democracy through its referenda, than as a Republic that checks the will of the majority against known and historically proven political principles that protect minorities and injury to the entire body politic.
By decentralizing, people can move to the successful states, much like they can choose what town they want to live in today. If taxes are too high for the services you receive, move to a different state. You will end up with better governments, better schools, and better social services under such a system.
The Federal government has not helped our schools, created citizens more knowledgeable about government, or prevented more fraud than local governments. One room schools 100 years ago were reading Greek classics in the Sixth grade.
Gordon,
When you say the federal government has not helped our schools, I'd agree with that if you mean during the Bush Administration. But are you categorically opposed to federal intervention? How would the schools have become desegragated in the South, for example, without it?
You honestly think President Obama is not adding to the problem?
Regarding the last comment, it's hard to respond. We're speaking in generalities.
I only know this:
our country's economic problems (the dual deficit, deindustrialization, etc.) have been building for a long time.
Now,for less than a year so far, we have a new administration, which is trying a new course. Whether they'll succeed or not isn't clear yet. I would love to hear some specific alternatives from the critics
You state “All I know is that it is obscene to blame the new President for these problems. His, and his team’s, efforts so far are nothing short of heroic. I don’t know whether they will succeed, but the problems they are facing are so daunting that it is miraculous to even see them try.”
This week’s US News and World Report shows that the rest of us have reached the “tipping point” with their poll question “Do you think that at this point, the state of the economy is more the result of President Obama's policies, or President Bush's policies?” resulted in
July 2009 Oct. 2009 Obama’s policies 29 42
Bush’s policies 56 42
Don’t Know 15 16
Those poll results make me sad.
As I said, I would like to hear what solutions are being proposed, to get us out of the mess.
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