Two great mysteries lie at the core of the current presidential administration. The first is how Secretary of Defense Donald Rumsfeld manages to keep his job given repeated blunders in the Iraq war. The second is how on earth President George W. Bush manages to pass himself off as the man of Republican principles he most certainly is not.
Just look at our nation’s finances. If you’re old enough to remember the Reagan administration, you’re old enough remember Republicans whining and moaning about Democratic profligacy, the party of “tax and spend.” A big load it was, too.
Here are the facts, folks, as laid out for us by the U.S. Congressional Budget Office: When he left office in 1989, President Reagan left us with a federal budget deficit just shy of $200 billion. When President George H. Bush left office in 1992, he gifted us with a budget deficit of $290.3 billion. When President Clinton left office he left us with a budget surplus of $236.2 billion. Let’s dwell on that one word for a while'surplus.
What thanks did the American public have for this most unusual legacy? We focused instead on the fact that he lied about cheating on his wife, treating it as some sort of national-security issue in hearing after hearing while Al-Qaeda hatched its heinous plots. Politicians just love a good diversionary tactic, and sexual morality tops the list.
But before firing off a letter about how a Democratic Congress created every budget deficit of the 1980s up until 1996, and that Clinton merely had the good fortune to preside over an unprecedented era of economic expansion, let’s review what happened to our national finances last week. Given a Congress controlled by Republicans to match a Senate controlled by Republicans, President Bush recently signed a bill pushing our national debt to the sky-high limit of $9 trillion.
The big news last week was, of course, the third anniversary of our perpetually mismanaged war in Iraq. But history may prove Bush’s raising of our debt ceiling as the far more ominous event, for with it, he’s pushed our nation further toward collapse.
People complain all the time about what government spends its money on, and how incompetent our elected officials are when it comes to estimating costs. The president’s Medicare-prescription-drug program for seniors is one big blank check to the pharmaceutical industry. Rumsfeld had the audacity to tell us war in Iraq would cost us a mere $50 billion, when it’s now costing us $200 million per day, for a final bill of up to $630 billion or even $1 trillion. Those paying attention know that Bush would rather cut into college loans or heating subsidies to the poor rather than give up $1.3 trillion in tax cuts to the rich.
All this is pertinent, but all we really need know is that our national debt is out of control. And unless we act now this crushing debt threatens to turn us into a second-rate world power.
It’s not as if certain people haven’t raised flags. Former Treasury Secretary Paul O’Neill refused to give his blessing to Bush’s second'or is that third?'round of tax cuts, and was summarily dismissed in December 2002. Now, under successor John Snow, we’ve watched our government’s estimated fiscal exposures more than double from $20.4 trillion in 2000 to $43.3 trillion in 2004. God only knows what they’ll amount to by the end of this year. But don’t take my word for it. The numbers are there on the U.S. Government Accountability Office Website for everyone to see.
If only enough of us were interested. There are those eternal optimists out there who never fail to point out that the United States still produces some $11 trillion worth of goods and services every year, enough to cover our national debt if we absolutely had to bite the bullet. They also smile at figures showing that even our annual budget deficits are a mere 5 percent or less of our Gross Domestic Product (GDP).
Fact is, Bush raised our debt level this week because if he had not, it would have signaled the first time in our history that we would have defaulted on our U.S. Treasury Notes, which we sell at an increasingly blinding rate to central banks in China and Japan. This worked fine when the U.S. dollar was the reserve currency of international preference. But now we’ve got the Euro to compete with. If foreign investors tire of buying our debt in the form of treasury notes, they can easily go elsewhere, unless we’re prepared to raise interest rates and slowly choke our economy. We certainly won’t have the fortitude to raise taxes. Not even the current “war on terror” scares us enough to actually pay for it. Perhaps the idea of servitude to overseas creditors might do the trick.
As a nation, we are clueless enough to go ballistic when Arabs talk about purchasing our ports, or when a president cheats on his wife. Tragically, we think nothing about borrowing thousands of billions of dollars from foreigners who will one day own us lock, stock and barrel unless we pay our debt.
The media’s full of articles about our renewed interest in all things economic. Bono and Angelina Jolie are regular attractions at the World Economic Forum in Geneva, Switzerland. Freakanomics and other titles about the dismal science are best sellers. Still, we’re blind to the damage being done.
Tax and spend? If only. Under the current set-up, we’re spending money we won’t even collect.