The slow learners need help to understand. American prosperity and the American economy are in danger. We are sure to be attacked, once again, as deficit hawks and worriers. But let the facts speak. Slow learners will kill us all.
Three articles from very recent days put into perspective the danger Americans face. The articles are not in alarmist news outlets nor from right-wing perspectives. The three articles do outline the dangers.
First Gerald Seib at the Wall Street Journal discuses the deficit:
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.
American military power, American power itself is based on American prosperity. Slow learners will recite this truth by rote, but without understanding. Let’s understand and help out the slow learner in chief:
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.”
Seib bullet points the dangers of deficits for the slow learner:
• 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. [snip]
• 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. [snip]
• 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. [snip]
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.
Seib hopes for a commission to lead us away from the economic threats but what Americans require is leadership.
David E. Sanger at the New York Times has also written how huge Deficits May Alter U.S. Politics and Global Power:
In a federal budget filled with mind-boggling statistics, two numbers stand out as particularly stunning, for the way they may change American politics and American power.
The first is the projected deficit in the coming year, nearly 11 percent of the country’s entire economic output. That is not unprecedented: During the Civil War, World War I and World War II, the United States ran soaring deficits, but usually with the expectation that they would come back down once peace was restored and war spending abated.
But the second number, buried deeper in the budget’s projections, is the one that really commands attention: By President Obama’s own optimistic projections, American deficits will not return to what are widely considered sustainable levels over the next 10 years. In fact, in 2019 and 2020 — years after Mr. Obama has left the political scene, even if he serves two terms — they start rising again sharply, to more than 5 percent of gross domestic product. His budget draws a picture of a nation that like many American homeowners simply cannot get above water.
For Mr. Obama and his successors, the effect of those projections is clear: Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors. Beyond that lies the possibility that the United States could begin to suffer the same disease that has afflicted Japan over the past decade. As debt grew more rapidly than income, that country’s influence around the world eroded.
The dangers are very real to all but the slow learner. The not very bright Barack Obama is a slow learner in everything except how to advance himself and play Joe Cool to the former high school geeks who now work at Big Media. But even some at Big Media now speak out on the danger of Obama’s policies:
Or, as Mr. Obama’s chief economic adviser, Lawrence H. Summers, used to ask before he entered government a year ago, “How long can the world’s biggest borrower remain the world’s biggest power?”
The Chinese leadership, which is lending much of the money to finance the American government’s spending, and which asked pointed questions about Mr. Obama’s budget when members visited Washington last summer, says it thinks the long-term answer to Mr. Summers’s question is self-evident. The Europeans will also tell you that this is a big worry about the next decade.
Obama, we have noted for years, recites words by rote for which he has no understanding. Obama told West Point cadets at one of his publicity stunts, “Our prosperity provides a foundation for our power.” “It pays for our military. It underwrites our diplomacy. It taps the potential of our people, and allows investment in new industry.” Words, but no understanding. Words but willful disregard of their meaning. Slow learner. During the campaign Obama would steal Hillary Clinton’s language and position but he has never attained Hillary’s understanding of the meaning of her words. Obama is not ready on Day 1 or even Day 1 plus a year. Slow learner.
His prescription is that the problem has to be made worse, with intense deficit spending to lower the unemployment rate, before the deficits can come down. [snip]
But with this budget, Mr. Obama now owns this deficit.
Even Obama lovin’ Politico understands, at least the politics, of the “busted budget”.
President Barack Obama’s new $3.83 trillion budget is a chickens-come-home-to-roost moment for Democrats who skipped past the deficit to tackle health care last year and now risk paying a heavy price in November.
The great White House political gamble was to act quickly — before the deficits hit home — and institute major changes which proponents say will serve the long-term fiscal health of the country. Instead, a year of wrangling and refusal to consider more incremental steps have brought Obama and Congress to this juncture, where waves of red ink threaten to swamp their boat and drown reform altogether.
Early last year we stated that the Obama plan was to deceive the nation with gimmicks, pass scam after scam to help Dimocrats with the 2010 elections – all before the numbers emerged and sensible people could see the numbers. It has taken Politico this long to write what has been obvious all along. In all scams the goal is to stay a few minutes ahead of the police. For Obama, the police are banging on the door.
“They are sending a toy firetruck to combat a five-alarm fire,” said Sen. Orrin Hatch (R-Utah).
The timing could not be harder for Democrats, who must complete passage of the $1.9 trillion debt ceiling increase this week.
Old party fissures are reopening. In the Senate last week, fiscal moderates, many of them junior senators, joined Republicans in backing what would be tougher spending limits than the president’s budget proposes. At the same time, the president’s increased war funding for Afghanistan has reopened the “guns vs. butter” divisions in his party.
To show discipline, the White House is betting heavily on the symbolism of a three-year freeze on domestic discretionary spending accounts totaling about $447 billion annually. [snip]
Just a year ago, the president’s 2010 defense budget requested $130 billion for operations in Afghanistan and Iraq and only $50 billion in 2011. The new budget ramps up 2010 spending to $163 billion and, for 2011, requests $159 billion in overseas contingency funds for the military.
This reverses the drop in war-related spending seen in fiscal 2009, which ended Sept. 30 and was a transition year of sorts between the two administrations. When compared to the peak war spending of the Bush years, Obama is only about 10 percent below Bush’s annual average of $176 billion in fiscal years 2007 and 2008 — the time of the Iraq war surge.
Core defense spending is also feeling the strain, and the president’s $549 billion request reflects less than 2 percent real growth over inflation.
At a time when Obama is emphasizing job creation, this sets up what could be bitter election-year fights with Democrats about plans to halt C-17 and Humvee production important to employment in California and Indiana — two battleground states in the fall.
Obama’s greatest risk is that his “freeze” becomes only a symbol — more cute than cutting.
In designing its cap, the administration has a built-in cushion because about $6 billion in 2010 census spending won’t have to be repeated in 2011. It also took advantage of a scorekeeping convention allowing it to claim a $4.5 billion “savings” within the Justice Department by capping expenditures from the Crime Victims Fund.
In the case of Education, Pell Grants for low-income college students are treated as a mandatory cost outside the cap. And while NASA’s budget makes some high-profile changes — canceling the always-doubtful Constellation program — the agency’s budget still goes up by about $275 million.
All this can seem too clever against the great constant of a deficit that threatens to set new records, topping $1.55 trillion in 2010.
The $5.08 trillion in red ink over the next five years is $1.32 trillion, or 35 percent more than the White House predicted 12 months ago — worse even than current projections by the Congressional Budget Office.
Revenues continue to lag, even after Obama’s budget claims credit for about $120 billion in unrealized receipts from health care reform. In fact, two-thirds of the deficit deterioration can be traced directly back to lower revenues and the high cost of the military operations in Iraq and Afghanistan.
An entire year has been wasted, added to the eight years of George W. Bush.
‘The president should have a tougher plan to address our fiscal crisis,” Gregg said, “because this budget will solve nothing.”
Americans are slow learners. Eight years of Bush, incurious and inexperienced, was not enough. Dimocrats and Big Media forced through self-interested and inexperienced Obama, and Americans forgot the lessons eight years taught.
To stop the threats to American National Security, a leader is needed. Her voice must be heard. Her experience must be put to work to save the nation and indeed, the world.