Over the last two generations, the United States of America has gone from being the world’s greatest creditor nation to its biggest debtor. During that time, Americans have been led to believe that oppressive debt is a way of life, rather than a grave danger. Borrowing money, in fact, is now universally accepted as being a miracle cure, rather than a debilitating cause, of economic hardship.
Take the new federal budget, for example. President Obama’s massive $3.55 trillion spending plan is so large that the projected deficit, $1.75 trillion, is nearly as much as the entire budget President Clinton submitted to Congress in the final year of his administration—which was at the peak of the dot-com boom. Based on that simple comparison alone, one would never guess that America is currently facing its worst economic crisis since the Great Depression.
How could it be that bad when we have a budget twice the size of the one President Clinton proposed just nine years ago? That’s how delusional our addiction to debt has made us.
Teetering on the brink of economic ruin? No problem! Just triple the deficit. Problem solved.
Federal Reserve Chairman Ben Bernanke thinks the “recession” will be over by the end of this year. President Obama confidently adds, “We will rebuild, we will recover, and the United States of America will emerge stronger than before.”
This is pure fantasy.
The president introduced his spending proposal yesterday by saying, “Throughout America’s history, there have been some years that appeared to roll into the next without much notice or fanfare.” Then, he continued (emphasis mine throughout),
there are years that come along once in a generation, when we look at where the country has been and recognize that we need a break from a troubled past, that the problems we face demand that we begin a new path. This is one of those years.
Indeed—the day of reckoning has arrived. But why are there so few who understand that by massively increasing expenditures, we are only digging ourselves a much deeper hole than we are already in?
In his weekly radio address last week, President Obama, presumably with a straight face, said his budget was “sober in its assessments, honest in its accounting,” and that it would restore “fiscal discipline.” Yet, far from signaling a new era of responsibility, as the cover page of the new budget proposal preposterously claims, the economic plan follows the same old path of President Obama’s predecessors: ever-expanding government, out-of-control spending and astronomical debt.
President Obama told Congress on Tuesday night that the “lifeblood” of our economy is the flow of credit. Accumulating debt is now seen as the lifeblood of America’s economy. “The ability to get a loan,” he said, “is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll.”
Yes—and it’s also how a massively bloated government continues spending way beyond its means. FoxNews.com reported yesterday that the president’s budget proposal, if approved by Congress, will increase the government’s already unfathomable burden of debt by 63 percent in the next two years. And as long as the flow of credit continues, Washington will go right on borrowing to pay for its binge-spending habits.
But what happens once the flow of credit runs dry? Well, look at what’s happened to many households and businesses in the private sector since September.
Washington’s debt bomb is set to explode.
Trouble Abroad
Those who insist that America’s power and influence is not in rapid decline often argue that we’re in a global recession and that other nations are hurting just as much as the United States—if not more so. But as Paul Kennedy pointed out in a recent opinion piece, the taller you stand, the further you fall. “So while today’s Russia, China, Latin America, Japan and the Middle East may be suffering setbacks, the biggest loser is understood to be Uncle Sam,” Kennedy wrote.
And as America desperately sells record amounts of debt in hopes of borrowing its way out of bankruptcy, its enemies are hard at work testing the mettle of the new administration, just as Joe Biden predicted while campaigning for Barack Obama last year.
The Iranian regime, for example, has tested the new president by “preemptively scorning his overtures, mocking his weakness, and assuring the world its nuclear program is nonnegotiable,” William Kristol recently wrote.
Russia too has seized its opportunity to “test the mettle” of Obama. Earlier this month, Kyrgyzstan, under pressure from Moscow, told the U.S. it would no longer be allowed to use an air base that coalition forces had relied on for the Afghanistan operation.
Then there is North Korea. Having scrapped all its agreements with South Korea, Kristol wrote, it is “preparing to test a new ballistic missile, the Taepodong-2, which is intended to eventually have a long enough range to hit U.S. territory.”
And it’s not just America’s sworn enemies that are testing the new president’s mettle, as Charles Krauthammer noted in his column last week:
With a grinning Goliath staggering about sporting a “kick me” sign on his back, even reputed allies joined the fun. Pakistan freed from house arrest A.Q. Khan, the notorious proliferator who sold nuclear technology to North Korea, Libya and Iran. Ten days later, Islamabad capitulated to the Taliban, turning over to its tender mercies the Swat Valley, 100 miles from the capital.
Some may consider these to be minor tests. But they portend much more difficult challenges ahead, which is why, Kristol wrote, “Obama had better focus on the commander in chief part of his job, not just on his domestic concerns.”
But domestic concerns, as the president outlined before Congress this week, clearly dominate the new administration’s agenda. “The only way this century will be another American century,” President Obama said in his speech on Tuesday,
is if we confront at last the price of our dependence on oil and the high cost of health care; the schools that aren’t preparing our children and the mountain of debt they stand to inherit. That is our responsibility.
In other words, in addition to “stimulating” the stagnating economy, bailing out lending institutions, and providing financial relief for homeowners, the new administration also intends to spend trillions more on alternative forms of energy, universal health care and public education.
“The only measure of my success as president, when people look back five years from now or nine years from now,” President Obama told cnn earlier this month, “is going to be, did I get this economy fixed?”
But as Kristol correctly notes, the primary measure of Obama’s success or failure as president will be his foreign-policy performance, not his economic strategy. Franklin D. Roosevelt’s presidency, for example, is primarily measured against the backdrop of his wartime leadership in the 1940s, even though he became president during the Great Depression.
Roosevelt also neglected U.S. foreign policy during the difficult years of economic hardship in the 1930s. And the United States, as well as the rest of the world, paid dearly for this negligence.
Could history be repeating itself? “Is our new commander in chief fully aware how dangerous the world can get, and how fast, when America is weak or distracted?” Kristol asked.
As bad as it was for America in 2008, could 2009 be the year the debt bomb explodes in Washington even as America sustains numerous strategic blows from dangerous forces abroad? •
