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USA: Time for Debt Rehab
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Do we need more proof that politicians should never be given national credit cards — unless, of course, they are German, Swiss or Scandinavian.

The thunder of crashing equity markets, the humiliating downgrade of America’s once gold-standard credit rating, and stern lectures on financial rectitude from the Chinese Communists of all people are the latest leitmotifs of America’s economic decline.

China called the United States “addicted to debt,” a point made for years by this column. Now is the time for national debt rehab.

The recent White House-Congressional budget agreement calls for $2.4 trillion in spending cuts over ten years. A bipartisan committee has been tasked with coming up with another $1.5 trillion in cuts by November.

Considering that the 2011 deficit will be over $1.4 trillion, and the national debt is over $14 trillion, these cuts, if ever realized, are modest, to say the least.

Obama hailed this compromise as “an important first step.” Many others saw it as the latest example of the growing financial and political paralysis of the United States.

The budget deal merely curbs runaway government spending; it does not reduce it.

It appears that the heaviest cuts may fall on Medicare, Medicaid, and Social Security. In other words, the poor and elderly are to bear the brunt of budget reductions.

Fifty million Americans rely on Medicaid for health care. In a national disgrace, while the US wages pointless wars abroad, 44 million Americans rely on government food assistance.

What is remarkable about this budget is that military spending is largely spared, showing once again the power of America’s military-industrial complex about which President Dwight Eisenhower warned the republic six decades ago. More guns, less butter.

The Pentagon may face cuts of $350-400 billion over a decade.But that’s peanuts compared to the Pentagon’s budget which is now near $900 billion annually when all war costs and veteran’s benefits are accounted for.

The US military and intelligence budgets doubled after the 9/11 attacks. President George W. Bush added $6.1 trillion to the US debt, an amount equal to the combined total increases to the national debt by all administrations from that of Jimmy Carter to Barack Obama.

Bush’s wars were waged on credit — that is, Americans were never asked to pay the true cost of these wars through higher taxes.

Current talk in Washington of a “peace dividend” from ending the wars in Iraq and Afghanistan is illusory. The US-installed Baghdad regime is shortly expected to “request” the US maintain “training” troops in Iraq indefinitely. The same will happen in Afghanistan. They will remain our tar babies.

Meanwhile, the Obama administration has expanded active military operations into Yemen, Libya, Djibouti, Somalia, Kenya, and West Africa. The US may end up involved in the new state of South Sudan, which it helped create. Not surprisingly, South Sudan has oil.


The US is now “fiscally hollow,” warns respected senior American strategist and diplomat Charles Freeman, who asserts the entire US military budget is financed by money borrowed from China and Japan. He warns the US is entering a long-term military rivalry with China that Beijing can easily bear but that may prove “fiscally ruinous for us.’

One cannot avoid the sharp irony that during the Cold War in the 1980’s, the US spent the Soviet Union into the ground. Now, it appears that the financially strained United States may go the way of the USSR by military competition with China and waging modern-day crusades in the Muslim world.

Few in Washington dare admit that the US can no longer afford “full spectrum global dominance.” The federal budget can only be balanced by cutting in half the gargantuan US military budget which amounts to an amazing 45% or so of world military spending. Add Washington’s rich allies, and the figure rises to 80%.

Most empires have been brought down by profligate spending and poor budget controls, not foreign invaders. The United States looks to be the latest example unless it can order its finances and rein in Wall Street. So far, not much sign of either.

Halving the Pentagon budget would only take us back to pre-9/11 days. But no one has yet come up with a way to halt the relentless progress of the military-industrial juggernaut.

While benefits to the poor and elderly may be cut, the Pentagon is trying to forge ahead with its $1 trillion plus F-35 fighter purchase. Why not just call up Moscow and Beijing and say, “hey, if you don’t build any new, ridiculously expensive, next generation stealth fighters, we won’t either.”

Fat chance. The military-industrial complex and Wall Street supply the lion’s share of political contributions. Jobs in every state depend on continued military production.

US Defense Secretary Leon Panetta is already warning the nation’s security is in danger if Pentagon budgets are cut. Danger from whom, we must ask? Are Red Chinese troops about to land in Los Angeles? Are the Russians going to grab Hawaii?

Well, there are always the lurking Muslims whose nefarious plans to impose a caliphate over the USA can only be stopped, it seems, by fleets of new, stealthy heavy bombers.

Eric Margolis [send him mail] is the author of War at the Top of the World and the new book, American Raj: Liberation or Domination?: Resolving the Conflict Between the West and the Muslim World. See his website.

(Republished from LewRockwell by permission of author or representative)
• Category: Economics • Tags: American Debt 
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