You know you have done something wrong when the IMF criticizes you, its largest financial donor, and it makes the front page of the New York Times. The Fund's warning to the U.S. last week that our rapidly rising national debt is a threat to national and international economic security should be seriously heeded by the Bush administration.
President Bush, bucking both liberals and conservatives, would like us to believe that we can have it all--limitless military deployment, a $400 billion Medicare prescription drug benefit, a multi-trillion dollar tax cut to the wealthy and corporate allies (it will trickle down, I promise!) and social security for the baby boomers. Bush is counting on Americans' increasingly short attention span to save him from the potentially long-term economic crisis he is sowing.
The fact that our national debt is nearly $7 trillion, with each U.S. citizen owning a whopping $24,000 share, may sound inconsequential now, but it is our parents and ourselves who will pay for it. And pay big. Here's how it works: As the administration has poured money into the Pentagon budget for more out-moded Cold War tanks, the budget deficit has grown to the record level of nearly $400 billion. The annual deficit gets tacked onto our national debt, for which the U.S. Treasury borrows $3 trillion annually. The problem is that as the debt continues to grow, it becomes increasingly difficult for the government to pay for basic services. So let's dispel one myth right now: The idea this administration is peddling--that it can pay for the tax cuts and fund Medicare, No Child Left Behind and social security, is ludicrous. Many in our generation may look at the Reagan years and conclude that since we never faced a major (highlight major) social services crisis after Star Wars and all those billions in tax cuts, Bush's flirtation with the red can't do much harm. But there's a major difference: The baby boomers were working then; now, they're retiring.
Yet the Bush administration does not seem worried, which at first seems odd because social security and Medicare can't fund themselves and total federal revenues have declined for three consecutive years. Its policies make more sense, however, if we assume that Bush is bluffing. In his three years in office, Bush has made a brilliant habit of currying favor from liberals by promising increased spending in certain areas, and then conveniently realizing that after a multi-billion dollar tax cut to the oil industry, the funding for those new programs cannot be found. It happened with NCLB and we're seeing the same trend with Medicare and social security. While simultaneously signing a $400 billion prescription drug bill, the administration has eliminated job training and employment programs, required veterans to pay more for health care and shifted the tax burden onto states and localities (though it did scrounge up some money for a new initiative encouraging sexual abstinence among teens). As a result, contrary to popular belief, most Americans do not face a trade-off between lower taxes and fewer services, but suffer from higher taxes and fewer services. Many North Carolina residents, for example, have seen property taxes increase by 67 percent in the last three years while the state struggles to fund public schools!
There are a couple factors at work here that the mainstream media has yet to report. First, it's a lot easier for the federal government to push the deficit onto states because, unlike the feds, most states are constitutionally mandated to balance their budgets. That means they are usually forced to raise taxes while the federal government can keep borrowing and cutting taxes. More important is the neo-conservative ideology, which, since Reagan, has sought to take the country back to the McKinley days, before the great liberal mistakes of FDR and JFK. To the neo-cons in power, publicly-funded programs like education and health care, are not basic entitlements that should be available to all Americans, but are privileges for only those that can afford them. Why else would this administration pass a Medicare bill that explicitly prevents the government from using its huge purchasing power to bargain for lower drug prices for seniors? The idea is to bankrupt the government agencies the now-retiring baby boomers and our own generation depend on in order to justify privatizing them.
So the administration hopes to avoid the national debt issue by simply cutting government spending out of the picture. Unfortunately, government spending, while not going to fund social services, continues to grow thanks to all the new tanks and the war in Iraq. And as the IMF points out, that is an enormous long-term liability both to our economy and national security. As we continue borrowing to delay the inevitable day-of-reckoning, countries like China, now our largest foreign creditor, not only hold all the dollars, but all the cards. A rogue nation of 15 years ago has positioned itself to bring down the United States' economy with its nearly $200 billion ownership of U.S. debt. What if China, over some trade dispute, decides to stop lending or demands we pay up? Then not only does the American economy plunge into recession with skyrocketing interest rates and rising unemployment, we even lose the ability to wage wars and maintain our status as the world's superpower. Whether you endorse Bush's aggressive foreign policy or not, you now have multiple reasons to elect someone who stands for a saner America.
Jared Fish is a Trinity sophomore. His column appears ever other Friday.
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