And the Debt Bomb Ticks On

And the Debt Bomb Ticks On

By Patrick J. Buchanan

With his approval rating moving up to 50 percent and higher in some polls, the pundits are all agreed. President Obama has turned the corner. He is now the winter-book favorite in 2012.

How, two months after his “shellacking,” did he do it?

First, by taking the wheel from Nancy Pelosi and Harry Reid, cutting a deal to extend the Bush tax cuts, bringing aboard Bill Daley, and separating himself from the demonizers of Sarah Palin and Glenn Beck as moral accomplices in the Tucson massacre.

Second, Obama has been the beneficiary of bullish news.

Corporate profits are coming in higher than expected. The stock market has surged. Nine of 10 economists surveyed by USA Today are more positive about the economy than they were three months ago. The ratio of businesses that anticipate new hires over businesses that anticipate new layoffs has not been better in a decade.

There is a feeling that at last we are coming out of the Great Recession.

But has the debt bomb really been defused?

On Jan. 20, The New York Times had two front-page stories that ought to concentrate the mind.

“A Path is Sought for States to Escape Their Debt Burdens,” was the headline over the first, which reported that bankruptcy lawyers were being consulted by congressional aides on how states like California might go into Chapter 9, “leaving investors in state bonds … possibly ending at the back of the line as unsecured creditors.”

Illinois, the story said, might, with federal help, do what GM did.

But GM bondholders were wiped out, as some of us know all too well.

Should states win the right to seek bankruptcy protection against their state bondholders, the $3 trillion municipal bond market, which has lately been taking hits, could crater.

The second Times story wrote of a rebellion in the House Republican Study Committee by conservatives and Tea Partiers who think the leadership is being too timid in cutting this year’s budget.

Rep. Paul Ryan & Co. want to cut $60 billion to $80 billion. But, says, Mick Mulvaney, a freshman from South Carolina, “We want more.” These conservatives want $100 billion cut from discretionary programs.

Among their ideas: a five-year freeze on federal salaries, a 15 percent cut in federal employees, a rollback to 2006 spending levels, $300 billion in long-term funding cuts from such programs as foreign aid, Amtrak, public broadcasting and the Washington, D.C., subway system.

As the Tea Partiers‘ proposed cuts do not touch the military, Medicare, Medicaid, Social Security or interest on the debt, the biggest budget items, slashes in transportation, education, domestic security, law enforcement and medical research, said the Times, “would be nothing short of drastic.”[G.O.P. Bloc Presses Leaders to Slash Even More, By David M. Herszenhorn, January 20, 2011]

Undeniably. Yet, consider.

The federal deficit for the fiscal year 2011, which ends Sept. 30, is projected at between $1,200 billion and $1,500 billion.

Thus, the $100 billion in cuts the firebrands are pushing, and few think they will get, add up at best to 8 percent of the deficit and 2.5 percent of the $3.87 trillion budget Obama proposed.

Thus, at best, this Congress will only slightly reduce the rate of speed at which we are heading toward a debt default.

The last few days have brought other news bearing on the debt bomb hanging over the Western world.

The Irish, upon whom austerity has been imposed as a condition of an EU bailout, saw their government fall this weekend. Elections are in March, and the ruling Fianna Fail, at 13 percent approval, is expecting a wipeout.

Will the Irish accept endless austerity, or vote for populists who will default and let EU governments and banks take the hit?

Should Ireland default, she will not be the last to do so.

Also this weekend, the European Central Bank chief warned that inflation in the global economy — the rising prices for oil, food, minerals and precious metals — may mandate a rise in interest rates. That would be bad news for bondholders and governments everywhere, including our deeply indebted states that now borrow to cover operating costs.

Then there is the crisis in the housing market that continues to deepen.

“All previous postwar recoveries,” writes Mort Zuckerman, “have been able to depend on a growing U.S. housing market.”

But 8 million homes are today in foreclosure or their owners are delinquent in their mortgage payments. Some 5.5 million are occupied by families whose mortgages are at least 20 percent higher than the value of the property, making them prime candidates for foreclosure.

This weekend, Bank of America reported fourth-quarter losses of $1.6 billion and a 2010 yearly loss of $3.6 billion. Its credit card unit took a $10 billion write-down, and its home loan business is still reeling from the fallout of the exploded housing bubble.

Now, facing trillion-dollar deficits as far as the eye can see, House Republicans are balking at agreeing to raise the debit limit of $14.3 trillion, though the national debt just crossed the $14 trillion mark.

Are the happy days really here again?

COPYRIGHT CREATORS SYNDICATE, INC.

Patrick J. Buchanan needs no introduction to VDARE.COM readers; his book State of Emergency: The Third World Invasion and Conquest of America, can be ordered from Amazon.com. His latest book is Churchill, Hitler, and “The Unnecessary War”: How Britain Lost Its Empire and the West Lost the World, reviewed here by Paul Craig Roberts.

How the Chinese Must See Us

By Patrick J. Buchanan

“O would some power the gift to give us to see ourselves as others see us,” wrote the poet Robert Burns.

As Hu Jintao wings his way home, America’s hectoring still ringing in his ears, he must be thinking that maybe we Americans should stop lecturing them and take a closer look at ourselves.

Revalue your currency, we demand of the Chinese, stop running these trade surpluses at our expense, start practicing free trade, and abandon these mercantilist and protectionist policies.

But why should they? Why should China abandon a trade policy that is working marvelously well for them, and adopt a trade policy that is failing dismally for us? Does that make sense?

Why should any nation emulate the U.S. trade policy of the Bush-Clinton-Bush era that has stripped us of a third of our manufacturing jobs and made us dependent on China and the world for the needs of our national life and the borrowed money to pay for them?

Why would China, seeking to make herself an independent and self-sufficient nation, adopt a policy that cost us our independence?

And what are the Chinese doing in their ascendancy to first power on earth that we did not do in ours?

Are our Milton Friedmanite free-traders unaware of how it was that, in the last third of the 19th century, we left the British in the dust? Are they unaware we had the highest tariffs on earth to price British products out of our market and goad rapacious Yankees into building new factories to produce the same goods we were then importing from Great Britain?

Lest we forget, the Americans who turned this country into the industrial marvel of mankind were known as “Robber Barons.”

As they put America first in our rise, the Chinese are putting China first.

Our grand strategists demand to know why the Chinese are making these brash claims to all the islands in the South China and East China seas. Why are they telling us to keep our aircraft carriers out of the Yellow Sea and out of the Taiwan Strait? Who do they think they are?

Well, maybe they think they’re 19th-century Americans.

Did not James Monroe and John Quincy Adams brashly tell the great powers of Europe to stay out of our hemisphere?

What are the Chinese about, other than imposing a Monroe Doctrine of their own? As historian Walter McDougall writes, Otto von Bismarck was as affronted by us as we are by the Chinese, declaring that the Monroe Doctrine represented “a species of arrogance peculiarly American and inexcusable.”

Hu Jintao got an earful from us on his human rights records. Stop the repression of Uighurs and Tibetans. Stop jailing political dissidents. Allow more freedom of the Internet and the press.

But on his way home, Hu must be thinking to himself: Who are these Americans to lecture us?

Is this not the same tribe that enslaved black people for 250 years and segregated them for a century? Is this not the same tribe that drove the Indians off their lands, then stuck them all in Bantustans called reservations? Are these not the only people in history to have dropped atomic bombs on defenseless cities?

How would we have reacted if Hu, instead of pretending he couldn’t hear the translation of that question about human rights, retorted, “We Chinese are also concerned about what we read of human rights at Abu Ghraib and Guantanamo, of renditions, torture and something called ‘water-boarding.'”

This is not written in defense of the Chinese communists who are a purposeful and ruthless lot, but to suggest that we Americans no longer look like the self-confident nation of Dwight Eisenhower and JFK that was unintimidated by the brutal and bullying Soviet Union of Nikita Khrushchev.

We were in a great struggle then—and acted like we could win it.

But as America sinks economically and retreats strategically, while China grows at 10 percent and bristles with confidence, we appear to be a nation of whiners. They are eating our lunch, and we sound like losers in a locker room.

We demand that the Chinese be more open and tolerant of opposition and dissent. But when they look at the gridlock of American democracy, the pettiness of our politics and the failure of our policies, while they are on the move at home and all over the world, why should they want to be more like us?

Has our American capitalism in this century performed as well as their autocratic capitalism? Is our political performance an argument for the superiority of our ballyhooed democracy over their one-party state?

We can’t win or end our wars, balance our budgets or control our borders. Great states like California and Illinois appear about to go belly-up. The U.S. government is running a third straight deficit of near 10 percent of our entire economy. We used our stimulus money to save government jobs. They used theirs for bullet trains.

Time to see ourselves as others see us.

COPYRIGHT CREATORS SYNDICATE, INC.

Patrick J. Buchanan needs no introduction to VDARE.COM readers; his book State of Emergency: The Third World Invasion and Conquest of America, can be ordered from Amazon.com. His latest book is Churchill, Hitler, and “The Unnecessary War”: How Britain Lost Its Empire and the West Lost the World, reviewed here by Paul Craig Roberts.

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