by Don Azarias
September 16, 2012
With only a few weeks left before the Nov. 6 presidential election, the political donnybrook between the two major political parties in the United States is in full swing. Another big battle is brewing in Washington, D.C. between Democrats led by President Barack Obama and Republicans under the leadership of House Speaker John Boehner. The Speaker accused the President of lacking the “courage” to work with his political foes to rein in entitlement spending and overhaul the tax code.
It would be worthwhile for the American people to know that the federal government’s indebtedness to foreign entities has shot up 72.3 percent since President Barack Obama took office. Surprised? Not me.
Boehner reminded the American public of Obama’s broken campaign promise to cut the deficit in half. “This debt is a drain on our economy and a crushing burden on our kids and grandkids, and it’s yet another indication that the president’s policies have made things worse,” Boehner said in a written statement. “To tackle the debt in a meaningful way and help our economy grow, we need pro-growth tax reform, and we need to strengthen and secure Medicare and other critical entitlement programs. Unfortunately, President Obama hasn’t had the courage to join us in working on these common sense reforms,” he added.
Republicans have highlighted the fact that the national debt swelled about $5.3 trillion on Obama’s watch, and accused him of adding to it with government spending like the $800 billion economic stimulus that was his first major initiative after taking office in 2009.
Standing defiant amid the looming financial crisis, Democrats have also placed the blame on Republicans—including Boehner—for the political stalemate that has jammed up any ambitious bipartisan plan to cut the debt. The White House, specifically, has accused Republicans of killing any such deal by rejecting tax increases as a component of a plan that would also include painful spending cuts. Republicans have countered that tax hikes on the wealthy risk drying up investment income they say would help grow the economy.
As the US government spends an unprecedented amount of money to fix the nation’s economy, there is an equally great need to raise the cash to pay for it. This is accomplished through borrowing, whereby the United States sells Treasury securities with varying maturity dates.
For investors, the U.S. treasury bills, notes and bonds are considered a safe investment vehicle because they have a guaranteed rate of return, backed by future U.S. tax revenues and good faith. This borrowing adds to the national debt, which has climbed above $16 trillion and is rising every day.
President Barack Obama and Democratic Party’s supporters should not blame Republicans for trying to prevent the impending financial collapse of the United States as Obama and Democrats continue to spend cash that the United States does not have. They are willing to sacrifice the financial well-being and future of the United States as a nation in order to remain true to their party’s platform of providing unaffordable social services and welfare programs for all regardless of long-term consequences. You may remember that even Fed Chairman Ben Bernanke said that the amount of U.S. Debts is unsustainable. It makes me wonder if Obama and his Democratic allies are even listening to the Federal Reserve chairman.
Erskine Bowles, former White House chief of staff under President Bill Clinton and a co-chair of the bipartisan National Commission on Fiscal Responsibility and Reform (NCFRR), also presented an equally dire prediction: “If we don’t solve the debt problem, we will be paying $1 trillion in interest in 2020. This debt is like a cancer growing within the country. To fix it, we’ve got to make decisions that are politically tough.” Bowles is right on target. Polls show that majority of the Americans are more concerned about the federal budget deficit than any other problems related to the economy.
Personally, I’m outraged everytime I hear short-sighted and ignorant commentaries against Republicans for trying to fiscalize an out-of-control spending by Democrats. I cringe everytime I read newspaper editorials, mainstream and ethnic, heaping praises on Obama and Democrats for trying to bankrupt the United States of America while demonizing the well-intentioned Republicans.
The growing dependence on borrowed cash, especially from China, is giving Beijing an extraordinary say and sway over the U.S. economy. Many economists are concerned about U.S. reliance on China for funding. By buying Treasury bonds, which are denominated in dollars, China is able to keep the dollar strong compared with the yuan. As a result, Chinese exports are cheaper relative to U.S. exports. That’s why many economists are worried about the long-term effect of the United States’ and China’s financial relationship.
This great country that was once the richest and the largest creditor on the face of the earth is now the largest debtor nation in the world although it still retains its bragging rights as the most powerful country in terms of its military capabilities. But this country can no longer afford to be a welfare state without mortgaging the future of our children’s children.
If you try to look at it from a different perspective, the United States, in reality, is now owned largely by China and other countries who are holders of U.S.debts. I don’t know about you, but in the event that China forecloses on the United States, I’ve made the decision to leave the country for good. I don’t plan on being a Chinese citizen. I’d rather be a Democrat.