Everyone is to blame for the escalating debt fight in the U.S. except the ruling Democrats. In any case, that’s the way Austrians see it.
Anyone listening to the Austrian radio network ORF to get an explanation of what’s going on with the American debt debate these days is probably on the brink of despair by now. A few obscure hillbillies in the Republican ranks are blocking America’s righteous president, Barack Obama, from rescuing the world’s economy from disaster. Right-wing Republicans blocked a Democratic initiative to raise the constitutionally mandated debt limit by a few trillion dollars.
Now, one might think that it’s the duty of the party in power to ensure the nation’s ability to pay its bills. But it’s certainly different with Barack Obama, for whom European hearts still flutter. As a result, the U.S. president is seen as the pitiful victim of petty political opponents who have no other agenda than to protect the rich from higher taxes — an agenda for which they’re willing to risk a national bankruptcy.
And then there’s Bush. This view was confirmed by the famous — if not entirely neutral — economist and 2001 Nobel laureate, Joseph Stiglitz, who knew what the problem was: The global economy was contaminated by right-wing economic theory that laid waste to everything. According to Stiglitz, that stupid ideology is to blame for the fact that the U.S. is now facing bankruptcy. Scarcely 10 years ago, the United States had such budget surpluses that people were talking about a totally debt-free nation. But along came the warmongering George W. Bush whose hideously expensive Gulf wars and tax relief for the super-rich frittered away the country’s economic advantage.
No one would deny that George W. Bush’s economic policies were less than successful. The man was a first-class “armaments Keynesian.” He berated liberal economists in his speeches, but at work he threw bushels of money out of White House windows. By the time his term was over, the economy was fragile, and he had doubled the national debt from $5 trillion to $10 trillion.
This is the point at which commentators and economists like to forget the statistics. That might be because they’re afraid they may see things they don’t want to see — like the fact that the debt has now reached $14.5 trillion. The “evil” Bush needed eight years to double the debt from $5 trillion to $10 trillion dollars, and the “good” Obama raised it another $4.5 trillion in just two and a half years! Bush blamed the rising debt on 9/11 and Iraq, and Obama blames the rise on the costly financial crisis, Afghanistan and essential social programs.
All this admittedly feeds the impression that the United States wasn’t so much driven to the brink of bankruptcy by “right-wing economic policy” as it was by irresponsible Republicans and Democrats. The difference, of course, is the subtle distinction that such bad decisions are excusable when they’re made by the “good guys.” What can’t be changed, however, is the fact that United States debt has nearly tripled since the year 2000!
If one compares the liabilities to the annual economic output, the United States currently owes 98.3 percent of its GDP. Sure, the tax on the wealthiest Americans could be raised from the current 31 percent in order to gain a little ground, but whoever thinks that the super-rich hardly pay any taxes at all is wrong. The top 1 percent of income earners currently earns 20 percent of all income but bears 40 percent of the tax burden.
In order to prevent the country from defaulting, opposition Republicans offered a bill to raise the debt ceiling by $900 billion, only to see it rejected by Senate Democrats barely two hours later. President Obama had already promised to veto it. An increase of $900 billion would have provided financing for one year at the most, and the nation would have been back at the brink of bankruptcy right in the middle of an election year. But it’s obvious: Blame for the failure in the negotiations belongs to everyone. Everyone but the governing Democrats, that is.