America Sweeps Its Superpower Status under the Carpet
Gigantic debt, diminished competitiveness and squabbling political parties: Washington can’t continue to downplay its problems.
Barack Obama sees his nation facing “the 11th hour.” If Democrats and Republicans can’t reach agreement on raising the debt limit by the weekend, the United States may be unable to pay all its bills after Aug. 2.
Both parties argue over whether retirees should become the first victims of America’s bankruptcy, or whether they should withhold paychecks from military personnel, or force government employees to take unpaid leave, or stop financial support to schools and universities, or cut off developmental assistance to Afghanistan, Pakistan, Palestine and beyond.
But neither side questions the fact that failing to come to an agreement will necessitate freezing many billions of dollars in spending, nor that a downgrading of the nation’s credit rating would cause turbulence on global financial markets.
And that’s the incredible, apparently unconcerned current reality of the situation: The political elite in the world’s only remaining superpower can reach no consensus on whether they need to balance future budgets. While Obama seeks a compromise, his opposition thinks it’s more important to posture about principles in the question of raising the debt ceiling.
That’s hardly less true of Democrats than it is of Republicans. It’s as if Washington’s politicians had long since secretly given up on the idea of being a superpower and now hide behind the modest confines of their ambitious principles.
Catalyst for the Economic Decline
A look at the crisis shows that America has long since become the land of limited possibilities, yet it doesn’t see itself as such. Blame is always simply put on the other party. According to Republicans, the president’s “big government” is to blame, or at least it’s the catalyst for the economic decline.
Democrats boldly make Wall Street the cause and blame Republicans because they are the party of banks and bankers and want to preserve the tax advantages enjoyed by the privileged class.
Both accusations don’t reach far enough. The Republicans are, in fact, stubbornly clinging to their ideology of uncompromising resistance to any form of revenue increases, but are correct in saying that the central cause isn’t that taxes have been too low but that spending has been too high.
Spending levels rose mainly under George W. Bush. In addition to waging expensive wars in Afghanistan and Iraq, Obama’s predecessor paired them with generous tax cuts. The Republicans acted like royalty at an expensive restaurant ordering the largest steak and finest wine with instructions to give the bill to the next customer.
The problem with today’s Republicans is that ever since their successes in the 2010 elections, they no longer recognize Barack Obama as the legitimate head of government. That electoral victory convinced them that the American people had given them a mandate to carry out their will. Since they won largely on their promise to prevent tax increases, that has become their catechism.
As stubborn as the Republicans appear (with the exceptions of John Boehner and Senate Minority Leader Mitch McConnell), they are not solely to blame for the problem. The Democrats have also failed, at least since Obama’s 2008 election.
Instead of taking action to counter the rapidly approaching tsunami of debt, the president initiated a stimulus package worth billions of dollars that, despite his predictions, failed to halt the growing wave of unemployment. The stimulus dispersed money willy-nilly, rather than targeting it to areas where it was most needed.
Obama’s philosophy of health care reform was also appropriate because a modern country shouldn’t put up with 10 percent of its workforce being uninsured. But in times of tight money, he should have put more emphasis on making medical delivery systems more efficient and stopping the tremendous waste of resources in social programs.
So he dealt only with peripheral elements. His party is still under the mistaken belief that social programs should be untouchable despite their faults and that raising taxes can solve every problem.
The deficit problem stretches back far beyond the Bush era. It’s closely connected to America’s gradual loss of economic competitiveness. The trade deficit is exactly 40 years old now — Americans have been importing more goods than they export since 1971.
That has led to a continuous loss of manufacturing jobs and an increase of jobs in the financial sector, but the financial sector also eventually collapsed in 2009. The combination of budget and trade deficits has blocked every short-term solution to the American crisis.
While the over-indebtedness has shaken confidence in the dollar as the global reserve currency, the lower value of the dollar should theoretically benefit exports. But there’s not much left to export from a country that has dismantled its factories, neglected education and is left with little more than minimum wage jobs.
Nevertheless, there’s still much potential for optimism in a society attractive to foreigners and that offers more land to accommodate new residents coming from the heavily populated countries of Europe and China.
The United States has to fundamentally renew itself, and both political parties have to make that a higher priority than their own political fortunes. But if Republicans and Democrats fail to demonstrate that this weekend, the 21st century American crisis may turn into the demise of the 20th century’s dominant power.
Barack Obama sees his nation facing “the 11th hour.” If Democrats and Republicans can’t reach agreement on raising the debt limit by the weekend, the United States may be unable to pay all its bills after Aug. 2.
Both parties argue over whether retirees should become the first victims of America’s bankruptcy, or whether they should withhold paychecks from military personnel, or force government employees to take unpaid leave, or stop financial support to schools and universities, or cut off developmental assistance to Afghanistan, Pakistan, Palestine and beyond.
But neither side questions the fact that failing to come to an agreement will necessitate freezing many billions of dollars in spending, nor that a downgrading of the nation’s credit rating would cause turbulence on global financial markets.
And that’s the incredible, apparently unconcerned current reality of the situation: The political elite in the world’s only remaining superpower can reach no consensus on whether they need to balance future budgets. While Obama seeks a compromise, his opposition thinks it’s more important to posture about principles in the question of raising the debt ceiling.
That’s hardly less true of Democrats than it is of Republicans. It’s as if Washington’s politicians had long since secretly given up on the idea of being a superpower and now hide behind the modest confines of their ambitious principles.
Catalyst for the Economic Decline
A look at the crisis shows that America has long since become the land of limited possibilities, yet it doesn’t see itself as such. Blame is always simply put on the other party. According to Republicans, the president’s “big government” is to blame, or at least it’s the catalyst for the economic decline.
Democrats boldly make Wall Street the cause and blame Republicans because they are the party of banks and bankers and want to preserve the tax advantages enjoyed by the privileged class.
Both accusations don’t reach far enough. The Republicans are, in fact, stubbornly clinging to their ideology of uncompromising resistance to any form of revenue increases, but are correct in saying that the central cause isn’t that taxes have been too low but that spending has been too high.
Spending levels rose mainly under George W. Bush. In addition to waging expensive wars in Afghanistan and Iraq, Obama’s predecessor paired them with generous tax cuts. The Republicans acted like royalty at an expensive restaurant ordering the largest steak and finest wine with instructions to give the bill to the next customer.
The problem with today’s Republicans is that ever since their successes in the 2010 elections, they no longer recognize Barack Obama as the legitimate head of government. That electoral victory convinced them that the American people had given them a mandate to carry out their will. Since they won largely on their promise to prevent tax increases, that has become their catechism.
As stubborn as the Republicans appear (with the exceptions of John Boehner and Senate Minority Leader Mitch McConnell), they are not solely to blame for the problem. The Democrats have also failed, at least since Obama’s 2008 election.
Instead of taking action to counter the rapidly approaching tsunami of debt, the president initiated a stimulus package worth billions of dollars that, despite his predictions, failed to halt the growing wave of unemployment. The stimulus dispersed money willy-nilly, rather than targeting it to areas where it was most needed.
Obama’s philosophy of health care reform was also appropriate because a modern country shouldn’t put up with 10 percent of its workforce being uninsured. But in times of tight money, he should have put more emphasis on making medical delivery systems more efficient and stopping the tremendous waste of resources in social programs.
So he dealt only with peripheral elements. His party is still under the mistaken belief that social programs should be untouchable despite their faults and that raising taxes can solve every problem.
The deficit problem stretches back far beyond the Bush era. It’s closely connected to America’s gradual loss of economic competitiveness. The trade deficit is exactly 40 years old now — Americans have been importing more goods than they export since 1971.
That has led to a continuous loss of manufacturing jobs and an increase of jobs in the financial sector, but the financial sector also eventually collapsed in 2009. The combination of budget and trade deficits has blocked every short-term solution to the American crisis.
While the over-indebtedness has shaken confidence in the dollar as the global reserve currency, the lower value of the dollar should theoretically benefit exports. But there’s not much left to export from a country that has dismantled its factories, neglected education and is left with little more than minimum wage jobs.
Nevertheless, there’s still much potential for optimism in a society attractive to foreigners and that offers more land to accommodate new residents coming from the heavily populated countries of Europe and China.
The United States has to fundamentally renew itself, and both political parties have to make that a higher priority than their own political fortunes. But if Republicans and Democrats fail to demonstrate that this weekend, the 21st century American crisis may turn into the demise of the 20th century’s dominant power.