USA: Burned Out and Wasting Away

Can the United States still be rescued? Their national debt is increasing rapidly — and both political parties close their eyes to reality.

One-third of all current budget outlays can only be covered with new debt. The national debt has broken the barrier of the entire annual GDP, $14.3 trillion. Yankeeland has burned down to the ground.

It’s the new Greece — but much worse. First, the United States is the world’s biggest economy, far ahead of the Chinese, in second place. Second, the world’s reserve currency — the U.S. dollar — hangs in the balance of how serious Americans are about the situation they’re in. Third, the solution to America’s problem has to come from Americans themselves. In Greece’s case, their European partners were able to pressure them, making E.U. assistance contingent on Greek self-discipline.

But there’s no similar authority capable of forcing the United States back onto the straight and narrow path of financial virtue.

In Washington, both camps — the Democratic president and the Republican House of Representatives — are meanwhile doing everything they can to mask the seriousness of the situation. They flood the public with plans to economize and strategies for salvation. On closer inspection, they all prove to be sleight-of-hand maneuvers and phony creative accounting exercises. Obama leads Americans to believe he can get new indebtedness down to 3 percent of GDP and reduce total indebtedness to 77 percent of GDP by 2021. That would approximately equate to the stability criteria for the Euro zone. He bases his calculations freely on the assumption that the U.S. rate of growth will reach 3.9 percent in the next decade, with an attendant reduction in the unemployment rate. Now who believes that will happen?

Republicans preach that it’s only necessary to eliminate the “waste” in social and foreign aid programs, and everything will be fine. They also cling to the illusion that the country can solve its financial dilemma without increasing revenues.

The reason for these fairy tales: the 2012 election. Neither side wants to hand its opponent the blueprints for a tailor-made campaign strategy. Republicans want to portray Obama as a socialist seeking to create a large financial burden with his programs that can only be paid for by raising taxes. Democrats are playing their cards close to the vest in order to put conservatives in the bind of having to expose their budget cuts first and risk the anger of the people, or if they want to avoid that, share the blame by agreeing to further debt.

Both camps know what’s necessary: a higher retirement age; cuts in defense, Social Security and Medicare spending; and higher taxes on income and energy.

People fear the mounting debt. They want to see cuts in government spending, but only theoretically. As soon as anything concrete is proposed, opposition rears its head. Elections might be won with so much fast talk, but that won’t save the United States from going broke.