How much more dismal will things have to get before the American people really start to understand what’s happening to our republic?
If you’re unemployed, the very unemployment benefits you’re receiving very well may extend your unemployment. The spending by President Obama and the democrats – you know, stimulus – may very well be our downfall. The Chinese have taken notice. It’s no wonder, since they own so much of our debt. They’d like to see their investment protected. (Had they known the US was going to turn commie they no doubt would have invested somewhere else.) From the Wall Street Journal:
The Chinese also zeroed in on Uncle Sam’s finances. “We sincerely hope the U.S. fiscal deficit will be reduced, year after year,” Assistant Finance Minister Zhu Guangyao said on Monday. We have long held that deficits per se are less important than their size relative to the overall economy, and that the real burden on taxpayers is the spending that creates deficits. However, Mr. Obama and Congressional Democrats have been rapidly raising both. One has to go back to the era of World War II to see deficits consuming so large a percentage of GDP as this year’s 13%.
These deficits must eventually be paid for with cash taken from taxpayers, which limits economic growth, or with inflation, which robs investors of the value of their savings. With the U.S. deficit exceeding $1.8 trillion in 2009, and likely to stay high for years to come, investors in China and around the world have every right to be concerned. The Chinese have economic problems of their own, but when they come visiting with a message of sound money and spending restraint, Americans ignore them at our peril.
The Chinese might have cause to be less worried if these deficits were poised to fall quickly amid an economic expansion. But the tragedy is that this blowout of the U.S. balance sheet was used to finance spending, largely on transfer payments like Medicaid and jobless benefits, rather than pro-growth tax cuts. The recession is already bottoming out, but the danger is that the expansion to come will be too mediocre to drive job creation and raise revenues enough to reduce the deficit the way it did in the 1980s.
This is just the latest international embarrassment in the age of Obama. Too bad he doesn’t care.
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