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Wednesday, August 20, 2008
Welcome to the good ol’ I.O.U.S.A
The Atlanta Journal-Constitution
Over the last few years, millions of homeowners borrowed more money than they could repay. They were living beyond their means, hoping that sometime in the future, something would come along to bail them out.
They’re now paying for that lack of responsibility. In the second quarter of 2008 alone, more than 700,000 homes went into foreclosure, driving housing values lower and gutting the nation’s construction industry.
There’s an important lesson in that tragedy, not just for Americans as individuals but as citizens of the United States of America. As a nation, we are living well beyond our means and behaving just as irresponsibly as those individual homeowners who mortgaged their family’s future for a plasma TV or European vacation.
Our national debt — the accumulation of year after year of deficit spending by our government — is approaching $10 trillion and growing, with almost 45 percent of it owed to foreigners.
And just as overextended homeowners lost their homes, we Americans may lose our country, or at least the prosperous, powerful country as we’ve known it. The debt is growing so large that last month alone, interest payments totaled $24 billion. Again, that’s a single month.
To see where that will inevitably lead, “we only need to look at the fate of other countries who have lived beyond their means for a long time,” warns former Treasury Secretary Paul O’Neill, who was fired from his Cabinet post by President Bush for daring to insist that deficits matter. “When you get extended to the point you can’t service your debt, you’re finished.”
O’Neill issues that warning in “I.O.U.S.A,” a documentary about our nation’s pending fiscal crisis that opens Thursday night, for one night only, in 400 movie theaters around the country, including eight in metro Atlanta. (For a list of theaters, go to http://www.iousathemovie.com/).
As the movie points out, a country deep in debt to the rest of the world loses control over its own future. Most of our foreign-held debt is owned by Japan, China and the oil-exporting countries, giving them enormous potential leverage not just over our foreign policy but over our domestic economic policies as well.
In addition to O’Neill, the movie features financier Warren Buffett, former Republican presidential candidate Ron Paul, former Treasury Secretary Robert Rubin and others. But its two stars are David Walker, until recently head of the Government Accountability Office, and Robert Bixby, head of the Concord Coalition, who have been traveling the nation trying to stir up grassroots concern about the problem.
The Concord Coalition, founded in 1992 by a Democrat and two Republicans, has been studiously nonpartisan. As Walker puts it, “The facts aren’t Democrat or Republican. The facts aren’t liberal or conservative. The facts are the facts.”
But facts being facts, two presidents in particular come in for pointed criticism. In one clip, Ronald Reagan is seen pointing out correctly that “for decades we have piled deficit upon deficit, mortgaging our future and our children’s future, for the temporary convenience of the present.”
But as he speaks, graphics point out that in Reagan’s eight years as president, our national debt almost tripled, from $909 billion to $2.6 trillion.
The current President Bush is given similar treatment. In a press conference, he is seen proudly awarding himself “an A for keeping taxes low and being fiscally responsible with the people’s money.” But as graphics demonstrate, our national debt was $5.7 trillion when Bush took office; it will be almost twice that when he leaves. There is no curve in the world on which that performance merits an “A.”
The film does not offer a detailed solution, but it does express restrained outrage at the immorality of one generation of Americans — you and I — willing to mortgage the futures of our children and grandchildren to satisfy our own selfishness.
It’s the scariest movie you are likely to see this summer, not least because we play the villains.
UPDATE: The movie premiere is Thursday night. The item has been updated to reflect that fact.
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Sticking US taxpayers for Europe’s defense
The Atlanta Journal-Constitution
Russia’s invasion of Georgia has refocused public attention on U.S. efforts to build a missile-defense system for Europe. While the United States officially insists that the system is intended to defend against missiles fired from Iran, it seems pretty clear that the system’s real “target,” so to speak, has always been Russia.
Congressional Democrats are still balking at the proposal, claiming that the system isn’t ready for deployment. And they’re right. The Pentagon’s own test and evaluation office acknowledges that the system is untested, unproven technology, but they want to install it anyway.
But I have a more fundamental question. Forget for a moment whether the system is ready for deployment. Forget about its potential diplomatic and military impact.
Why on earth is it the obligation of U.S. taxpayers to pay for, build and operate weapons systems to protect Europe from either Iran or Russia? Why is that our problem?
The cost is substantial — $712 million in the next fiscal year alone, just to start construction of the project.
Europe is a pretty wealthy place. The European Union has a combined annual GDP of $18.5 trillion, compared with roughly $14 trillion in the United States. The European Union accounts for 31 percent of total world economic output.
If Europe believes it is threatened by such missiles, it should build the system itself or at least compensate the U.S. taxpayer for our cost. Instead, U.S. officials have had to beg, wheedle and cajole European nations to accept those missiles. They act as if they’re doing us a great big favor by letting us build a system to protect them.
If they don’t think it’s such a big problem, why should we?
American conservatives like to complain that the Europeans are unwilling to protect themselves, that they leave the fight to the Americans. Well why shouldn’t they, if we are so eager to do it for them? Why should they spend their own euros and put the lives of their own children on the line when those silly Americans are so willing and eager to do it for them?
And what’s in it for us? Bragging rights? The psychic reward of proclaiming that “We’re No. 1!”? There’s something seriously awry here, something that very few people in this country are even willing to think about.
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