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Web Letters | The Nation

Web Letter

The problem of US deficits is so deeply "structural" at so many levels, it is not even funny.

Our deficit is currently 41.4 trillion, our debt approximately 410 trillion (40 percent of GDP). These figures don't include the country's social responsibility (read further liabilities) to people with no health insurance, nor do they include contractually foreseeable liabilities to Medicare and Social Security! Also, we are "waking up" (from a coma) regarding our finances only in the midst of a near recession due to over-leverage. All this is well repeated even in mainstream media (though sadly still not yet comprehended/absorbed by even a simple majority of the population)!

The following is an additional piece of information that should strike fear into the Obama administration, as well as analysts and concerned citizens: the "rest of the world" is getting along just fine despite the US. Brazil, China, India are thriving. Even Russia, Latvia, etc. are coping rather well. This implies that whatever figures Beltway analysts in the Congressional Budget Office are projecting in their omniscient spreadsheets, in terms of trends in future US GDP growth versus trends in the cancerous growth of deficits, are all irrelevant, because the entire US economy has become globally irrelevant!

Finance and brokering is what has become a large part of our economy; military spending is the other significant part. It was credit that enabled GM's customers to buy their cars. It was "ninja" loans that filled Home Depot, and fuelled housing starts. Our current GDP is being bloated by war spending... which wars appear to be ending soon, with no geopolitical gains for all that effort.

Now power is shifting out eastward, to Asia. When it rains it pours. How will the US even look to compete? We will not be selling DRAM chips to the Koreans or Japanese. We will not be selling Chryslers to the Chinese or Germans. We will not be providing software services or healthcare to India. On what, exactly, is the CBO office basing its cliched forecasts of GDP growth?

Meanwhile the political dialogue between the two major parties remains asinine, and the prevailing global world view of most of our citizens remains out of touch.

Scary times.

kiers sohn

New York, NY

Nov 4 2009 - 9:37pm

Web Letter

Though I agree with most of the adverse comments on Mr. Greider's comparison with post-WWII, I say: look at the bright side!

A further collapse of the US dollar might finally force the Chinese to cease buying our deteriorating Treasury bonds. We would not have the means of paying our Congress their ill-deserved salaries. Their single-payer healthcare would be gone without the single-payer!

More significantly, there is the chance that the political revolution that would ensue as Social Security and Medicare went under would at last end American imperialism and the killing of millions of people around the globe. We might have restored to us a government with checks and balances, three equal branches of government; or, even better, scrap the eighteenth-century relic for a parliament with multiple parties.

Of course, it could go the other way: martial law, no habeas corpus for anyone, government by decree. At least, the US would no longer be projecting its military power and the number of our generals and admirals would be sharply reduced.

Alvin D. Hofer

St. Petersburg, FL

Nov 2 2009 - 10:25am

Web Letter

The white elephant in the room is revenue.

We need higher rates on upper-income earners. Import taxes on all imported goods--oil and manufactured goods--would have a dynamic effect on unemployment, creating a domestic green industry, as well as alleviating borrowing needs.

We can't rely on the government to artificially create jobs with borrowed money forever. So far there is nothing on the horizon to indicate this administration has a long-term plan for the economic revival.

That may be because they've been focused on healthcare. Once those votes are cast, this administration has to seriously address sustainable job creation, and a concrete paln to draw down debt.

Bud Ilic

Bloomington, Il

Oct 31 2009 - 10:10am

Web Letter

The word that comes to mind after reading Greider's piece is "delusional." It is as though he went to sleep in 1952, woke up in 2009, and missed everything that happened in between.

If massive government control of the economy was the way to wealth, we would have torn down the Berlin Wall from our side, to get to the worker's paradise on the other.

We will get past this recession. Once we do, we will face significant public-sector debt and a structural deficit of 6 percent to 10 percent of GDP--and that is before we get to the hidden debt represented by the unfunded portions of Social Security and Medicare.

The challenge of our era is finding some way to meet the intergenerational obligations of Medicare and Social Security without raising taxes so high as to throttle economic growth and job creation. In other words, how not to be Europe.

Jim Hemphill

West Chester, PA

Oct 31 2009 - 10:00am

Web Letter

Is the author aware that the inflation rate shot to 14.6 percent after WWII? The piece reveals a very uninformed, poorly reasoned partisan perspective.

Karen Kline

Washington, DC

Oct 30 2009 - 2:58pm

Web Letter

Our current federal government debt is a smaller percentage of GDP than at the end of WWII, but that leaves out important facts. First, current OMB projections almost double the government debt again by 2019, during which time our GDP will likely grow very little, since we will long be recuperating from a debt-induced hangover. And we'll be doubling federal debt without a WWII, which was such a herculean effort that we had 10 percent of our total population in uniform!

Second, gross US debt (including private, corporate and state debt, which were virtually nil in 1945) is roughly double our current federal public debt.

Third, FDR's entitlement programs were still young in 1945; people died earlier and there were fewer old people. Moreover, we were at the very onset of a baby boom. The demographic trends are now completely reversed. The boomers are retiring and consuming the entitlement dollars that were originally so far in the future that FDR could have just written "here lie dragons," like on pre-Columbian maps.

Lastly, 1946 found the US the only significant industrialized nation in the world left unscathed by the war. As such, we had an economic boom, being able to sell US products to the rest of the world. We no longer enjoy that advantage, and so can't expect economic growth to forever overmatch runaway borrowing.

A $20 trillion debt (fast approaching) would require $800 billion just to service the interest, if the interest cost were to rise only moderately from today's 1.2 percent to an average cost of 4 percent. In other words, it would take roughly 100 percent of 2009's total federal income tax receipts just to pay the interest. That leaves out paying for all of the functions of government and leaves out ununsustainable social security, Medicare and possibly soon the healthcare "public option" costs.

But I'm sure you're right, Greider, we can just keep borrowing will-nilly forever without there ever being any consequences.

Dan Hughes

Minneapolis, MN

Oct 30 2009 - 2:13pm

Web Letter

God help us with this analysis. When, exactly, has our political leadership shown a willingness to restrain spending, let alone get deficits under control? They resort to yearly fixes to the AMT and Medicare payments to doctors, and pile on earmarks and wasteful defense spending year after year. Paygo is a sham that's good for political posturing and little else. And the last stimulus package was as much about pork spending as it was actual stimulus--what a short memory Greider has.

Greider is going to have to do lot better than resort to wishful thinking, which is just about all he has in his tank.

James Cameron

Seattle, WA

Oct 30 2009 - 1:57pm

Web Letter

Greider needs to spend more time on the website Real Clear Politics and less time parroting White House talking points. He offers no numbers, only hot air.

Jack Davis

Phoenix, AZ

Oct 30 2009 - 1:51pm

Web Letter

Balderdash.

Sioan Stephen Bethel

Brooklyn, NY

Oct 30 2009 - 1:12pm

Web Letter

This is not post WWII America. All of the other developed countries had been bombed to smithereens. Of course our economy took off. We are in a very different situation today.

Susan Black

Metairie, LA

Oct 30 2009 - 12:23pm