"We just can`t
Not long ago, every America child
heard that, at one time or another, in the home in which
he or she was raised.
"We just can`t
afford it!" It may have been a new car, or two weeks
at the beach, or the new flat-panel TV screen.
Every family knew there were times
you had to do without. Every father and mother has had
to disappoint their kids with those words. Why is it
that what parents do many times a year politicians seem
incapable of doing: saying no.
How many times in the last decade
have the political leaders of either party stood up and
declared, "No, we
cannot afford this."
Consider. Friday, the White House
conceded that the deficits over the next 10 years will
total $2 trillion more than they had reported just
months ago. Instead of $7.1 trillion, we will run $9
trillion in deficits.
Meanwhile, the White House demands
a new entitlement—health care coverage for 47 million
uninsured who can`t afford it or refuse to buy it—that
will cost at least $1 trillion over 10 years. Can we
"We can`t afford
not to," comes the retort. This is
"a core ethical and moral obligation," says Barack Obama.
But is it not a core ethical and
moral obligation not to debauch the currency in which
most of the hard-earned wealth of the American people is
invested? Yet, as Warren Buffett writes in The New York Times, collapse of the dollar and the end of its days
as the world`s reserve currency is what we are risking.
Government expenditures are running
at 185 percent of revenue, which is like the lone family
breadwinner earning $50,000 a year, while the family
spends $92,500 a year. With families that do that, it is
not too long before the
credit cards are cut off, the mortgage is called in
family Chevy is repossessed.
According to those same White House
figures, this year`s deficit will be closer to $1.6
trillion than the $1.8 trillion previously projected.
Now, there are only three basic ways to finance that
The first is by borrowing the
savings of one`s own citizens, thus consuming the seed
corn of the private economy. The second is by borrowing
from abroad. The third is by having the Fed,
"through a roundabout process," writes Buffett,
, August 18, 2009]
Assume the Treasury borrows most of
the savings of the American people this year, say, $500
billion. Then Uncle Sam is able to
persuade Beijing to buy another $500 billion in
Treasury bonds. The Fed must still run the printing
presses to create another $600 billion.
How long before our Chinese,
Japanese and OPEC creditors conclude that the Americans
are depreciating their currency, and dump their U.S.
Treasury bonds, or demand a higher rate of interest to
cover the risks of their dollar-denominated assets
sinking in value?
Can anyone believe the dollar can
even retain its present diminished purchasing power if
we run $9 trillion in deficits over 10 years? How long
before producers conclude the same and start to demand
more dollars for their goods—and inflation takes off?
As Buffett argues, even when the
U.S. economy returns to full employment, the new tax
revenue it would throw off cannot close a deficit of
that size. One must either slash spending or raise taxes
to balance a budget where the feds are spending a fourth
of gross domestic product.
But how do we cut spending when the
five largest items in the budget—Social Security,
Medicare, Medicaid, interest on the debt and national
defense—are untouchables and growing faster than the 3
percent to 4 percent a year a full-employment economy
Are we going to cut
veterans benefits, spending on our crumbling
infrastructure or education, when Obama is promising
every kid a
college degree? Are we going to cut funds for
Afghanistan and Iraq, and risk losing both wars? Are
we going to cut foreign aid after
Hillary Clinton has been touring Africa telling one
and all America is here to stay?
Does either party have any plan to
cut federal spending from today`s near 28 percent of GDP
to the more traditional 21 percent?
When a democracy reaches a point
where the politicians cannot say no to the people, and
are competing for votes by promising even more spending
or even lower taxes, or both, the experiment is about
said John Adams,
lasts long. It soon wastes, exhausts and murders itself.
There never was a democracy yet that did not commit
CREATORS SYNDICATE, INC.
Patrick J. Buchanan
no introduction to VDARE.COM readers;
his book State of Emergency: The Third World Invasion and Conquest of America, can be ordered from Amazon.com. His latest book
Hitler, and "The Unnecessary War": How Britain Lost Its
Empire and the West Lost the World,
Paul Craig Roberts.