Uncle Sam Borrows; China Invests
by Eric Margolis: Egypt’s
Revolution Has Just Begun
driving in rural Virginia, I saw a billboard that proclaimed, "Jesus
Saves." Some wag had scrawled across the bottom, "But
that to "the US borrows while China lends."
As my friend
and veteran columnist Arnaud de Borchgrave writes, while the US
has wasted $1.5 trillion on its Afghan and Iraq Wars, China is busy
winning friends and customers and buying companies around the world.
magazine just estimated that China’s total foreign exchange holdings
now exceed $3 trillion. That’s more than enough, says the Economist,
to buy the Pentagon and all its arms, or all of America’s farm land
– and still have lots of change left over.
this cash hoard two ways: by exporting low cost goods and earning
interest on the $1.1 trillion it has lent to the US government.
The US financial
crisis is picking up speed. As the once mighty US dollar continues
to sink, gold just hit $1,513 an ounce. World financial markets
and investors are taking fright.
A leading credit
rating agency just warned the US AAA credit rating might be downgraded.
How the mighty have fallen.
was burning, President Obama and the Republican-controlled US Congress
traded childish taunts and bromides, or fulminated against wicked
Col. Gaddafi. Both parties refused to tell Americans the painful
truth: their government’s yawning $1.4 trillion US budget deficit
must be slashed to prevent a financial meltdown. That would mean
pain for everyone.
But the two
political parties are deadlocked: Obama’s Democrats want to raise
taxes. Republicans demand tax cuts and want to cut health, education
and welfare, all three sacred cows to the Democrats. The GOP urges
increasing military spending at a time when 40 million Americans
use government food stamps.
debate mostly ignores the 800-lb gorilla in the room: America’s
bloated $750-900 billion annual military spending. Some experts
put total annual US military and intelligence spending at $1.2 trillion.
politicians, the courageous Rep. Ron Paul excepted, dare suggest
seriously trimming the Pentagon’s runaway spending.
The US National
Priorities Project estimates that in 2011, out of one dollar of
US federal spending, 27.4% is military; 21.5% health; 13.8% interest
on the debt; 10.9% social security; benefits; 3.5% education; and
23% on everything else. The US spends $450 billion annually to finance
its ever-growing deficits. Some estimates say that $.40 cents of
every dollar Washington spends must be borrowed, mostly from China
In 2010, US
military spending exceeded by 50% the average spent in the Cold
War years when America had a serious rival in the Soviet Union.
Since 2000, US military spending has grown by 67% (all figures adjusted
for inflation). Yet today America has no real military rival.
The US now
accounts for almost half of total world military spending. Add America’s
wealthy allies in Europe and Asia, and the total rises to 80%.
And yet Americans
are incessantly barraged by wild claims their nation is under dire
threat, the latest and most preposterous being that dirt-poor Myanmar
(former Burma) is getting nuclear weapons. China, with a military
budget only 1/10th the size of America’s, is the only
future threat the Republicans can come up with.
It’s too bad
most Americans think of "defense" spending rather than
calling it "military spending." This gives the totally
mistaken impression America’s shores are somehow being threatened
by enemy invasion.
the Pentagon’s vast budget sustains US world military domination,
with over 100 overseas bases, air and naval fleets, two wars, numerous
smaller "police actions" in Africa and Asia, rented allies,
and a strategic nuclear arsenal at least 75% larger than possibly
W. Bush started two wars, cut taxes, and spent billions in farm
and medical subsidies - without funding these expenditures through
tax increases or spending cuts. These costs were simply loaded on
to America’s huge debt – our maxed out national credit card.
taxpayers had to actually pay through taxes for the so far $1.6
trillion wars in Afghanistan and Iraq, these conflicts would quickly
Johnson also financed the Vietnam War through debt. The result:
a worldwide wave of inflation that took a decade to overcome. The
same thing is happening today thanks to the profligate George Bush
who doubled US government spending.
The US has
been exporting inflation around the globe by debauching the dollar
and massive borrowing to finance its deficits.
Bush and now
Obama’s unpaid-for wars, recklessly low US interest rates, flooding
the US economy with cash, commodity speculation, and China’s overheated
economy are fueling the rising tide of world inflation.
A few politicians
have recently had the temerity to gently suggest modest cuts in
military spending. But they are terrified of being accused of the
ultimate sin in hyperpatriotic US politics, being "soft on
defense" and "not supporting our boys."
unless the Pentagon’s budget is cut – perhaps by as much as half
or more – the US, dangerously top-heavy with debt, may capsize.
spending is undermining, not reinforcing, US national security.
History amply shows that more empires were done in by poor finances
and debt than invasion by enemies.
governing system, dominated as it is by powerful, self-enriching
special interests and advocates of empire can’t seem to escape from
our nation’s addiction to war and debt.
him mail] is the author of War
at the Top of the World and the new book, American
Raj: Liberation or Domination?: Resolving the Conflict Between the
West and the Muslim World. See his
© 2011 Eric Margolis
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