FacebookTwitterGoogle+RedditEmail

What Uncle Sam Has to Tell His Creditors

According to all accounts the US faces its worse economic crisis since the Great Depression with $2 trillion in near-term financing needs for bailouts and economic stimulus.  This is an enormous sum for any country, especially for one that is so heavily indebted that it is close to bankruptcy.  If the money can’t be borrowed abroad, it will have to be printed–a policy that carries the implication of hyper-inflation.

In normal life a borrower who must appeal to creditors makes every effort to bring order to his financial affairs.  But not the Bush regime.

The out-of-pocket costs of Bush’s Iraq war are about $600 billion at the present moment, a figure that increases by millions of dollars every hour.

In addition, there are the much larger future costs that have already been incurred, such as long-term care for the wounded and disabled US soldiers, the replacement costs of the used up equipment, interest payments on the war debt, and the lost economic use of the resources and manpower squandered in war.  Experts estimate that the already incurred out-of-pocket and future costs of Bush’s Iraq war to be $3 trillion and rising.

Even these costs might be small if an article by Richard LaMountain in the November 2008 Middle American News is accurate.  According to LaMountain, US refugee programs for Iraqis displaced by the US invasion and occupation could result in a large and growing Muslim US population.  These would be people whose lives were adversely impacted by the US invasion of Iraq.

If the US maintains its pro-Israeli stance against Arabs and Muslims generally, the implications of a growing Muslim population and a government obsessed with its “war on terror” are frightening for American civil liberty. In order to contain the potential terror that it will have imported, Washington would impose a total police state.

The war must also end in order that bankrupt Washington can borrow abroad the money it needs to bail out the US economy.

The budget authority for the annual out-of-pocket costs of the war have been rising by $150 billion per year, an addition to the budget deficit that must be financed by borrowing abroad.  A sane person might think that a government, such as the US, in need of foreign loans to save its economy, would jump at the change to get its troops out of Iraq, where they are not wanted.

Instead the Bush regime has been struggling all year with the Iraq government in order to secure an agreement that lets the US government continue to hemorrhage hundreds of billions of dollars by keeping American troops in Iraq.

The Korean War ended 55 years ago, and the US still has troops in Korea.

Germany was defeated in 1945, and the US still has troops in Germany.

A country that must go hat in hand to its creditors must first look to where costs can be cut.  Annual military spending of $700 billion is certainly a good place to start.

But the US government has far more hubris than intelligence and is on its way to being a failed state that has to print money to pay its bills.

It is not too late for the US to save itself and the dollar standard, but it would require a rapid transition from arrogance to humility.  The rest of the world can bring America down by not lending to us, in which case neither the trade nor budget deficits could be financed.

The world does not want to bring us down in this way.  Our creditors would like to preserve as much as possible the values of their trillions in US dollar assets.  This is easier done if the dollar remains the reserve currency.  Therefore, the US government has an opportunity to go to its creditors with a plan.

This is what the plan must be:  A declaration that repudiates the neoconservative goal to achieve US hegemony over the world; a budget that reduces annual US borrowing needs by several hundreds of billions by ending the Afghan and Iraq wars, by closing overseas military bases, and by cutting military spending; a new corporate tax system that brings back American jobs, manufacturing capability, and export potential by taxing US corporations’ worldwide profits according to the value-added in the US.

Such a plan would demonstrate that the US respects the sovereignty and aspirations of other countries and is willing to cooperate peacefully with others as an occupant of what the Russian president has termed “our common house.”  Such a plan would demonstrate that the US government has come to the realization that there is a limit to its borrowing capacity and the loans that it can service and is prepared to put first things first.  Such a plan would show that the US can curtail its unsustainable dependency on imports without erecting a wall of tariffs.

If the US had the leadership to approach its creditors with such a plan, a sigh of relief would emit from the rest of the world.  Many of the economic hardships that Americans currently face could be avoided, and the prospect of a hyper-inflationary depression would recede.

Such a favorable outcome requires that the government in Washington give up the delusion that Americans are an “indispensable people” who have a monopoly on virtue that gives them claim to hegemony over the world.

PAUL CRAIG ROBERTS was Assistant Secretary of the Treasury in the Reagan administration. He is coauthor of The Tyranny of Good Intentions.He can be reached at: PaulCraigRoberts@yahoo.com

 

 

 

 

 

More articles by:

Paul Craig Roberts is a former Assistant Secretary of the US Treasury and Associate Editor of the Wall Street Journal. Roberts’ How the Economy Was Lost is now available from CounterPunch in electronic format. His latest book is The Neoconservative Threat to World Order.

Weekend Edition
August 17, 2018
Friday - Sunday
Daniel Wolff
The Aretha Dialogue
Nick Pemberton
Donald Trump and the Rise of Patriotism 
Joseph Natoli
First Amendment Rights and the Court of Popular Opinion
Andrew Levine
Midterms 2018: What’s There to Hope For?
Robert Hunziker
Hothouse Earth
Jeffrey St. Clair
Roaming Charges: Running Out of Fools
Ajamu Baraka
Opposing Bipartisan Warmongering is Defending Human Rights of the Poor and Working Class
Paul Street
Corporate Media: the Enemy of the People
David Macaray
Trump and the Sex Tape
CJ Hopkins
Where Have All the Nazis Gone?
Daniel Falcone
The Future of NATO: an Interview With Richard Falk
Cesar Chelala
The Historic Responsibility of the Catholic Church
Ron Jacobs
The Barbarism of US Immigration Policy
Kenneth Surin
In Shanghai
William Camacaro - Frederick B. Mills
The Military Option Against Venezuela in the “Year of the Americas”
Nancy Kurshan
The Whole World Was Watching: Chicago ’68, Revisited
Robert Fantina
Yemeni and Palestinian Children
Alexandra Isfahani-Hammond
Orcas and Other-Than-Human Grief
Shoshana Fine – Thomas Lindemann
Migrants Deaths: European Democracies and the Right to Not Protect?
Paul Edwards
Totally Irrusianal
Thomas Knapp
Murphy’s Law: Big Tech Must Serve as Censorship Subcontractors
Mark Ashwill
More Demons Unleashed After Fulbright University Vietnam Official Drops Rhetorical Bombshells
Ralph Nader
Going Fundamental Eludes Congressional Progressives
Hans-Armin Ohlmann
My Longest Day: How World War II Ended for My Family
Matthew Funke
The Nordic Countries Aren’t Socialist
Daniel Warner
Tiger Woods, Donald Trump and Crime and Punishment
Dave Lindorff
Mainstream Media Hypocrisy on Display
Jeff Cohen
Democrats Gather in Chicago: Elite Party or Party of the People?
Victor Grossman
Stand Up With New Hope in Germany?
Christopher Brauchli
A Family Affair
Jill Richardson
Profiting From Poison
Patrick Bobilin
Moving the Margins
Alison Barros
Dear White American
Celia Bottger
If Ireland Can Reject Fossil Fuels, Your Town Can Too
Ian Scott Horst
Less Voting, More Revolution
Peter Certo
Trump Snubbed McCain, Then the Media Snubbed the Rest of Us
Dan Ritzman
Drilling ANWR: One of Our Last Links to the Wild World is in Danger
Brandon Do
The World and Palestine, Palestine and the World
Chris Wright
An Updated and Improved Marxism
Daryan Rezazad
Iran and the Doomsday Machine
Patrick Bond
Africa’s Pioneering Marxist Political Economist, Samir Amin (1931-2018)
Louis Proyect
Memoir From the Underground
Binoy Kampmark
Meaningless Titles and Liveable Cities: Melbourne Loses to Vienna
Andrew Stewart
Blackkklansman: Spike Lee Delivers a Masterpiece
Elizabeth Lennard
Alan Chadwick in the Budding Grove: Story Summary for a Documentary Film
FacebookTwitterGoogle+RedditEmail