Did President Bush Say That the U.S is Broke?

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by: Lawrence York

The Bush Administration angered members of the European Union by its demand to exclude any specific greenhouse gas emission cuts in the final climate agreement due in 2009. The U.S insists that the developing nations, particularly China and India, must also make similar cuts to those demanded of the US. The developing nations argue that they have largely not been responsible for the pollution levels present and that therefore they should not have to bear an equal burden. The negotiations have not reached dead-end though; delegates are continuing to negotiate under the assumption that new U.S leadership in 2009 will actually lead and not inhibit progress toward this most important global issue.

President Bush recently stated that he takes the issue seriously. But he also made a 'freudian slip' that may be the key to understanding his administration's seemingly neanderthal stance on an issue all his allies agree on. In his words:

And so, absolutely I take the issue seriously. But I want to make sure that we're effective in what we do, and secondly, do not wreck our economy in whatever we do. See, it is hard to develop the technologies necessary to be able to make sure our standard of living remains strong and deal with greenhouse gases if you're broke. If you don't have any money, it is really hard to develop new technologies. And so we need to be prosperous for a lot of reasons, primarily so our citizens can have a good life; but also so that we're wealthy enough to make the investments necessary to deal with greenhouse gases.

The President inadvertently acknowledged the seriousness of the U.S deficit that now rapidly approaches $10 trillion. He said he the U.S can't afford to dump old technologies and increase our cost of doing business. He actually said he was making sure not to 'wreck our economy' and used the word 'broke' in describing the situation confronting the U.S today:

See, it is hard to develop the technologies necessary to be able to make sure our standard of living remains strong and deal with greenhouse gases if you're broke. If you don't have any money, it is really hard to develop new technologies.

The president went on advocate nuclear power as the preferred solution to the greenhouse gas problem.

Did the rest of the press not hear his words? Can any Republican now bash a Democrat for saying the U.S needs to raise taxes? Clearly the U.S middleclass and poor can not pay more, so there seems to be two choices: cut spending or raise taxes--if indeed the U.S is broke.

David Walker, Comptroller General of the US [GAO] has said the US is. He detailed the dire straits of the US in a powerpoint presentation entitled: "Saving our Future Requires Tough Choices." In it he says that doing nothing is not a choice. He highlights a looming insovency, a point of departure President Bush was obviously referencing:

How Big is Our Growing Fiscal Burden?

  • Total -major fiscal exposures: $50.5 trillion
  • Total household net worth: $53.3 trillion
  • Burden/Net worth ration: 95 percent

Burden

  • Per person: $170,000
  • Per full-time worker: $400,000
  • Per household: $440,000

Income

  • Median household income: $46,326
  • Disposable personal income per cap: $31,519

Source: GAO-07-1275CG

So we are down to preverbial "Guns or Butter" choice. President Bush has chosen 'Guns.' Unfortunately, guns are a zero sum gain in the sense that they are either stockpiled or destroyed in battle and contribute nothing to a productive life. Like digging a ditch and filling it back up over and over, you accomplish little or no gain. Indeed the calculus is that a nation that spends an excessive amount on defense stockpiling weapons of mass destruction it forfeits that expenditure for otherwise commercially productive goods to benefit its citizens.

If you think about the U.S's financial problem. The solution set to the financial calamity has only four (4) possible solutions:

  • Default
  • Raging Inflation
  • War
  • Growth

We do not believe the U.S can consider defaulting on its debt and we have commented previously about U.S foreign policy initiatives versus implications for U.S debt service. We likewise do not think the U.S can choose inflation, except as a last resort as it would damage an already frail economy--we have commented about prospects of U.S inflation as well. And true, the U.S is in a regional war, but not a war resulting from default. Besides, a nation can continue to borrow so long as borrowers will lend, and we do not seem to be near a juncture where Treasuries are not wanted. But of course a war would not likely be faught as a result of default in any case. Instead it would more likely result from escalated trade tensions and perhaps economic sanctions related to deviant behavior--the typical mask to disguise intent and perhaps a play to gain spoils. But again, we argues that war is not a viable U.S solution as the cost/benefit does not resolve the U.S financial problem. We argue that growth is the only viable solution. Not growth of defense technologies, but growth of technologies people need to improve their circumstance. For example, bio-tech investment on stem cell research, cancer, aging, and auto-immune deseases all are desireable growth aims. As are investment and subsidy on alternative energy (solar, hydrogen), green house emission control devices, and clean water technologies. The point is the whole world wants and needs better solutions, in President Bush's words, so that 'their citizens can have a good life.

The U.S is an innovation leader, but has taken the wrong course because it lacks farsighted leadership. President Bush operates from a false point of departure rooted in his religious upbringing that has spilled over into his leadership style. His religion advocates an exclusionary elitism advocating that "unless you believe as I do you can not ...." which sends men on crusades to convert the non-believers, an politic at once offensive spirtually, culturally and politically. Likewise the U.S Congress made up almost entirely of lawyers pander to win elections rather than passing legislation for the good of the nation. For them party politics is a brotherhood that trumps all other reason and economic reality. The result is abandonment of fiscal responsibility, breach of fiduciary duty, and management by crisis.

Unfortunately President Bush's 'freudian slip,' may become the tale-tell of a U.S undoing. It has a slim 5% operational (equity) margin, before the final tab is tallied: for Mr. Bush's Iraq war, for the losses resulting from the U.S housing debacle, and for the unfunded state, local, and federal unfunded pension liabilities. Indeed the U.S is moving toward and inevitable financial showdown and time is a waisting to take corrective action. Their is an economic war being fought, and no consensus in the U.S Government appears care about it. Will crisis have to come to the world for the U.S to respond?

We believe that the U.S must refocus its energies on domestic growth and become a partner with its businesses. Instead of fear and devisiveness, opportunity and inclusiveness must rule the day. For America to hold its ground it needs a new Lincoln, a new Kennedy, or even a benevolent dictator is required. The U.S must stop fighting itself, regain its focus (on itself) and begin to compete with commercial invention if it is to salvage its standing in the world. We disagree with Mr. Bush. The U.S does have money to develop the needed technologies. It simply has made poor choices.