Some economists think that President Obama is borrowing the United States into an eventual bankruptcy. They point to the huge expansion of the U.S. government debt during his administration. But the reparations currently being negotiated at the UN Climate Control Conference in Copenhagen may end up dwarfing payments to China on his budget deficits.
Specifically, the Washington Post reported on December 17 that Europe has offered that the developed countries (United States, Europe, Japan, etc.) would pay the developing countries (China, India, Africa, etc.) $100 billion per year by 2020 and that the developing countries have agreed to accept that offer:
Ethiopian Prime Minister] Zenawi said he would accept $30 billion a year in the short term, rising to $100 billion a year by 2020, for poor countries worldwide. This was seen as a key concession by developing countries, which had previously spurned that figure -- originally proposed by European countries -- as too low.Meanwhile, on December 17 Secretary of State Clinton told reporters that the U.S. has offered to pay $10 billion of the $30 billion per year being offered by 2012. If the 1/3 ratio continues, the Obama administration is offering that the U.S. will pay $33 billion per year by 2020.
It is not clear how the United States would be able to afford to pay such sizable reparations. The United States is currently running chronic trade deficits, and reparations either have to come out of exports or be borrowed from abroad.
President Obama is aware of the danger of an American government bankruptcy. ABC News reported on December 16:
President Obama told ABC News’ Charles Gibson in an interview that if Congress does not pass health care legislation that will bring down costs, the federal government “will go bankrupt.”Maybe, just maybe, this might not be the best time to saddle the U.S. government with a huge new debt.
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