Financial Problems in America

June 30, 2011 by · Leave a Comment 

By Justin Webb

Is America in denial about the extent of its financial problems, and therefore incapable of dealing with the gravest crisis the country has ever faced?

This is a story of debt, delusion and – potentially – disaster. For America and, if you happen to think that American influence is broadly a good thing, for the world.

The debt and the delusion are both all-American: $14 trillion (£8.75tn) of debt has been amassed and there is no cogent plan to reduce it.

The figure is impossible to comprehend: easier to focus on the fact that it grows at $40,000 (£25,000) a second. Getting out of Afghanistan will help but actually only at the margins. The problem is much bigger than any one area of expenditure.

The economist Jeffrey Sachs, director of Columbia University’s Earth Institute, is no rabid fiscal conservative but on the debt he is a hawk:

“I’m worried. The debt is large. It should be brought under control.

The longer we wait, the longer we suffer this kind of paralysis; the more America boxes itself into a corner and the more America’s constructive leadership in the world diminishes.”

The author and economist Diane Coyle agrees. And she makes the rather alarming point that the acknowledged deficit is not the whole story.

The current $14tn debt is bad enough, she argues, but the future commitments to the baby boomers, commitments for health care and for pensions, suggest that the debt burden is part of the fabric of society:

“You have promises implicit in the structure of welfare states and aging populations that mean there is an unacknowledged debt that will have to be paid for by future taxpayers, and that could double the published figures.”

Richard Haass of the Council on Foreign Relations acknowledges that this structural commitment to future debt is not unique to the United States. All advanced democracies have more or less the same problem, he says, “but in the case of the States the figures are absolutely enormous”.

Mr Haass, a former senior US diplomat, is leading an academic push for America’s debt to be taken seriously by Americans and noticed as well by the rest of the world.
He uses the analogy of Suez and the pressure that was put on the UK by the US to withdraw from that adventure. The pressure was not, of course, military. It was economic.

Britain needed US economic help. In the future, if China chooses to flex its muscles abroad, it may not be Chinese admirals who pose the real threat, Mr Haass tells us. “Chinese bankers could do the job.”

Because of course Chinese bankers, if they withdrew their support for the US economy and their willingness to finance America’s spending, could have an almost overnight impact on every American life, forcing interest rates to sky high levels and torpedoing the world’s largest economy.

Not everyone accepts the debt-as-disaster thesis.

David Frum is a Republican intellectual and a former speech writer to President George W Bush.

He told me the problem, and the solution, were actually rather simple:

“If I tell you you have a disease that will absolutely prostrate you and it could be prevented by taking a couple of aspirin and going for a walk, well I guess the situation isn’t apocalyptic is it?

“The things that America has to do to put its fiscal house in order are not anywhere near as extreme as what Europe has to do. The debt is not a financial problem, it is a political problem.”

Mr Frum believes that a future agreement to cut spending – he thinks America spends much too big a proportion of its GDP on health – and raise taxes, could very quickly bring the debt problem down to the level of quotidian normality.

‘Organised hypocrisy’

I am not so sure. What is the root cause of America’s failure to get to grips with its debt? It can be argued that the problem is not really economic or even political; it is a cultural inability to face up to hard choices, even to acknowledge that the choices are there.

I should make it clear that my reporting of the United States, in the years I was based there for the BBC, was governed by a sense that too much foreign media coverage of America is negative and jaundiced.

The nation is staggeringly successful and gloriously attractive. But it is also deeply dysfunctional in some respects.

Take Alaska. The author and serious student of America, Anne Applebaum makes the point that, as she puts it, “Alaska is a myth!”

People who live in Alaska – and people who aspire to live in Alaska – imagine it is the last frontier, she says, “the place where rugged individuals go out and dig for oil and shoot caribou, and make money the way people did 100 years ago”.

But in reality, Alaska is the most heavily subsidised state in the union. There is more social spending in Alaska than anywhere else.

To make it a place where decent lives can be lived, there is a huge transfer of money to Alaska from the US federal government which means of course from taxpayers in New York and Los Angeles and other places where less rugged folk live. Alaska is an organised hypocrisy.

Too many Americans behave like the Alaskans: they think of themselves as rugged individualists in no need of state help, but they take the money anyway in health care and pensions and all the other areas of American life where the federal government spends its cash.

The Tea Party movement talks of cuts in spending but when it comes to it, Americans always seem to be talking about cuts in spending that affect someone else, not them – and taxes that are levied on others too.

And nobody talks about raising taxes. Jeffrey Sachs has a theory about why this is.

America’s two main political parties are so desperate to raise money for the nation’s constant elections – remember the House of Representatives is elected every two years – that they can do nothing that upsets wealthy people and wealthy companies.

So they cannot touch taxes.

In all honesty, I am torn about the conclusions to be drawn. I find it difficult to believe that a nation historically so nimble and clever and open could succumb to disaster in this way.

But America, as well as being a place of hard work and ingenuity, is also no stranger to eating competitions in which gluttony is celebrated, and wilful ignorance, for instance regarding (as many Americans do) evolution as controversial.

The debt crisis is a fascinating crisis because it is about so much more than money. It is a test of a culture.

It is about waking up, as the Americans say, and smelling the coffee.

And – I am thinking Texas here – saddling up too, and riding out with purpose.

BBC News

13-27

Surprising Results of CFR Survey

December 10, 2009 by · Leave a Comment 

What the U.S. Elite Really Thinks About Israel

By Jeffrey Blankfort, Counterpunch

The Council on Foreign Relations is always near the top of the Left’s list of bogeymen that stand accused of pulling the strings of US foreign policy. It is right up there with the Bilderberg Group and the Trilateral Commission, right? Wrong. If that was the case,  those arguing that US support for Israel is based on it being a “strategic asset”  will have a hard time explaining a Pew Research Center survey on America’s Place in the World, taken of 642 CFR members between October 2 and November 16. The Pew poll  not only reveals that the overwhelming majority, two-thirds of the members of this elite foreign policy institution, believes that the United States has gone overboard in favoring Israel, it doesn’t consider Israel to have much importance to the US in the first place.

What can be concluded from the answers to questions that dealt with the Israel-Palestine conflict is that the general public forms its opinions from what it hears and reads in the mainstream media which are largely biased towards Israel while CFR members have greater access to as well as interest in obtaining more accurate information and are less susceptible to pro-Israel propaganda. That apparently not a single US newspaper saw fit to report on the opinions of CFR members, under those circumstances, is not surprising. The evidence:

(1) That on a list of countries that will be the “more important as Americas allies and partners” in the future, just 4 per cent included Israel which placed it in a tie with South Korea and far behind China, 58 per cent, India, 55 per cent, Brazil, 37 per cent, the EU, 19 per cent, Russia, 17 per cent, Japan, 16 per cent, the UK and Turkey, 10 per cent, Germany, 9 per cent, Mexico, 8 per cent, Canada, Indonesia, Australia and France at 5 per cent. CFR voters were allowed to make up to seven selections.(Q19)

(2) When asked which countries would be less important to the US, Israel, at 9 per cent  was behind 22 countries including Canada and Mexico and in the region Turkey, Egypt and Saudi Arabia.(Q20)

(3) What was particularly revealing is that “in the dispute between Israelis and Palestinians,” only 26 per cent of the CFR sided with Israel, compared with 51 per cent of 2000 members of the general public who were polled over the same period. While but 16 per cent of CFR members sided with the Palestinians compared to 12 per cent of the public, 41 per cent of the CFRers sided with “both equally” as opposed to 4 per cent of the public. Supporting neither was 12 per cent of the CFR and 14 per cent of the public. (Q33)

(4) That the CFR has not had a major hand in making US Israel-Palestine policy nor is it in agreement with those who did is strikingly revealed by the response of its members when asked their opinion of US Middle East policies. The problem, according to 67 per cent of CFR members (as compared to 30 per cent of the public) is that the US favored Israeli too much, while only 2 per cent (as opposed to 15 per cent of the public) believed that US policy overly favored the Palestinians.. Twenty-four percent of the CFR believed US policy “struck the right balance” as did 29 per cent of the public. (Q34)

(5) The overwhelming majority of CFR members, 69 per cent, think that Pres.Obama is “striking the right balance” between the Israelis and Palestinians as compared with a slim majority, 51 per cent of the public. Thirteen percent of the CFR believes that Obama is “favoring Israel too much,” as compared with 7 per cent of the public, while 12 per cent thinks he is siding with the Palestinians, a position taken by 16 per cent of the public. (Q35)

Regarding Iran, one detects the same gap between the CFR and the public. Whereas a 64 per cent-34 per cent majority of the polled CFR members see Iran as a major threat to US interests, compared with a 72-20 per cent per cent  majority of the public, only 33 per cent of the CFR  would support an attack on Iran should it get a nuclear weapon as contrasted  with 63 per cent of the public. (Q7)

The percentages are almost reversed when it comes  to Pakistan with 63 per cent of the CFR supporting US military action were “extremists…poised to take over Pakistan,” whereas only 51 per cent of the public would approve such a move. (Q24). This is another indication of the success of Israel’s  porte-paroles in the mainstream media  in  building up the Iran threat while downplaying the potential threats to the stabilty of nuclear-armed Pakistan. The entire Pew survey can be viewed here: http://people-press.org/reports/questionnaires/569.pdf

[Jeffrey Blankfort is a long-time pro-Palestinian activist and a contributor to The Politics of Anti-Semitism. He an be contacted at jblankfort@earthlink.net]