With a credit card, you have a whole lot of financial convenience, say the credit card companies but when the spending is more than the limit you are to avail, the whole lot of convenience turns into a whole lot of worries and it’s these worries that kill you. So maxing out your credit card means a financial death wish. Beware guys! You have duly been warned!
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THE US MAXES OUT ITS CREDIT CARD
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by Eric Margolis
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The US dollar sank further last week and gold hit $1,500 an ounce, frightening investors and destabilizing financial markets. A leading credit rating agency warned the US AAA rating might be downgraded.
While Rome burned, President Obama and the Republican-controlled US Congress traded childish taunts and hot air. Both parties refused to tell Americans the painful truth: government’s yawning $1.4 trillion US budget deficit had to 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. They want to cut health, education and welfare, all three sacred cows to the Democrats, while increasing military spending when 40 million Americans draw government food aid.
This dishonest 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.
Few American politicians 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% on education; and 23% on everything else.
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 50% of 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.
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.
In reality, 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 needed.
President George W. Bush waged two wars, cut taxes, and spent billions in farm and medical subsidies without funding them through tax increases or spending cuts. These costs were simply loaded on to America’s huge national debt. If American taxpayers had to actually pay for their $1.6 trillion wars in Afghanistan and Iraq, these conflicts would quickly end.
President Lyndon 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, commodity speculators, and China’s overheated economy are fueling the rising tide of world inflation.
The subject of modest cuts from the sacred cow of military spending is being timidly raised by politicians of both parties. But they are terrified of being accused of the ultimate sin in hyperpatriotic US politics, being unpatriotic and “not supporting our boys.”
Yet unless the Pentagon’s budget is cut – perhaps by as much as half or more – the US, dangerously top-heavy with debt, may capsize. History amply shows more empires done in by poor finances and debt than invasion by enemies.
Alas, America’s governing system, dominated as it is by such powerful special interests as the military-industrial complex, Wall Street, and agriculture, can’t seem to escape from the national addiction to war and debt.
As my friend Arnaud de Borchgrave writes, while the US has spent $1.5 trillion on its Afghan and Iraq Wars, China is using US interest payments to win friends and customers around the world.
copyright Eric S. Margolis 2011
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