Sixty years ago, Washington DC was consumed with hysteria over the Red Menace - the communist threat that would soon destroy America unless drastic action was taken immediately to thwart the sinister, amorphous evil which had already permeated American universities, entertainment, government and unions. Of course the fear mongering was all BS and there never was any danger of a communist take over, much less any threat.
Today, the reactionary right has a new Red Menace, as Mitch Daniels - George Will's favorite fear monger, described it to CPAC last week: "We face an enemy, lethal to liberty ... I refer, of course, to the debts our nation has amassed for itself over decades of indulgence. It is the new Red Menace, this time consisting of ink."
Oh really?
Although Mitch Daniels purports to be a serious thinker, he conveniently ignores all the facts which contradict his agenda. First and foremost, how does the debt service, i.e., interest cost, of our federal debt compare to other major countries as a fraction of our national income, i.e., GDP? In other words, what is our debt service to income ratio as compared to say Germany, Japan or the UK? Glad you asked because that is exactly the question any bank or other creditor would ask you before approving your loan.
U.S. spending on debt service accounts for 1.7 percent of its GDP compared with 2.5 percent for Germany, 2.6 percent for the United Kingdom . . . while Japan’s is 2.9 percent and Brazil 5.2 percent.
http://www.bloomberg.com/...
The inconvenient truth for Mitch, George and the rest of the boys, is that the U.S. does not have any problem managing its debt. In fact, lenders around the world are fighting each other to buy our debt:
Demand for Treasuries remains close to record levels at government debt auctions. Investors bid $3.04 for each dollar of bonds sold in the government’s $178 billion of auctions last month, the most since September, according to data compiled by Bloomberg. Indirect bidders, a group that includes foreign central banks, bought a record 71 percent, or $17 billion of the $24 billion in 10-year notes offered on Feb. 9.
Foreign holdings of Treasuries have increased 18 percent to $4.35 trillion through November. China, the largest overseas holder, has increased its stake by 0.1 percent to $895.6 billion, and Japan, the second largest, boosted its by 14.6 percent to $877.2 billion.
http://www.bloomberg.com/...
And here is another fact for Reagan-worshiping RepubliCons to "refudiate": interest rates on 10-year U.S. Treasury bonds, which are market driven, are half as much under Obama as they were under Reagan. Obviously, the free bond market thinks Obama's deficits are much less risky than Reagan's were.
http://finance.yahoo.com/...
Right now, we need to increase the federal deficit to drive the economy to full employment. And what will be the result of increasing the deficit now? How about a balanced budget:
The U.S. produced four budget surpluses from 1998 through 2001, the first since 1969, as the expanding economy, declining (interest) rates and a boom in stock prices combined to swell tax receipts.
But the sad truth is that Washington is now hell bent on another hysteria that will damage our country and its economy condemning millions of Americans to long-term unemployment and financial ruin, all to satisfy the myth that cutting federal spending will produce prosperity. It didn't work in 1937 and it won't work now.