Thursday, December 01, 2005

Declining Status in the World

The midwest has always been known as the industrial engine of our country, and manufacturing jobs have traditionally paid good wages and benefits, which in part helped create a strong middle class. The tide has been turning for some time though, particularly for the auto industry, and the standard of living workers once enjoyed is rapidly disappearing. We’ve lost our industrial edge, and our image and standing in the world have suffered as a result. America is no longer #1 in terms of industrial might.

The U.S. is losing its edge in other areas too. The Christian Science Monitor points to these troubling indicators:
As 2005 draws to a close, foreigners hold about $3 trillion (yes, that's trillion) in US dollars, Treasury bonds, and other government securities such as Fannie Mae mortgages. Two-thirds of this is held by four Asian countries - Japan, China, Taiwan, and Korea. It is a mark of confidence that foreigners are willing to put so much of their money into our money, but the cumulative result is that foreigners are acquiring huge claims on American assets. This is the stuff of nightmares for US economic policymakers worrying about what would happen if the Asians should decide to cash in their dollars all at once. Worse, what if the Asians decided, as the US has sometimes done, to use their economic clout for political purposes?

It’s not just the foreign deficit we need to be worrying about either; our federal deficit has skyrocketed.
It used to be said that budget deficits didn't matter because we owed the money to ourselves. But that is no longer true. Both as a government and a people, we are living beyond our means…

We need to have a national debate about the federal budget. This should not be a repetition of the silly argument in which Republicans accuse Democrats of taxing and spending and Democrats accuse Republicans of neglecting the poor in favor of the rich. The budget is our main tool for allocating resources and setting national priorities and values…

The other part of budgetmaking is taxes. Tax policy is deciding who pays how much for the costs of the budget. Tax policy can also be used for social purposes, that is, the redistribution of wealth…

At the same time, we have to adjust to a changing world. We don't know how to deal with globalization. The Chinese, on their way to becoming a world power, don't know how to deal with the clash between a liberalizing economy and an authoritarian political system. General Motors, long the world's biggest automaker, is threatened in that position not by Ford, not by Volkswagen, but by Japanese Toyota. And this comes on the eve of the 64th anniversary of Pearl Harbor. Better an economic than a military threat, but the irony remains.

An economic threat may be less painful in terms of death and destruction, but how long can we hold onto our military might if we lose our economic superiority? The USSR is a perfect example of a country that lost its military edge when its economy faltered. Is that the future of this country?

And what is the future for millions of Americans who already live in poverty? What about the millions without health care? We need to raise taxes and reduce spending in ways that reflect our national values, but I don’t believe most American’s values include bankrupting our country on the backs of the middle and lower classes while enriching the coffers of corporations and the upper class. We CAN do better for the people in this country. The question is: What are we waiting for?

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