America Is Running Out of Time
By PAUL CRAIG ROBERTS
George W. Bush will go down in history as the president who fiddled while
America lost its superpower status.
Bush used deceit and hysteria to lead America into a war that is bleeding
the US economically, militarily, and diplomatically. The war is being fought
with hundreds of billions of dollars borrowed from foreigners. The war is
bleeding the military of troops and commitments. The war has ended the US claim to
moral leadership and exposed the US as a reckless and aggressive power.
Focused on a concocted "war on terrorism," the Bush administration diverted
money from the New Orleans levees to Iraq , with the consequence that the US
now has a $100 billion rebuild bill on top of the war bill.
The US is so short of troops that neoconservatives are advocating the use of
foreign mercenaries paid with US citizenship.
US efforts to isolate Iran have been blocked by Russia and China , nuclear
powers that Bush cannot bully.
The Iraqi war has three beneficiaries: (1) al Qaeda , (2) Iran and (3) US war
industries and Bush-Cheney cronies who receive no-bid contracts.
Everyone else is a loser.
The war has bestowed on al Qaeda recruits, prestige, and a training ground.
The war has allied Iran with Iraq 's Shi'ite majority.
The war has brought soaring profits to the military industries and the firms
with reconstruction contracts at the expense of 20,000 US military
casualties and tens of thousands of Iraqi civilian casualties.
The Republican Party is a loser, because its hidebound support for the war
is isolating the party from public opinion.
The Democratic Party is a loser, because its cowardly acquiescence in a war
that is opposed by the majority of its members, is making the party
The latest polls show that a majority of Americans believe the US cannot win
against the Iraq insurgency. The majority support withdrawal and the
redirection of war spending to rebuilding New Orleans . Despite the clarity of the
public's wishes, the Republican Party continues to support the unpopular war.
With the exceptions of Reps. Cynthia McKinney and John Conyers, Democrats
fled the scene of the Sept. 24 antiwar rally in Washington DC . The cynical
Democrats are apparently owned by the same interest groups that own the
Republicans and are refusing the mantle of majority party that the electorate is
offering to the party that will end the war.
The Bush administration is churning out red ink in excess of $1 trillion
annually. The federal budget deficit is approaching $500 billion. The US trade
deficit is approaching $700 billion.
The budget deficit is being financed by foreigners, primarily Asians who now
hold enough US government debt to exercise power over US interest rates and
the value of the dollar whenever they decide to use the power that Bush has
placed in their hands.
The trade deficit is being financed by turning over the ownership of US
assets and future income streams to foreigners, making Americans forever poorer
from the loss of accumulated wealth.
For the time being, China is willing to accumulate US assets as a way of
taking over our consumer markets, attracting US manufacturing industry with
cheap labor subsidized by artificial currency values, and gaining our technology.
China 's strategy is to over-value the US dollar in order to encourage the
transfer of US economic capabilities to China . China 's strategy gives
artificial value to the dollar and keeps US interest rates at an artificial low.
The values of US stocks, bonds, and real estate depend on the support that
Asians' economic strategies provide the dollar and US interest rates. As Asia
achieves its goal of preeminence in manufacturing, innovation, and product
development, the strategy will change. Once China completes its acquisition of
US capabilities, it will no longer have a reason to support the dollar.
When the dollar goes, it will affect costs, profits, interest rates and
living standards in dramatic ways. Costs and interest rates will soar, and
profits, living standards, equity values, bond prices and real estate will plummet.
These unpleasant events await only Asia's decision to curtail its support
for US red ink. That will happen when this support no longer serves Asia 's
When Asia pulls the plug on the dollar, the US government will find that
monetary and fiscal policy are powerless to offset the consequences.
Compared to US budget and trade deficits, terrorists are a minor concern.
The greatest danger that the US faces is the dollar's loss of reserve currency
role. This would be an impoverishing event, one from which the US would not
An intelligent government sincerely concerned with homeland security would
find a way to halt the global labor arbitrage that is stripping the American
economy of high value-added jobs and manufacturing capability, thereby causing
the US trade deficit to explode. The loss of tax base that results when US
companies outsource jobs and relocate production abroad makes it ever more
difficult to balance a budget strained by war, natural disasters, and
demographic impact on Social Security and Medicare.
Global labor arbitrage is rapidly dismantling the ladders of upward mobility
and thereby endangering American political stability. This threat is far
greater than any Osama bin Laden can mount.
Time is running out for Republicans and Democrats to escape from the
distraction of a pointless war and to focus on the real threats that endanger the
United States of America .
Paul Craig Roberts has held a number of academic appointments and has
contributed to numerous scholarly publications. He served as Assistant Secretary of
the Treasury in the Reagan administration. His graduate economics education
was at the University of Virginia , the University of California at Berkeley ,
and Oxford University . He is coauthor of The Tyranny of Good Intentions. He
can be reached at: firstname.lastname@example.org_