The 16 trillion dollar question
The American economy is a rapacious beast; it constantly needs new territory to feed its growth, if that territory is not forthcoming, it will quickly eat itself alive
It may have been the most cited figure in the US Presidential election race; the US national debt currently stands at $16.3 trillion.
The debt accumulated under Barack Obama’s first term is not just the greatest amount of national debt accumulated by any US President in the nation’s history; it is more than the cumulative debt of all American Presidents since WWII, more than the debt accumulated by any leader, in the history of the world. There is no sign that going into his second term, Barack Obama will attempt to cut US debt, or even slow spending.
The existing debt currently equates to a debt burden of almost $200,000 for each American family, more than the average price of a house in the United States. This unprecedented level of debt is however only a fraction of the problem faced by America; the real problem is Obama has no plan to pay it back.
If your economic vision includes using debt and structural deficit as an auxiliary tool for economic support, you may be a hard-line fiscal conservative. It was, after all, not Barack Obama who began the trend of running the US economy at significant deficit.
Ronald Reagan was the first President to incorporate deficit spending as an integral part of his economic policy. Reagan’s administration worked hand-in-glove with the economist Arthur Laffer, who put forward the theory that if a government aggressively cuts taxes, while in the short term the Treasury would run at a huge deficit, in the medium to long term it would promote such growth in the economy that it would ultimately lead to a net gain in tax revenue, and more importantly a self-propelling boom in the private sector.
Even Reagan’s Vice President described the theory as “voodoo economics”, but it worked, American manufacturing, industry and small and medium sized business growth came roaring back. Reagan’s economic plan borrowed from the US economy, to invest in its future.
Bill Clinton continued the trend for deficit spending, working closely with the Randian economist and chairman of the Federal Reserve Bank, Alan Greenspan, to promote ever easier liquidity and de-regulated financial services, but most importantly to invest in re-training the US economy from low-tech to high tech.
The fertile bed for new technology that this created in the United States, built around the growing phenomenon of the internet, was so significant to the growth of the American economy, Greenspan described it to Clinton as “like discovering a new planet”. Though Clinton ran up a national debt to $5.5 trillion, the US economy grew by 30% under his tenure as President, the investment largely paid off.
Many blame Reagan and Clinton for the economy that they built being fraught will structural deficiency that would inevitably lead to collapse. What those critics fail to understand is that the American economy is a rapacious beast; it constantly needs new territory to feed its growth, if that territory is not forthcoming, it will quickly eat itself alive, and it did.
It was almost eight years after Bill Clinton left office that the economic model that he and Reagan built began to collapse, eight years is the time in which the administration of George W. Bush had to reinvent the US economy and find new territories for it to feast upon, they tried, and failed. Barack Obama has not even tried.
To repay the $16.3 trillion of US debt, Barack Obama would need to create the economic growth of both Ronald Regan and Bill Clinton combined, and then double it, in four years. The notion that “the green economy” is going to be many times as significant to the future of the US economy as the internet was, and in a quarter of the time, absent the arrival of the greatest invention in the history of mankind is dangerously misguided.
This can only mean one thing, American decline in both comparative and real terms. Not only will the United States cede global power to China and other nations formerly on the periphery of international system, the lives of each American generation will get worse, not better.
The American Dream will be slammed into reverse and the results to the American mind, to the West, and the order of the world will be catastrophic.
Mitt Romney did not appear to have the greatest invention mankind has ever seen up his sleeve, but he at least understands the fundamental truth that you should only borrow, to invest, and if you aren’t investing, you need to curb spending and borrowing immediately.
The world is now increasingly full of prospective citizens, people and companies looking for the most fertile place to settle and do business. Most of these citizens will be seeking a high-tech, low tax economy, under Regan and Clinton they would have most likely gone to America, now they would actively avoid the United States and the massive tax burden that each citizen and business inherits.
The most important vote for the future of America will be by feet, not hands, and if the USA cannot retain global competitiveness, then while more people the world over may vote for Obama, the result is that in the future, far fewer will be coming to America.
Ben Harris-Quinney is the Chairman of the Bow Group and Contributing Editor to The Commentator. Follow him on Twitter: @B_HQ
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