Re: Obama's tax increases...how much will
by
Issywise
04/22/2008, 2:24 PM #
One thing that should be addressed by tax increases is the 9 plus trillion dollar national debt, twenty two percent of which is held by foreigners--most especially the central banks of Asian trade powers (China and Japan) and oil states. The central banks who stepped into the treasury bond market in a big way when Bush's tax cuts started producing bigger deficits and pressuring government bond rates upward. They stepped in to keep our bonds cheap--purchasing debt at an artificially low interest rate. They're making a trade--they keep the interest on our on-going national borrowing low in return for us permitting them to profit by huge trade imbalances.They kickback some of that imbalance to fund our ongoing government operation in order to maintain the flood of capital from our economy to theirs.
There have been three states that have exercised economic hegemony since 1500 and before our current turn--Spanish, Dutch and English. It is the privilege and temptation of an economic hegemon to draw-in capital from trading partners to fund current government operations. All three of our hegemonic predecessors did it. It was the practice that undid all of them.
Delegating the power to interfere with current government operations to a foreign state is a bad idea. The most recent example is, of course, England. After WWI, the British were forced to bring-in American oil companies as partners in the resources under soil subject to British rule. They didn't want to do it, but their national debt to America was too strong a lever to be resisted.
We're getting the same treatment only worse. In time of peace, we are depending on on overseas powers for the actual funding of day-to-day government operations. Jobs and capital flow toward the Asian powers, in return for which, they kickback below actual market purchases of our accumulating national IOUs. We seem paralyzed as the cost of the most important commodity in the world, oil, double and doubles again. A gallon of gas was $1.19 when GW Bush took office.
The administration's defense of the practice of borrowing to fund day-to-day government operations claims the creditors won't act "recklessly" because they are holding our debt, are our trading partners and they won't want to undo their sweet deals.. So good-so far for politicians who want to deliver more services to voters than the voters want to pay for.
Unfortunately, the bond interest has a set value payable in dollars. If the dollar skids far enough, any reasonable creditor will switch to trading in other currencies and cease to buy bonds tied to them: certainly, they will quit subsidizing below market interest rates.
So someday in the future, we get hit with a double whammy. Bond rates jump to market value in a market that is soaring because demand has dried up. Worse, all of the sudden we'll be in a crisis over the on-going operation of government. We won't have the income to run the government.We can't borrow ourselves out of a credit-currency panic. So a panic congress will have to do something. Who believes congress will act responsibly at such times.
Add to this one more component--human nature as it applies to the captains of finance. In the early 1900s, the bankers at JP Morgan and Company wanted American ascendancy to replace British. They worked at it purposefully and over decades. Simply put, unless our financial leaders and the American government change the debt-run government policy soon, the counterparts of the Morgan bankers now running the central banks in China, Japan and in oil states will sooner or later inevitably move against us--if for no other reason than that human nature dictates they do.
So Skeppy, if your one of those guys who thinks that taxes are the worst thing in the world, I suggest you look at the economic policy that is mostly tied to the Republican Party of the last quarter century to see something worse. When the recklessness finally catches up to us, the pain will last for decades and (if the Spanish and Dutch are any example) perhaps for centuries.
This crap that taxes are the sole and only factor to consider is the fundamental problem that has created this mess: our gormless politicians are responding to our own shortsightedness. Debt may not be a sin anymore, as it was once, but it is a HUGE issue we have to deal with.
