The Road to Imperial Bankruptcy
"US global power, as presently conceived by the overwhelming majority of the US establishment, is unsustainable. The empire can no longer raise enough taxes or soldiers, it is increasingly indebted, and key vassal states are no longer reliable." Anatol Lieven
March 2, 2009
By Rob Lafferty
From 1950 through 1980, each successive American President could take credit for reducing the national debt created by the Great Depression and World War II. Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford and Carter all left behind a similar legacy of paying down our debts. Even during the escalation of the Southeast Asia conflict during the Nixon years the size of the debt compared to growth in the economy continued to decrease. Under Reagan and Bush I, however, that debt rose sharply every year until peaking in 1992.
By themselves, those two presidents used "Reaganomics" to wipe out 40 years of progressive debt reduction. When Clinton took office the debt-to-GDP ration was right back at the levels Eisenhower inherited in 1952; over the next eight years his administration managed to lower it slightly.
Eight years of Bush II under the guidance of VP Cheney put an end to that trend. Our debt rose each year until it surpassed the 1992 peak. The $5.7 trillion debt Bush inherited is now over $10 trillion. In his first six years in office Bush raised the limit on the national debt on four different occasions, to a ceiling of $9 trillion which it then ignored. Instead of cutting government spending or improving the efficiency of government programs, the Bush/Cheney team created the largest government in our history, threw at least a trillion dollars away by invading Iraq and paid for it all with borrowed money.
They did, however, cut to the bone one of the few things the federal government once did well regulate interstate commerce. The Securities and Exchange Commission was created in 1934 to keep financial wizards from manipulating markets and stealing from investors. For the past two decades the agency has failed that task completely, allowing thieves like Bernie Madoff to defraud thousands of people out of billions of dollars over two decades.
A smart fellow named Harry Markopolos did some investigating and tried to warn the SEC about Madoff’s scam for eight years but was ignored. According to Markopolos, the scam succeeded because of incompetent people who work closely with the same people they're supposed to regulate. That would include Madoff, who was asked to advise SEC officials on several occasions and spoke publicly about his close ties to the agency.
“It took me five minutes of research to know I was looking at fraud,” Markopolos said of his investigation in 2000. “It took me four hours of mathematical modeling to prove it.”
“My experiences ... lead me to conclude that SEC securities lawyers, if only through their investigative ineptitude and financial illiteracy, colluded to maintain large frauds such as the one to which Madoff later confessed,” he added. "Madoff had a lot of help.”
When you gut the resources of a government agency and fill staff positions with unqualified appointees, you'll get exactly the kind of government that Reagan condemned. He achieved legendary status for that bit of political theater but the reality of his administration created a larger, more expensive and less effective federal government. Bush I continued that legacy, Clinton took advantage of it, and Bush II expanded it beyond Reagan’s wildest dreams.
Then there's the national annual deficit, which is a polite way to describe how our government mirrors our national habit of spending more money than we earned. During the Clinton years government coninued to grow in size but the annual deficit went from $300 billion each year to $0 and beyond, achieving a small surplus in his last year of office.
From the beginning of the Bush administration deficit spending returned and grew steadily. Four years later it peaked at over $700 billion. The cost of the Obama recovery plan is close to the same amount Bush overspent in 2004, yet few people remember what we gained as a nation from all that expense because only a privileged few gained anything at all.
There's a simple source of ready cash available to solve much of our financial problems but it's doubtful we'll ever dip deeply into that source. To do so, we would need to regain our national courage and become a peace-loving nation instead of the war-liking aggressors we've been for more than a century. America still maintains more than 700 military bases in 130 countries around the world. More than 800,000 US citizens and soldiers live on those bases and we employ almost as many foreign workers. That costs each taxpayer a lot of money; by some standards of measurement, more than 50¢ of every $1 spent by our government goes towards defense and the military.
There's no honest estimate of those costs, however, as a lot of those expenses are classified while others are hidden in plain sight. The cost of keeping soldiers in Afghanistan and Iraq has never been in the national budget, because the neoconservative believers Cheney brought into power didn't want Americans to contemplate the true price of an American Empire in the Middle East. They treated the supplemental budget requests that funded the occupation just as they treated the caskets of soldiers killed in action keep them out of the spotlight and out of people's minds.
Those were dishonorable and dishonest actions by people who took over a Republican party that was once admired for honor and integrity. Sadly, the truth behind that reputation faded away long ago. The GOP may find its way back to a set of principles based in reality, but not until it drops the failed practices of the past three decades.
They don't seem too anxious to make big changes just yet. A lot of people out there in the midst of recession aren't making any changes, either. Enough people still spend big money for sporting events that The Washington Redskins felt secure enough to offer one player a $41 million “signing bonus” plus another $6 million per year to play football. And just tonight Serena Williams was paid $400,000 for one day of winning at tennis before a full stadium of spectators.
It has been said many times before, but apparently not enough: this is the same path that Rome followed during its last days of Empire. Perpetual warfare, an economy based on excessive consumption, and the distortion of human value. Imperialism should be resting on the same garbage heap of history as communism, consumerism and the divine right of kings. The days of Imperial America may be closing, but consumerism continues to live at the heart of the American way of life.
To paraphrase our newest President, changing our history of spending what little money we have on things we don't need is one change that few Americans are ready to believe in. By and large, we would rather go broke first and it looks like we'll have the chance to make that choice very soon.
Rob Lafferty is a former editor of the Haleakala Times. He can be reached via email at firstname.lastname@example.org