Then George W. Bush took over.
Discussion ensued over the next two years about the consequences of paying off the public debt in toto. It was stirring to hear the Federal Reserve Chair talk about the ramifications of this scenario before Senate committees.
Attending a critical meeting in the Bush administration in November 2002, Treasury Secretary Paul O’Neill warned of impending fiscal crises as he objected to a new round of regressive tax cuts that O’Neill saw as locking in fiscal debt were Bush to tack in the same fiscal direction. O’Neill was fired one month later.
Vice President Dick Cheney cut O’Neill off in the meeting, saying "Reagan proved deficits don't matter. We won the midterms (congressional elections). This is our due" (Ron Suskind, The Price of Loyalty; Simon and Schuster, 2004).
But Reagan had proved no such thing.
As Reagan presided over the catastrophic October 1987 stock market crash, Walter Isaacson noted:
What crashed was more than just the market. It was the Reagan Illusion: the Idea that there could be a defense buildup and tax cuts without a price, that the country could live beyond its means indefinitely. ... As he shouted Hooverisms over the roar of his helicopter ... or doddered precariously through his press conference, Reagan appeared embarrassingly irrelevant to a reality that he could scarcely comprehend. Stripped of his ability to create economic illusions ... he elicited the unnerving suspicion that he was the emperor with no clothes. [Time Magazine, November 2, 1987
pp. 20-21. Quoted in Haynes Johnson, Sleepwalking Though History, pp. 385-386; W.W. Norton, 1991] (It's worth noting that assertions that Reagan was a deregulator of markets is a myth, though he did share with George W. Bush a profound ignorance of policy, and though Reagan had neocon aspirations, they were knocked down after Iran-Contra blew. His true heir is George W. Bush who took the first term of Reagan's and streched it to its absurd and destructive conclusion.)
Now, eight years after the Clinton announcement projecting the end of public debt, we have a $10 trillion national debt and $500 billion projected annual fiscal deficit.
Many wonder whether foreign investors might decide to find greener pastures than twenty-first century America, resulting in dire consequences to the American way of life should this occur.As “old Europe” and Latin America and indeed most of the world engage in schadenfreude, many mainstream intellectuals in America now openly wonder if America is "A Power That May Not Stay So Super."
Greed-and-crony finance, deregulation, corruption, and eight years of nihilistic politics may spell the beginning of the end of America as a hyper power and the launching of something new, something better.
As American citizens something new is our due.
We should have listened to warnings issued before. We can listen now.
From September 26, 2005 in CounterPunch, an excerpt from a piece 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. ... 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 interest. ...
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.
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