The Chinese Own Me

            All the talk these days is about the deficit and the debt. It almost sounds at times that the terms are interchangeable. They are not.

            The deficit is an annual thing. It's all about spending more money than we take in. When we overspend, we add to the debt.

            The debt is what this country owes, because we borrowed money to finance deficits. China owns most of our debt, the same China that stocks the shelves at Walmart, because we can't produce the same products at a competitive price. If we don't start to reduce our debt soon, China will end up owning US!

            Let's look at it this way. When we are in a deficit mode like the one we're in now, every time Obama, for example, gives Brazil $2 billion to develop its oil industry, we have to borrow that money from the Chinese. When we give the Libyan rebels $25 million to help them fight Qaddhafi, we have to borrow that money from the Chinese. When we shower Tripoli with half a billion dollars' worth of missiles, we have to borrow money from the Chinese to replace them in our arsenal. Every time we spend money we don't have, we have to borrow it from the Chinese.

            Our debt is nearly $15 trillion, a number that everyone agrees is unsustainable. Yet, Washington is crying that if we don't lift the debt ceiling, our creditworthiness will collapse and we won't be able to borrow more from the Chinese. So what should we do? Raise the debt ceiling, of course.

            Is that nuts, or what?

            The only way for Washington to reduce the debt is to stop spending more than it takes in. But Washington is addicted to spending. Whenever anyone proposes drastic action to balance the budget, the knee-jerk response is to accuse the proposer of kicking grandma out on the street and denying pregnant teenagers their reproductive health rights.

            What should Washington do, that is, if it had any guts?

            First, what it shouldn't do is raise the debt ceiling. Pay the interest first and then figure out how to live off the rest. But the rest isn't enough? It certainly was enough twenty years ago, wasn't it?  So what would I do? I'm no expert, but I know what I'd do.
             See my next blog.