The U.S. military has no rival. No economy is as large and dynamic as ours. Our movies, our music, our language are in demand across an ever-smaller world. America’s technological innovations still set the pace in many fields. America’s ideals of democracy, free enterprise, freedom of speech and assembly, tolerance and diversity are on the move. “We shall overcome” is sung in many languages by many movements in every continent of the world. The state of the union is strong, the president says.
Is it? Beneath the bluster of the Bush administration, our isolation is growing and our independence eroding. Our trade and budget deficits continue to set new records. The Bush administration and the Republican Congress don’t even include the costs of the war in Iraq — now headed toward $300 billion — in their budget. The war is being fought on credit, with the loans coming from Chinese and Japanese central bankers, and the debt being sent to our kids.
President Bush clearly prefers to act alone rather than to tend to the burdens of nurturing allies and consensus. Despite Secretary of State Condoleezza Rice’s “charm offensive” to Europe, the president’s true intent was signaled by the nomination of John Bolton, a “movement conservative” and darling of former right-wing Sen. Jesse Helms, as U.S. ambassador to the United Nations. Having just returned from London, I can attest that the appointment is seen as a direct and offensive spit in the eye throughout Europe.
How could it not? Bolton is infamous for deriding the U.N. “There is no United Nations,” he once proclaimed, arguing that the world depends on the U.S., its one real power, to lead. Bolton stands with Republicans in Congress who, he said, “not only do not care about losing the General Assembly vote but actually see it as a ‘make my day’ outcome. Indeed, once the vote is lost . . . this will simply provide further evidence to many why nothing more should be paid to the U.N. system.”
Bolton, a relentless foe of international accords, basically sees allies as irritants. If they line up and salute, fine. Otherwise they should just get out of the way. And the U.N. particularly offends him. “The Secretariat building in New York has 38 stories. If it lost 10 stories,” he declared before Sept. 11 made his words haunting, “it wouldn’t make a bit of difference.” Bolton’s nomination is Bush’s way of putting his thumb in the eyes of our allies.
But beneath this bravado, Bush is presiding over a precipitous erosion of America’s strength. The U.S. is now the world’s largest debtor. Despite the continuing decline of the dollar’s value in Europe, the U.S. ran a record global deficit of over $600 billion last year. We will have to borrow nearly $2 billion a day from abroad. Under Clinton, during the high-tech boom, the U.S. could attract private and corporate investment in the real economy. Under Bush in the slow-growth economy, real investment from abroad has dried up. Instead, a growing percentage of our foreign debt is financed by central banks — particularly China and Japan.
Essentially, the leaders of these countries are choosing to keep the value of their currencies low, while they take our jobs and lend us the money to import the products that we used to make. Last month, the textile imports from China soared over 500 percent, as prior trade limits expired by law. China is becoming the world’s manufacturing center. We’re already the world’s leading credit-card consumer.
Bush seems intent on running up this debt and sending the bill to our children — who will be forced to devote a significant portion of their lives working to pay interest to our Chinese and Japanese creditors.
Debtors can’t be choosy. They have to please their creditors. We are now very dependent on the decisions of a handful of people at the top of the Chinese communist party. If they chose to stop buying our bonds, interest rates would soar, indebted small businesses and homeowners would get hit and the economy would plummet.
Think that’s far-fetched? Well, earlier this month, the South Korean bankers — who aren’t in China’s league as a U.S. creditor — suggested that they might be losing their appetite for dollars. Immediately the markets declined and interest rates spiked. The Koreans rushed out a statement saying, in effect, that they weren’t serious and would stay with the dollar.
Bush may delight in stiffing our allies and scorning international institutions, but we’re paying a higher and higher price for it. In the last week alone, China spurned U.S. appeals and passed a law authorizing military assault on Taiwan if that island moves toward independence. At the same time, our European allies spurned U.S. appeals and are moving to start selling advanced military weaponry to China.
Macho posturing — as reflected in Bolton’s nomination — is good politics at home. But the president is eroding our influence abroad and ignoring our growing dependence on foreign creditors. The Chinese bankers are being handed a chokehold over our economy. If they decide to tighten the noose, the president will go from posturing to prostrating himself to ask for mercy.