Barack Obama’s plan to unveil tonight a non-defense discretionary spending freeze for the next three years will essentially forfeit America’s growth future to China.
China has been massively investing in its high speed rail, its science labs, its educational system, its roads, its energy grid an its information super-duper highway. It has been obsessed with job retention and job creation. It has been building a mind-boggling number of every kind of power plant imaginable — natural gas, high end coal, low end coal. It’s investing in next gen renewable energy projects on a scale larger than the United States. It has been subsidizing all of this with a neo-mercantilist currency policy, pumping exports which it finances to consumers not only in the US but all over the world. China flaunts a robust “Buy China” requirement in its government and semi-private industrial procurements and contracting.
And the President of the United States, one year into his job, and still dealing with the tail winds of the worst economic disaster in global markets and the US economy since the Great Depression, is saying that he is going to freeze spending on virtually everything but the wars we have on hand.
America needs to invest in itself.
This economic crisis we continue to flounder in with effective unemployment higher than 19%, according to Leo Hindery’s valuable monthly head-knocking reminders, requires leadership and decisive, large scale action to make the investments in America and its manufacturing and innovation base that create recurring returns to the nation over time.
Obama’s team, content to have bailed out Wall Street, seem to now run the rest of the economy on a cash accounting basis. That’s bad, self-defeating policy.
What needs to be run on a cash accounting basis — that is not — is the part of the budget Obama seems not to want to rein in…..a huge, runaway bill to pay for Iraq and Afghanistan. In 2010, the cost of America’s Iraq engagement will still run more than $150 billion. And add to that $100 billion plus for Afghanistan.
One QUARTER OF A TRILLION DOLLARS is what the US is spending on two nations, Iraq and Afghanistan that together have a COMBINED GDP of just $23 billion.
That is lunacy. Americans have a US President who is going to say tonight — we cannot afford our future, we cannot afford investment in ourselves, but we can afford to bail out Wall Street financiers, and we can afford to pump $250 billion into two small countries abroad, but we can’t afford to do the right things by American working families — who deserve far better.
There are parts of what the President’s team is doing — particularly what Jared Bernstein, Paul Volcker and Austan Goolsbee have been working on — that I do support.
But the broader issue that we are going to cease deep investment in the US in a way that is big, significant and consequential — while China does everything the reverse that we are doing and reaps the rewards is a sign of America’s collapse, not America rebuilding itself.
— Steve Clemons