The Bush Economy In a Tailspin
It’s hard to believe, but there is one area of Presidential business which George W. Bush has arguably screwed up as badly as foreign affairs. We’re talking about the economy. While most Americans have a peripheral awareness that the President is pushing a large tax cut which benefits mostly the wealthy, few have grasped the true consequences of Mr. Bush’s foolish and unsound economic policy. There aren’t hundreds of thousands of protesters marching in the streets about this issue, but maybe there should be. If Mr. Bush is making scoundrels out of Americans in the world’s eyes, he’s making morons out of us here at home.
Rather than worrying about what Saddam Hussein is up to, maybe we should be worrying about where people around the world are putting their money. Foreign investment in the U.S. is down 85 percent since 2000, from $300 billion to just $46 billion. And that’s before Mr. Bush sends American troops into Baghdad. The tumbling foreign investment is coupled with a sharp decline in stock purchases by foreigners. Now when the U.S. needs money, anxious foreigners lend it to us instead of investing it in assets or shares. If the trend continues and foreign money keeps flooding out of this country, we’re in for big trouble.
Will foreigners continue to withdraw their money? Well, look at the dollar. One could say that the dollar is the most critical litmus test of world opinion about our economy and investments in the U.S. Since George W. Bush was elected, the dollar is down 15 percent against the euro, a loud signal that foreign investors have concluded the U.S. is not where they want to invest their capital. It’s foreign capital that has financed our economy for the past 20 years—stocks, bonds and real estate.
As a result of Mr. Bush’s clumsy economic stewardship and the potential cost of a war, the country is facing an economic debacle which threatens to flatten us. When Mr. Bush took office, the Congressional Budget Office forecast a 10-year surplus of $5.8 trillion. Now the country may be looking at a 10-year deficit of as much as $3 trillion. If that happens, it will send interest rates to the moon. It almost seems as if this country is being run like a banana republic. Last week, the Committee for Economic Development—a nonpartisan business group—urged the administration to initiate tax increases and spending cuts, warning that if the White House does not do so, "investment, productivity and living standards will suffer." It won’t be long before the return of the "misery index," that unsettling calculation of inflation plus unemployment—note that the U.S. has lost two million jobs since Mr. Bush was elected.
Our economy will be impacted for decades to come by this out-of-control fiscal policy, led by an administration that doesn’t appear to have a clue.
nyobserver.com |
