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 | | From: | Chris Gunn | | Subject: | Government Debt The Greatest Threat to National Security | | Date: | Sat, 27 Nov 2004 11:27:21 -0600 |
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 | http://www.lewrockwell.com/paul/paul213.html
Government Debt The Greatest Threat to
National Security
by Rep. Ron Paul, MD
Once again the federal government has reached its debt ceiling, and once
again Congress is poised to authorize an increase in government borrowing.
Between its ever-growing bureaucracies, expanding entitlements, and overseas
military entanglements, the federal government is borrowing roughly one
billion dollars every day to pay its bills.
Federal law limits the amount of debt the U.S. Treasury may carry, and the
current amount a whopping $7.4 trillion has been reached once again by a
spendthrift federal government. Total federal spending, which now exceeds $2
trillion annually, once took more than 100 years to double. Today it
doubles in less than a decade, and the rate is accelerating. When President
Reagan entered office in 1981 facing a federal debt of $1 trillion that had
piled up over the decades, he declared that figure incomprehensible. At its
present rate of spending, the federal government will soon amass $1 trillion
of new debt in just one year.
Government debt carries absolutely no stigma for politicians in Washington.
The original idea behind the debt limit law was to shine a light on
government spending, by forcing lawmakers to vote publicly for debt
increases. Over time, however, the increases have become so commonplace
that the media scarcely reports them and there are no political
consequences for those who vote for more red ink. Its far more risky for
politicians to vote against special interest spending.
Since 1969, the federal government has spent more that it received in
revenues every year. Even supposed single-year surpluses never existed, but
were merely an accounting trick based on stealing IOUs from the imaginary
Social Security trust fund. Remember that the total federal debt continued
to rise rapidly even during the claimed surplus years. Since Congress is
incapable of spending only what the Treasury takes in, it must borrow money.
Unlike ordinary debts, however, government debts are not repaid by those who
spend the money theyre repaid by you and future generations.
The federal government issues U.S. Treasury bonds to finance its deficit
spending. The largest holders of those Treasury notes our largest creditors
are foreign governments and foreign individuals. Asian central banks and
investors in particular, especially China, have been happy to buy U.S.
dollars over the past decade. But foreign governments will not prop up our
spending habits forever. Already, Asian central banks are favoring
Euro-denominated assets over U.S. dollars, reflecting their belief that the
American economy is headed for trouble. Its akin to a credit-card
company cutting off a borrower who has exceeded his credit limit one too
many times.
Debt destroys U.S. sovereignty, because the American economy now depends on
the actions of foreign governments. While we brag about our role as world
superpower in international affairs, we are in truth the worlds greatest
debtor. Like all debtors, we are not truly free. China and other foreign
government creditors could in essence wage economic war against us simply by
dumping their huge holdings of U.S. dollars, driving the value of those
dollars sharply downward and severely damaging our economy. Desmond Lachman,
an economist at the American Enterprise Institute, states that foreign
central banks Now have considerable ability to disrupt U.S. financial
markets by simply deciding to refrain from buying further U.S. government
paper. Former Treasury secretary Lawrence Summers warns about A kind of
global balance of financial terror, noting our dependency on the
discretionary acts of what are inevitably political entities in other
countries.
Ultimately, debt is slavery. Every dollar the federal government borrows
makes us less secure as a nation, by making America beholden to interests
outside our borders. So when you hear a politician saying America will do
whatever it takes to fight terrorism or rebuild Iraq or end poverty or
provide health care for all, what they really mean is they are willing to
sink America even deeper into debt. Were told that foreign wars and expanded
entitlements will somehow make America more secure, but insolvency is hardly
the foundation for security. Only when we stop trying to remake the world in
our image, and reject the entitlement state at home, will we begin to create
a more secure America that is not a financial slave to foreign creditors.
October 26, 2004
Dr. Ron Paul is a Republican member of Congress from Texas.
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