As I See It
The current state of the United States economy bears a worrisome resemblance to a family whose income has been declining, running up their credit card debt and wondering how they are going to pay the future cost of their children’s college education. Let’s take these three issues one at a time.
Manufacturing jobs, many of which are higher-paying jobs, have been going overseas for several decades, and the rate has increased significantly over the last 10 years. U.S. iron and steel production has declined more than 25 percent since 1970. Other industries which have been bleeding jobs abroad include clothing, shoes, automobiles, auto parts, tools, kitchen appliances and utensils, hardware and household items. The most recent exodus has been high-paying high-tech and professional jobs in communications, computer equipment and services, and accounting, to name but a few.
Companies say they have to “out-source” these jobs to save money in an increasingly competitive business climate, due in part to a sluggish economy. This is a vicious cycle, because sending jobs overseas only makes our economy even weaker. More than 9 million Americans are now unemployed, and countless other millions have been forced to accept jobs which pay far less than the job they lost. The inevitable result is a major reduction in federal tax revenue.
In the face of this major economic downturn, the federal government is going into debt at the rate of half a trillion dollars a year to pay for Bush’s tax cuts for the wealthy and his Iraq venture. We are stripping our country of money badly needed to rebuild our schools, water and sewage systems, bridges, and highways in order to police and rebuild Iraq. This is a burden we did not have to take on ” one our leaders have created for us.
With the combination of dwindling tax revenue and the ballooning deficits to pay for the aftermath of our invasion of Iraq, our government is ill prepared to meet the Social Security and Medicare demands of the 30 million baby boomers who will start reaching retirement age in just seven years.
How do we expect to meet this obligation to those who have paid into the Social Security program for their entire working lives and pay even the interest on a national debt which at present spending levels could very well reach $8 trillion to $10 trillion by 2010? The only recourse, and the one to which governments have historically resorted, is runaway inflation, which is a way to steal the value of people’s savings to stave off government insolvency. It is questionable whether even that will work in this case, because high inflation will drive interest rates on the national debt up to a level which will eat up a trillion dollars a year just to pay the interest. Social Security and Medicare payments, which are indexed to reflect inflation, will cost the government another half a trillion dollars a year, or more.
So where does all of this leave us? Will we become an economy based on serving each other meals at fast-food restaurants, unable to defend ourselves because we have shipped our iron and steel production and manufacturing facilities and technical skills abroad? And will our government go bankrupt because it lacks the income to meet its obligations?
We have been through financial crises before ” to fund four years of the Civil War, nearly four years of World War II, seven years of the war in Vietnam, and public works and relief programs during seven years of the Great Depression. The question now is whether our economy can survive the onslaught it seems to be headed for, and what are we going to do to bring our government to its senses?
Glenwood Springs resident Hal Sundin’s column runs every other Thursday in the Post Independent.
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