It's crunch time for America. China is getting tired of picking up America's bar tab and has put the US on notice that the days of cheap booze may soon be over. No more bad cheques, thank you very much and absolutely no more rowdy brawls in Congress either.
The Bush years were a national piss up like no other. Cheney said Reagan had shown that "deficits don't matter" and he meant it. The Republicans, aided by a good many Democrats, went at it like mining camp whores on payday. In just two terms in office, Bush almost tripled America's national debt. al Qaeda only managed to bring down two office towers. Bush Republicans brought down the entire country. In the process they completed the greatest unearned transfer of wealth in their country's history by fleecing the blue and white collar working classes and facilitating the transfer of their wealth and the fruits of their productivity to the richest of the rich, leaving a near bottomless chasm of inequality in their wake. But, remember, those were the good times.
Those good times are over. Recklessness comes with a price and it's often pretty ugly. We're only now getting the full measure of their fiscal perfidy. Imagine taking the world's sole super military establishment and swelling that to the point of bloating. Imagine waging two wars (and wars without end at that) against relatively backward states and running up a tab exceeding what you spent in WWII. Imagine financing that massive military expansion and financing those wars with masses of money borrowed from foreign lenders. And then imagine slashing taxes for the richest of the rich, wealth you can only forgo by yet further borrowing from foreign lenders. Imagine slashing taxes for anybody when you're already deeply in hock. It's nothing short of breathtaking.
Recklessness was the gold standard of the Bush Republicans. It was their stock in trade. Having largely completed Reagan's work in divesting America of her manufacturing base, the Bush Republicans set about to deregulate their country's new economy, its utterly parasitic FIRE (finance/insurance/real estate) economy. Henceforth wealth would be created not by actually producing goods but through inducing illusions. Prosperity would be a perception crafted out of seemingly limitless amounts of money borrowed at ridiculously low interest rates. These enabled asset values (illusion) to become detached from and race ahead of true worth (reality). It felt the same. Hell it felt good and it came with the promise that it was just going to go on and on and on forever. The promises that flowed from America's political and corporate elite were about as reliable as promises from a crack dealer and they were very bit as destructive.
Now the question is whether what's left of America's blue and white collar working class will be broken on the wheel in an orgy of deficit fighting. The narrative of the upcoming campaign is already being framed. Spending cuts are on the table. Tax restoration for America's new aristocracy definitely is not. This pain is not for those who can most easily bear it and, in all fairness, deserve it. This pain is reserved for their underclasses. Those who will wield the lash are the Congressional minions of the aristocracy, the elite's new House of Lords.
Congress will attack America's working classes by stripping them of their "entitlements." Blue and White collar America will see their social safety net, their Social Security and Medicare benefits, rejigged to reduce eligibility and coverage. That is where money will be found, in the very place it does not exist.
Working Americans funded their Social Security entitlements through their payroll taxes. Those monies were to have been held "in trust" by their government. The United States government became the fiduciary for every employee who remitted payroll taxes. This is a very special type of debt. We even have a specific word to describe the wrongful taking of trust money by a fiduciary, "defalcation." We consider it so egregious that we provide in our bankruptcy laws that a debt arising out of defalcation shall not be expunged by a debtor's discharge from bankruptcy. The debt survives even bankruptcy.
But, it seems, when outright defalcation is committed by Congress it doesn't matter, perhaps because the federal government was stealing from, cheating every member of the working classes. Now, having done that, they intend to compound the suffering inflicted on working Americans by preserving a tax dodge scheme implemented for the new aristocracy. "Unmitigated gall" isn't remotely adequate to describe what is about to be visited on blue and white collar America and the tattered remnants of her once vibrant and robust middle class.
It's probably too late now to change any of this. You won't get this sort of change from a "bought and paid for" Congress. Early in the Bush years Karl Rove let slip that it was part of his neo-conservative dream that the American government should be de-funded. That way, he opined, it would be forced to scrap the entire progressive legacy of Franklin Roosevelt. And that dream has become today's reality. The government is defunded, the middle class is a spent force, and the populace has been conditioned to recoil from its own best interests. As Bill Maher puts it, they throw up their hands and yell, "Jesus, take the wheel."
About a decade ago I pondered whether China, had it sought to hasten America's decline and its own economic, political and military ascendancy, could have devised two better weapons than globalization and debt? Sap America of its manufacturing base and use the wealth thereby generated to transform America into the world's greatest debtor state and China into America's major creditor. Who needs missiles or bombs when your rival will so freely cooperate in its own decline even as it facilitates your own ascent? I'm still far from convinced this was not China's intent from the outset. At this point I suppose that no longer matters. It is what it is.
I'm more than a little angry about this. An impoverished America on our doorstep is something of a threat to our own social stability. There are those in our country who would happily emulate cherry-picked elements of American policy. This is going to be a very challenging century for every nation and, for many regions, it will be far more than merely challenging. This is the time when we will need the strongest, most responsive democracies and institutions, capable of resisting the powerful temptations of authoritarianism and oligarchy. Yet we seem to be heading in the exact opposite direction.