GAO chief warns economic disaster looms

From the AP via Yahoo courtesy of AlterNet:

Why is America so fiscally unprepared for the next century? Like many of its citizens, the United States has spent the last few years racking up debt instead of saving for the future. Foreign lenders — primarily the central banks of China, Japan and other big U.S. trading partners — have been eager to lend the government money at low interest rates, making the current $8.5-trillion deficit about as painful as a big balance on a zero-percent credit card.

In her part of the fiscal wake-up tour presentation, Rogers tries to explain why that's a bad thing. For one thing, even when rates are low a bigger deficit means a greater portion of each tax dollar goes to interest payments rather than useful programs. And because foreigners now hold so much of the federal government's debt, those interest payments increasingly go overseas rather than to U.S. investors.

More serious is the possibility that foreign lenders might lose their enthusiasm for lending money to the United States. Because treasury bills are sold at auction, that would mean paying higher interest rates in the future. And it wouldn't just be the government's problem. All interest rates would rise, making mortgages, car payments and student loans costlier, too.

A modest rise in interest rates wouldn't necessarily be a bad thing, Rogers said. America's consumers have as much of a borrowing problem as their government does, so higher rates could moderate overconsumption and encourage consumer saving. But a big jump in interest rates could cause economic catastrophe. Some economists even predict the government would resort to printing money to pay off its debt, a risky strategy that could lead to runaway inflation.

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The above excerpted article reports that there is only one tonic for all these economic woes, cutting social services and raising taxes dramatically, which is pretty much all I ever hear anyone in the American mainstream suggest as far as curing the deficit goes. That's pretty weird because there is one very easy and rather painless solution staring us all right in the face. I mean, it really is an elephant in the middle of the living room: cut defense spending massively. The bottom line is that, while we do need some kind of military for protection, what we have now is so insanely huge that it can only be used for imperial purposes. That is, we just don't need it anymore, and imperial wars these days, as amply illustrated by first the Vietnamese and now the Iraqis, are by and large unwinnable, and therefore a waste of money. Besides, with so many arms on hand, the temptation to use them is seemingly overwhelming. It's time to end America's role as defender of corporate globalism and start tending to our needs right here at home. Hell, we don't even have to say goodbye to the corporate system: all we have to do is start working in tandem with--gasp!--other nations to ensure business security.

Face it, our huge military is a near total waste of money, and it threatens the entire economic system that it exists to protect. Christ, our leaders are so fucking stupid.

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