Posted on 03/23/2016 2:45:59 AM PDT by Citizen Zed
America isn't broke. Nor is it on the verge of a government debt crisis (whatever "crisis" even means for a nation whose debt is printed in a currency that is both its own and the world's reserve). America is not in decay, and the last thing the U.S. should do is rashly withdraw from a dangerous world because of those mistaken beliefs.
This should be especially clear after the Belgium terror attacks.
Yet retreat is just what Donald Trump seems to be proposing. In an interview with The Washington Post editorial board Monday, Trump questioned the U.S. role in NATO and presence in Asia due to the financial burden they require:
[I mean, we pay billions — hundreds of billions of dollars to supporting other countries that are in theory wealthier than we are. … When you look at the kind of money that our country is losing, we can't afford to do this. Certainly we can't afford to do it anymore…. I think we were a very powerful, very wealthy country. And we're a poor country now. -- Trump]
Looks like we finally found something Trump is in favor of off-shoring: America's security.
Now, it's certainly legitimate to evaluate the mission and cost of America's overseas military commitments and posture. But that's different thing than scrapping our military alliances — or threatening to do so as some ham-handed budget negotiating tactic. Leading the free world, reassuring allies, and deterring aggression have little overlap with the skills needed to drive a hard bargain with a potential tenant in Trump Tower.
And yet, Republicans might give Trump's defense policy ideas more of a hearing than they deserve because of their persistent debt fears. After all, it's mainstream GOP economic thought that U.S. finances are precarious. How could they not be given the $19 trillion federal debt — $22 trillion if you include state and local government? These are figures Trump always mentions, as do many Republican politicians. They provide handy justification for arguing we can't afford to invest in science, repair and upgrade our infrastructure, or bolster wages for low-income workers.
But here's the thing: The U.S. is far from a poor nation. American households entered 2016 with a net worth of nearly $87 trillion, according to the Federal Reserve. To put that ginormous number in some context, China's private wealth has been estimated at $23 trillion. Even if you factor in America's debt-laden public sector and China's large state-owned companies, the U.S. still has a $45 trillion wealth edge.
There are other ways of looking at national wealth that also show America's riches. The value of U.S. intellectual capital has been estimated at around $9 trillion, with the value of the intangible assets — such as patents, copyrights, and general business methods — at nearly $15 trillion. And given Trump's appreciation of brands — he generously values his own at $3 billion — you would think the businessman would appreciate America's, which has been valued at close to $20 trillion.
Maybe all this wealth is one reason global financial markets don't seem so worried about the U.S. debt. Well, that and the U.S. tax burden being one of the lowest in the developed world. The dollar is strong, and interest rates are low, as are inflation expectations. None of this is to say the U.S. should be a spendthrift in either defense or social spending. Without entitlement reform, Medicare and Social Security will require massive tax increases to keep their promises. Yet Trump would leave them untouched, vowing implausibly to fix their fiscal problems through higher economic growth alone.
The U.S. isn't bankrupt. Our pockets aren't empty. We aren't a pauper nation.
But, of course, you can't promise to make America great again without arguing that it currently isn't.
If you have No money your broke.No matter how much material wealth you may have.
~$20 trillion in US debt.
Pay that off tomorrow without raising taxes, then I might listen to your argument.
Well yes people who currently profit from a corrupt rigged system often think the status quo is “great”.
Yes, most of that is real estate. And $18 Trillion is in retirement accounts.
“America isn’t broke.”
Hmm, I guess that all depends on how you define “broke”. Let’s use more concrete words then, eh? America is on the path to fiscal insolvency, and not a single elected official or representative has proposed a viable plan for avoiding it.
That is not something I think anyone can actually dispute.
“So all the politicians have to do is tax that wealth away.”
Even if they did, if they don’t address the underlying problems that led us to be 20 trillion in debt, that would just be a band-aid. We’d pay off the debt and then rack it right back up again.
The decline abated a little under Reagan because of rising wages and income, and of course, housing prices.
Excellent post.
You forgot possibility #4: the foreign companies just raise their prices to pay for the tariff and pass it on to the consumer, just like all taxes get passed on to the consumer.
Since we don’t manufacture our own goods anymore, as you noted, we wouldn’t have much recourse except to buy the foreign goods and pay the tariff ourselves.
Amen. Jeremiah was not called “the weeping prophet” for nothing. His words were for Israel, but as you alluded to, I believe they point towards our bleak future as well.
Or ramp up local production, where we can now compete on price......thus increasing jobs here in America.
Wrong. 20 trillion in debt.
80 trillion in future unfounded liabilities.
Many of the states are also broke.
“Or ramp up local production, where we can now compete on price......thus increasing jobs here in America.”
Either way the consumers are getting shafted and paying higher prices. You’re just hoping that the higher prices get funneled to subsidize, well, let’s be honest, welfare for manufacturing workers, instead of going to feed the federal beast through tariffs.
There's two solutions in that. 1) Threat of tariff opens foreign markets. 2) Implementation of a tariff makes U.S. products more competitive with newly higher priced foreign alternatives.
Either way, the U.S. economy grows and restores some breadth.
“Either way, the U.S. economy grows and restores some breadth.”
The US economy doesn’t grow by robbing the pockets of one segment of the population to subsidize another segment. That’s just another version of the old socialist shell game and it won’t work.
Since Obama was elected the US has created $17 trillion in new debt, has seen GDP decrease in real terms, lost more than 40% of publicly listed companies, put 40 million more Americans out of work, added 20 million more Americans to welfare, put 10 million more Americans on social security, seen the median wage decrease and increased the number of Americans who don’t have health insurance.
We’re certainly not as rich as were before Obama.
Trump never said to get out of NATO. Just for the other member countries to pay more for their defense.
They hate up because we are not them. Why is not important.
“America isn’t broke.”
If a person had a $40,000 income but had $200,000 short term debt with over $1,000,000 promised in payments in the next 30 years, we’d call them broke.
If a person had a $40,000 income but had $200,000 short term debt with over $1,000,000 promised in payments in the next 30 years, and added an additional $50,000 in promised payments and an additional $4,000 to $10,000 per year in debt, we’d call them broke.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.