http://www.rabble.ca/rabble_interview.shtml?x=56462
U.S. Democrats face tough choices Most commentary on the George W. Bush decision to send an additional 20,000 troops to Iraq has focused on the military and foreign policy consequences of the decision. Many doubt the wisdom of trying to pacify Iraq by having more hands hold more guns. Others point out that American capacity to act in the world will be diminished by escalation of the Iraq conflict. The impact of the Bush decision on the U.S. itself has received less attention. But with a Republican President now facing a Democratic Congress, throughout the last two years of his mandate, the impact of U.S. imperial actions on domestic U.S. politics is bound to become more important. Bush has lost public support for his Iraq adventure, as public opinion polling shows. More importantly, the overall costs of the Bush foreign policy have yet to be understood by the American people. Congress needs to focus on the financial consequences for Americans of the Iraq debacle. It's the most prescient example of the costs to the U.S. of trying to run the world from Washington. Observers generally consider the U.S. to be rich country, albeit with a lot of poor people. Few question U.S. prosperity, and often the American economic model is held up as one to be emulated, not least in Canada, where the article lamenting Canada's inferior productivity performance, compared to the U.S., has been a journalistic staple for decades. What is less widely appreciated is the role foreign lending to the U.S. plays in financing U.S. economic expansion, and the U.S. military expenditures abroad, including in Iraq. Europeans readily add to large portfolios of U.S. stocks and bonds, helping out the U.S. economy. The central banks of China, Japan and other Asian countries have been steadily accumulating mountains of U.S. government debt. All this foreign lending to the U.S. underwrites American domestic consumption, and foreign policy adventures. Funding American debt would seem to make sense, because the foreign consumer goods bought by Americans come from Asia and Europe. But the persistent foreign borrowing by the U.S. weakens confidence in the U.S. dollar that looks to decline in value. The poor public standing of Bush, coupled with no end in sight to the Iraq war, erodes overseas confidence in the American administration. There will come a day when foreign lenders no longer pony up to support the U.S. dollar. By then Bush may be on his way back to Crawford, Texas for good. In the meantime the Democratic Congress should be asking how the U.S. is going to adjust when the foreign lending is no longer available. The short answer is the fabled U.S. middle class is going to see its living standards erode. Interest rate hikes will be needed to keep the U.S. dollar from sinking out of sight, generating a recession, and stock market losses. The wealthy will escape; the average income earners will be hard hit. The rest of the world will suffer along with the U.S. middle class. Countries, such as Canada, which have been so imprudent as to build an economic strategy around sales to the U.S., will be sure to suffer disproportionately. U.S. spending has to be curtailed because the rest of the world is not going to fund U.S. foreign deficits indefinitely. The Americans can choose to reduce consumer spending, and continue to maintain their overseas empire, and to fight on in Iraq, Afghanistan, Sudan and elsewhere. Or, Congress can decide to rein in the imperial presidency and take back its constitutional role overseeing U.S. foreign relations. This would allow for re-investment in domestic health care, education, social housing and income support. The U.S. conduct of the war in Iraq is about a lot more than bad U.S. foreign policy and military strategy. The failure in Iraq throws world U.S. leadership into question. Americans, along with the rest of the world, will pay for the leadership follies in reduced economic circumstances. The time has surely come to put in place a multi-lateral world order to replace the discredited unilateral approach of George Bush. For that to happen, the rest of the world will have to come up with a plan, and the U.S. Congress will be called upon for support. The twin challenges of dealing with a domestic slump, and finding an international solution are a lot to ask of the new Democratic Congress. History suggests Congress can block but not lead. But when the economic costs of the Bush presidency hit American voters, a new direction, supported internationally, will have its appeal, and Congress will take notice. [Non-text portions of this message have been removed] -------------------------- Want to discuss this topic? 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