Sunday, November 14, 2004

The United States of Pete Rose

As it turns out, big budget deficits do matter:

"The dollar, which has declined nearly 30 percent against the euro since President Bush took office in 2001, fell to a record low this week. The decline has not been as marked against other currencies, largely because China and Japan prop up the dollar by investing heavily in United States Treasury securities - in effect, lending us money so we can buy their goods.

The only lasting remedy is to reduce the federal budget deficit. That, in turn, calls for specific policies, like - we may have mentioned this before - rolling back the Bush tax cuts. Letting the dollar weaken is a far less responsible approach, an unwieldy and risky attempt to reduce the trade imbalance without the political pain of deficit reduction.

During the Bush years, 92 percent of the nearly $1 trillion increase in publicly held debt has been financed by foreign lenders. Foreign ownership of Treasuries has tripled from the peak of the Reagan deficits in 1983. Because of this enormous dependency, anything that might affect foreign lenders' willingness to invest in Treasuries - including dismay over the United States' long-term fiscal disarray, better investment opportunities elsewhere, or geopolitical or economic strife - could cause the dollar to tank. "

New York Times, 11/13/04

First, there was a big surplus, and Georgie was going to give us some money and a free lunch, too--remember those four singles he kept waving around during the campaign in 2000? Didn't work out. Then he inherited the "Clinton recession" (nope). Then he bought a big, long round of drinks for the nation's wealthiest, and called it a smart "economic stimulus package" that would grow the nation's economy (it wasn't; it didn't). Then 9/11 and the War on Terra were responsible for the exploding numbers (negligibly so). Then he started a very expensive, elective war--one which Sen. Jack Reed now says we will be involved in for years if we hope to get anything constructive done--and at the same time bought the wealthy another round of drinks (yipee!). Then he started promising that he would cut the deficit in half over the next four years (which no one really believes because it's based on psychotically optimistic numbers and does not include any costs for the abovementioned war). Now the weakening dollar is a good thing, because it will cut the trade deficit.

Bad moves and cheesy rationalizations, one after another. The administration's narrative is sounding less like that of a big business struggling to get back on its feet, and more like that of a guy with a gambling problem. Really, just one more round of tax cuts will get them the big score they've been looking for, and then we'll really be in the clover.

And our bookie's name is China. Terrific.


Anonymous Anonymous said...

This is quite profound, especially when it is coupled with the pete rose gambling metaphor and the striking imagery of a cheesy rationalization. But didn't Jack Reed die at the end of Reds?

4:11 PM  
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