America in denial about debt?

Pittsey

Knock, Knock...
Staff member
#1
http://www.bbc.co.uk/news/world-13906274

Is America in denial about the extent of its financial problems, and therefore incapable of dealing with the gravest crisis the country has ever faced?

This is a story of debt, delusion and - potentially - disaster. For America and, if you happen to think that American influence is broadly a good thing, for the world.
The debt and the delusion are both all-American: $14 trillion (£8.75tn) of debt has been amassed and there is no cogent plan to reduce it.
The figure is impossible to comprehend: easier to focus on the fact that it grows at $40,000 (£25,000) a second. Getting out of Afghanistan will help but actually only at the margins. The problem is much bigger than any one area of expenditure.
The economist Jeffrey Sachs, director of Columbia University's Earth Institute, is no rabid fiscal conservative but on the debt he is a hawk:

The debt is not a financial problem, it is a political problem

"I'm worried. The debt is large. It should be brought under control. The longer we wait, the longer we suffer this kind of paralysis; the more America boxes itself into a corner and the more America's constructive leadership in the world diminishes."
The author and economist Diane Coyle agrees. And she makes the rather alarming point that the acknowledged deficit is not the whole story.
The current $14tn debt is bad enough, she argues, but the future commitments to the baby boomers, commitments for health care and for pensions, suggest that the debt burden is part of the fabric of society:
"You have promises implicit in the structure of welfare states and aging populations that mean there is an unacknowledged debt that will have to be paid for by future taxpayers, and that could double the published figures."
Richard Haass of the Council on Foreign Relations acknowledges that this structural commitment to future debt is not unique to the United States. All advanced democracies have more or less the same problem, he says, "but in the case of the States the figures are absolutely enormous".
Mr Haass, a former senior US diplomat, is leading an academic push for America's debt to be taken seriously by Americans and noticed as well by the rest of the world.
He uses the analogy of Suez and the pressure that was put on the UK by the US to withdraw from that adventure. The pressure was not, of course, military. It was economic.


Many so-called "Tea Party" supporters fiercely oppose tax raises.

Britain needed US economic help. In the future, if China chooses to flex its muscles abroad, it may not be Chinese admirals who pose the real threat, Mr Haass tells us. "Chinese bankers could do the job."
Because of course Chinese bankers, if they withdrew their support for the US economy and their willingness to finance America's spending, could have an almost overnight impact on every American life, forcing interest rates to sky high levels and torpedoing the world's largest economy.
Not everyone accepts the debt-as-disaster thesis.
David Frum is a Republican intellectual and a former speech writer to President George W Bush.
He told me the problem, and the solution, were actually rather simple: "If I tell you you have a disease that will absolutely prostrate you and it could be prevented by taking a couple of aspirin and going for a walk, well I guess the situation isn't apocalyptic is it?
"The things that America has to do to put its fiscal house in order are not anywhere near as extreme as what Europe has to do. The debt is not a financial problem, it is a political problem."
Mr Frum believes that a future agreement to cut spending - he thinks America spends much too big a proportion of its GDP on health - and raise taxes, could very quickly bring the debt problem down to the level of quotidian normality.

'Organised hypocrisy'
I am not so sure. What is the root cause of America's failure to get to grips with its debt? It can be argued that the problem is not really economic or even political; it is a cultural inability to face up to hard choices, even to acknowledge that the choices are there.
I should make it clear that my reporting of the United States, in the years I was based there for the BBC, was governed by a sense that too much foreign media coverage of America is negative and jaundiced.


Are Alaskans fooling themselves about the viability of their state?

The nation is staggeringly successful and gloriously attractive. But it is also deeply dysfunctional in some respects.
Take Alaska. The author and serious student of America, Anne Applebaum makes the point that, as she puts it, "Alaska is a myth!"
People who live in Alaska - and people who aspire to live in Alaska - imagine it is the last frontier, she says, "the place where rugged individuals go out and dig for oil and shoot caribou, and make money the way people did 100 years ago".
But in reality, Alaska is the most heavily subsidised state in the union. There is more social spending in Alaska than anywhere else.
To make it a place where decent lives can be lived, there is a huge transfer of money to Alaska from the US federal government which means of course from taxpayers in New York and Los Angeles and other places where less rugged folk live. Alaska is an organised hypocrisy.
Too many Americans behave like the Alaskans: they think of themselves as rugged individualists in no need of state help, but they take the money anyway in health care and pensions and all the other areas of American life where the federal government spends its cash.
The Tea Party movement talks of cuts in spending but when it comes to it, Americans always seem to be talking about cuts in spending that affect someone else, not them - and taxes that are levied on others too.

nimble and clever and open could succumb to disaster in this way.

But America, as well as being a place of hard work and ingenuity, is also no stranger to eating competitions in which gluttony is celebrated, and wilful ignorance, for instance regarding (as many Americans do) evolution as controversial.
The debt crisis is a fascinating crisis because it is about so much more than money. It is a test of a culture.
It is about waking up, as the Americans say, and smelling the coffee. And - I am thinking Texas here - saddling up too, and riding out with purpose.
 

Pittsey

Knock, Knock...
Staff member
#2
Is America in denial? Is everyone in Denial? Are we all happy to be in debt, is it a just a normal way of life?

In London I don't see many people cutting back, at least no-one I know. I don't know anyone who has lost their job and house prices are up on 2008 prices, not down.
 

masta247

Well-Known Member
Staff member
#3
That's how America works. Many countries have relatively high debt. It's silly that it's considered to be "normal" but that's how most countries function.
Here in Poland we have maximum allowed debt written in our constitution, so we have a debt and it's also getting bigger but it's 'under control' and still people are aware of it and everyone criticizes it so every politician promises to reduce it. That's part of the reason why our taxes went higher- for example this year they raised VAT to 23%. Now the worst part is that it didn't help much. Reducing a national debt isn't as easy and for America it would have to mean a total, national reengineering and Americans wouldn't be happy, that's for sure.
There's a 'national debt counter' in the city centre in Warsaw displaying our current debt to put you in a perspective of how important the matter is here, yet our debt is so much lower per capita than in America.

I don't know how much an average American is aware of their economic situation and national debt but in fact they're in a position where China pretty much owns a huge part of them and continues to take more and more with every year. American wellbeing is mostly dependent on China and it's worrying that they're not doing anything to change the situation. They've functioned that way so they continue doing so, hoping for I don't know what while their debt increases and the situation gets worse.
 

Pittsey

Knock, Knock...
Staff member
#4
I think a lot of countries have increased their taxes, with VAT being the easiest.

China is buying a lot of national debt. But I think the trend is stopping, which will have an effect on the western world. It amazes me that society operates this way. Banking and manipulation of debt seems to be the capitalist way these days. No longer are we buying and selling commodities, but IOU's.

I have never studied economics, so I am waiting for SOFI to come into this thread and let me know how I've got it wrong.
 

Jokerman

Well-Known Member
#5
Is America in denial? Is everyone in Denial? Are we all happy to be in debt, is it a just a normal way of life?
They're not in denial, it's just most people tune-out. It's too much to handle, too negative. Ppl don't feel knowledgeable enough. The same with every problem. Just turn it to the Jersey Shore so I can watch something more dysfunctional than me, so I don't have to feel bad about my life. That's the average American.
 

Pittsey

Knock, Knock...
Staff member
#7
I have found some cost savings scope. No air con for soldiers in Iraq.

http://www.npr.org/2011/06/25/137414737/among-the-costs-of-war-20b-in-air-conditioning?ps=cprs

The amount the U.S. military spends annually on air conditioning in Iraq and Afghanistan: $20.2 billion.
That's more than NASA's budget. It's more than BP has paid so far for damage during the Gulf oil spill. It's what the G-8 has pledged to help foster new democracies in Egypt and Tunisia.

"When you consider the cost to deliver the fuel to some of the most isolated places in the world — escorting, command and control, medevac support — when you throw all that infrastructure in, we're talking over $20 billion," Steven Anderson tells weekends on All Things Considered guest host Rachel Martin. Anderson is a retired brigadier general who served as Gen. David Patreaus' chief logistician in Iraq.

Why does it cost so much?

To power an air conditioner at a remote outpost in land-locked Afghanistan, a gallon of fuel has to be shipped into Karachi, Pakistan, then driven 800 miles over 18 days to Afghanistan on roads that are sometimes little more than "improved goat trails," Anderson says. "And you've got risks that are associated with moving the fuel almost every mile of the way."
Anderson calculates more than 1,000 troops have died in fuel convoys, which remain prime targets for attack. Free-standing tents equipped with air conditioners in 125 degree heat require a lot of fuel. Anderson says by making those structures more efficient, the military could save lives and dollars.
Still, his $20.2 billion figure raises stark questions about the ongoing war in Afghanistan. In the wake of President Obama's announcement this week that about 30,000 American troops will soon return home, how much money does the U.S. stand to save?


When you have this many people in a country that doesn't want you there — that has no economy, no infrastructure and a corrupt government — and you're trying to stabilize it and build them into a viable nation? I'm not sure we have enough time, and I definitely know we don't have enough money.

- Sen. Joe Manchin (D-WV)

Dollars And Cents
The 30,000 troops who will return home by the end of next year were sent to Afghanistan in 2009, at a cost of about $30 billion. That comes out to about $1 million a soldier.
But the savings of withdrawing those troops won't equal out, experts say.
"What history has told us is that you don't see a proportional decrease in spending based on the number of troops when you draw them down," Chris Hellman, a senior research analyst at the National Priorities Project, tells Martin.
"In Afghanistan that's going to be particularly true because it's a very difficult and austere environment in which to operate," he says.
That means most war expenditures lie not in the troops themselves but in the infrastructure that supports them — infrastructure that in some cases will remain in place long after troops are gone.
"We're building big bases," American University professor Gordon Adams tells Martin. The costs of those bases are, in economic terms, "sunk" costs, he says.
"We're seeing this in Iraq. We're turning over to the Iraqis — mostly either for a small penny or for free — the infrastructure that we built in Iraq. But we won't see back any money from that infrastructure."
Then there's the costly task of training Afghan security forces. The Obama administration has requested almost $13 billion to train and equip Afghan security forces in the next fiscal year.
And more importantly, Hellman says, "[Afghan President Hamid] Karzai indicated a couple years back that [Afghanistan] wasn't going to be a position to support their own military forces 15, 20 years out. I suspect we're going to be called on to pay a substantial part of that bill going forward."

Criticism From The President's Own Party


The realm of war and peace exists separately apart — and justifiably so — from the economic realm.

- Lawrence Kaplan, a visiting professor at the U.S. Army War College

For critics of the president, the idea that the troop drawdown won't save much money is reason enough to suggest it should be bigger.
One outspoken critic is Sen. Joe Manchin (D-WV). He notes the wars in Afghanistan and Iraq have cost hundreds of billions of dollars so far, and he argues a larger troop drawdown isn't a national security risk.
"We have the greatest special ops in the world. We have more technology than any other country on earth," Manchin tells Martin. "Do we actually need to have 70,000 troops on the ground?"
"When you have this many people in a country that doesn't want you there — that has no economy, no infrastructure and a corrupt government — and you're trying to stabilize it and build them into a viable nation? I'm not sure we have enough time, and I definitely know we don't have enough money," Manchin says.

But others argue war should be waged independent of cost.
"The realm of war and peace exists separately apart — and justifiably so — from the economic realm," says Lawrence Kaplan, a visiting professor at the U.S. Army War College, who says critics like Manchin are looking for "economic answers to a non-economic question.
"And anyway, it's not the war that's broken Washington's piggy bank," he adds, noting that Medicare, Medicaid and Social Security account for far more spending than the $107 billion the Pentagon says it will spend in Afghanistan next year.


A U.S. military tent after treatment with polyurethane foam. A 2006 test of the foam cut energy use by 92 percent, says retired Brig. Gen. Steven Anderson.


A U.S. military tent after treatment with polyurethane foam. A 2006 test of the foam cut energy use by 92 percent, says retired Brig. Gen. Steven Anderson.
"Remember, we're talking about 30,000 troops," he says "I don't think that hundred-billion-dollar price tag should be the determining one."

Can Greener Mean Safer?

But for Anderson, the retired brigadier general, economics does have a role to play in modern warfare.
Anderson advocates for increased energy efficiency for military structures in order to cut down on the need for long, dangerous fuel-transport missions. A few months ago, Anderson heard from a company commander in Afghanistan.
"He literally has to stop his combat operations for two days every two weeks so he can go back and get his fuel. And when he's gone, the enemy knows he's gone, and they go right back to where they were before. He has to start his counter-insurgency operations right back at square one."

Anderson says experiments with polyurethane foam insulation for tents in Iraq cut energy use by 92 percent and took 11,000 fuel trucks off the road. But he adds there's a lack of enthusiasm for a greener military among top commanders.
"People look at it and say 'It's not my lane. We don't need to tie the operational commanders' hands' — things like this," he says.
"A simple policy signed by the secretary of defense — a one- or two-page memo, saying we will no longer build anything other than energy-efficient structures in Iraq and Afghanistan — would have a profound impact."
 

The.Menace

Well-Known Member
Staff member
#10
Of course there are solutions, especially in the US, because it'd would be possible to raise the taxe rate. Europe can't really do that, the "normal" people already pay all the taxes. On both continent though the cooperations don't pay enough taxes (Deleware etc)...

...anyway, of course cost reduction has to be part of reducing the defecit. Esp in the US. You gotta go to these two links and combine data.

http://en.wikipedia.org/wiki/Military_budget_of_the_United_States
http://en.wikipedia.org/wiki/World_population

$ 685 100 000 / 6 930 000 People = 98,9 $ per person on earth in 2010
 

The.Menace

Well-Known Member
Staff member
#12
I always wonder how many people don't even know what USA stands for but still they spent 98,9$ in 2010 to 'protect' the country from each one of them.
 

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