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Et tu, Hillary? Panic button hit on Obama's colossal debt

Posted By Jerome R. Corsi On 09/08/2010 @ 8:27 pm In Front Page | Comments Disabled

Secretary of State Hillary Clinton and the U.S. military joint command are now both on record that rising levels of U.S. national debt pose a national security threat.

The message to the commander-in-chief now from both the secretary of state and the U.S. joint military command appears to have been delivered loud and clear – continuing U.S. federal budget deficits measured in the trillions of dollars makes Americans less safe to threats posed by foreign enemies.

Addressing the Council on Foreign Relations today in Washington, D.C., Clinton said the U.S. budget deficit under the Obama administration poses a national security threat and projects a “message of weakness” internationally.

Responding to a question from CFR President Richard Haas, Clinton said rising U.S. debt levels pose a national security threat in two ways: “It undermines our capacity to act in our own interest, and it does constrain us where constraint may be undesirable.”

Clinton continued, “I mean, it is very troubling to me that we are losing the ability not only to chart our own destiny but to, you know, have the leverage that comes from this enormously effective economic engine that has powered American values and interests over so many years.”

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In an apparent effort to blame President George W. Bush for the federal budget deficit problem, Clinton said, “I mean, you know, it is – we don’t need to go back and sort of re-litigate how we got to where we are, but it is fair to say that, you know, we fought two wars without paying for them, and we had tax cuts that were not paid for either.”

U.S. military agrees

Clinton’s message on the debt echoed a message issued by the American military last March.

The Joint Operating Environment 2010 report, or JOE 2010, released March 15 by the United States Joint Forces Command, or USJFCOM, warned that “even the most optimistic economic projections suggest that the U.S. will add $9 trillion to the [national] debt over the next decade, outstripping even the most optimistic predictions for economic growth upon which the federal government relies for increased tax revenue.”

The USJFCOM expressed concerns that the burgeoning U.S. national debt represented a threat to U.S. national security.

“Rising debt and deficit financing of government operations will require ever-larger portions of government outlays for interest payments to service the debt,” the JOE 2010 cautioned. “Indeed, if current trends continue, the U.S. will be transferring approximately 7 percent of its total economic output abroad simply to service its foreign debt.”

To underscore its concern, the USJFCOM cited an alarming litany of historic examples, including the following:

  • Habsburg Spain defaulted on its debt 14 times in 150 years and was staggered by high inflation until its overseas empire collapsed;

  • Bourbon France became so beset by debt due to its many wars and extravagances that by 1788 the contributing social stresses resulted in its overthrow by revolution;
  • Interest ate up 44 percent of the British government budget during the interwar years 1919-1930, inhibiting its ability to rearm against Germany.

“Unless current trends are reversed, the U.S. will face similar challenges, anticipating an ever-growing percentage of the U.S. government budget going to pay interest on the money borrowed to finance our deficit spending,” the JOE 2010 concluded.

The USJFCOM expressed concern that U.S. current account and federal budget deficits will inevitably mean fewer dollars available to spend on defense.

In 1962, defense accounted for approximately 49 percent of total U.S. government expenditures, but by 2008 defense spending dropped to 20 percent.

“Following current trend lines, by 2028 the defense budget will likely consume between 2.6 percent and 3.1 percent of GDP – significantly lower than the 1990s average of 3.8 percent,” the JOE 2010 stressed, noting that by 2028 the Department of Defense could shrink to less than 10 percent of the total federal budget.

“The fundamental issues for the Joint Force are the long-term sustainability of our current allocation of the federal budget and how we can contribute to continued security while operating within the fiscal constraints that are unfolding.”

Unsustainable

With U.S. national debt topping $13.45 trillion this month and U.S. gross domestic product forecast to be $14.6 trillion in 2010, the U.S. debt-to-GDP ratio is at 92 percent.

The U.S. debt-to-GDP ratio historically only exceeded 100 percent once, in the years immediately following World War II.

WND previously reported that a blue-ribbon panel that included three former heads of the Congressional Budget Office told President Obama and the Democrat-controlled Congress in January that the debt level of the United States is “not sustainable.”

Studying the growth in three major entitlement programs – Medicare, Medicaid and Social Security – the report entitled “Choosing the Nation’s Fiscal Future” concluded that spending was far outpacing tax revenue such that “any efforts to rein in future deficits must entail either large increases in taxes to support these programs or major restraints on their growth – or some combination of the two.”

Unless action is taken immediately, the study warned the U.S. “faces the risk of a disruptive fiscal crisis.”

In an alarming chart, the study projected that, assuming tax rates stay near their current level, federal debt would be more than seven times the nation’s GDP in 75 years if no action is taken to constrain or offset the growth of Social Security, Medicare, and Medicaid.



The report predicted a frightening fiscal future for the U.S. should the Obama administration and the Congress fail to act.

“If remedial action is postponed for even a few years, a large and increasing federal debt will inevitably limit the nation’s future wealth by reducing the growth of capital stock and of the economy,” the panel advised. “It will also increase the nation’s liabilities to investors abroad, who currently hold about one half of the federal government’s debt.”

Increasing debt to GDP levels also exacerbate the increased interest payments U.S. taxpayers in the future will be obligated to pay just to finance current budget deficits.

“Increasing debt also may contribute to a loss of international and domestic investor confidence in the nation’s economy, which would, in turn, lead to even higher interest rates, lower domestic investment and a falling dollar,” the panel said.



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