trade deficit with China of nearly $230 billion

I bolded the paragraph on the deficit
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From Pat Buchanan's column,

Posted: February 2, 2007
1:00 a.m. Eastern

"I'm concerned about protectionism, isolationism."

Those were the first words President Bush spoke as he sat down Wednesday at an editorial board meeting at the Wall Street Journal.

Reading his remarks calls forth only sadness. For neither the president nor his acolytes at the Journal appear to have learned anything from the disasters their ideas have visited upon the party and country.

Can Bush not see that the isolation of America is a result of the war he launched on a nation that, no matter how odious its regime, did not threaten us? Can he not see clearly now the idiocy of the Journal's 10-year crusade for a "MacArthur Regency" in Baghdad? Has this president learned nothing? And, if not, what does that portend for Iran?

As for protectionism, does Bush not see the link between the rise of economic nationalism in America, the rout of his party in November and the humongous trade deficits he has been running up?

When the trade figures for 2006 come in, it will be revealed that the United States ran the greatest trade deficit in history, close to $800 billion, near 7 percent of GDP. And the greatest trade deficit with any one country will be recorded – a trade deficit with China of nearly $230 billion.

Because China fixes its currency 40 percent below where it would float in a free market, Beijing is siphoning factories, technologies and jobs out of our country at a prodigious rate. For two decades, China's annual growth has been consistent at 9-10 percent. Beijing has accumulated $1 trillion in hard currency reserves, most of it in dollar-denominated instruments.

A good slice of that trade surplus, and of the billions Beijing collects in annual interest on that share of our national debt it holds, is used to finance the greatest military buildup in Asia since Japan in the 1930s. Our "strategic partner" just sent us a message in the clear. Using a land-based ballistic missile, Beijing blasted a satellite out of the sky, 500 miles above the earth.

Does President Bush not understand the correlation between his trade policy, our sinking dollar and the loss of 3 million manufacturing jobs on his watch? Economic patriotism is on the march because economic globalism is failing America.

We are being skinned alive by our trading partners. While we have eliminated tariffs, they impose value-added taxes of up to 20 percent on U.S. goods entering the country and rebate the VAT on goods they export to the United States. This system operates like a 40 percent tariff on U.S. goods. That is why we are running record trade deficits with Canada, the European Union, Japan and Free Asia.

Bush has now begun his campaign for renewal of "fast track" authority, which expires in July. Under fast track, Congress agrees to give up its constitutional right to amend trade treaties.

But to give Bush a blank check to negotiate trade treaties after his record trade deficits makes as much sense as giving him a blank check to launch another war. Some adult has got to grab the steering wheel here.

In closing, the president delivered a little disquisition on history to the editors. Reading it, one has the sinking feeling of that professor of Civil War history who, at semester's end, was asked by one of his students, "Sir, why were all the major Civil War battles fought in national parks?"

Said Bush: "Sometimes, nativism, isolationism and protectionism all run hand in hand. We've got to be careful about that in the United States. The 1920s was a period of high tariff, high tax, no immigration. And the lesson of the '20s ought to be a reminder of what is possible for future presidents."

What is President Bush talking about?

Under Harding-Coolidge and Treasury Secretary Andrew Mellon, tariffs were indeed doubled to 38 percent, but imports were only 4 percent of GDP and most imports came in duty-free. And Wilson's wartime income tax rates were not raised, but slashed from Wilson's 72 percent to 25 percent.

When Harding took office, the unemployment rate was 12 percent. When Coolidge went home, it was 3 percent and America was producing 42 percent of the world's manufactures. Between 1922 and 1927, the economy grew at 7 percent a year, the largest peacetime growth ever. They were not called The Roaring Twenties for nothing, Mr. Bush.

As for "nativism," the immigration law of 1924 simply cut back immigration to 160,000 a year, and declared that the racial and ethnic profile of America was fine and should not be altered. Sam Gompers agreed. A. Philip Randolph wanted immigration stopped.

Thanks to that law, by the 1950s, almost all immigrants and their children had been fully assimilated and Americanized. What was wrong with that, Mr. President? Or do you and your Journal acolytes simply not like the country you grew up in?

Ronald Reagan, who loved Cal Cooldige, went to Eureka College. Bush, who thinks the Republican Era of the 1920s a disaster, was educated at Yale and Harvard. Maybe that's the problem.

from:
http://www.wnd.com/news/article.asp?ARTICLE_ID=54058

I have been reading Pat Buchanan for a while - and think he has a lot of really good things to say. If you are into reading at all - pick up his books "A Republic not an Empire", "Death of the West" and the latest one "State of Emergency" - he has others too - I haven't gotten them all.

There are other people who back up what Mr. Buchanan is trying to tell us - some of them have a much bleaker view of where we are headed:



[FONT=Georgia, Times New Roman, Times, serif][FONT=Times New Roman, Times, serif]Nemesis on the Imperial Premises[/FONT][/FONT]


[FONT=Georgia, Times New Roman, Times, serif][FONT=Georgia, Times New Roman, Times, serif][FONT=Georgia, Times New Roman, Times, serif][FONT=Georgia, Times New Roman, Times, serif][FONT=Times New Roman, Times, serif]by Tom Engelhardt[/FONT][/FONT][/FONT][/FONT][FONT=Times New Roman, Times, serif] and Chalmers Johnson[/FONT][/FONT]
[FONT=Georgia, Times New Roman, Times, serif][FONT=Times New Roman, Times, serif]

[/FONT]

by Tom Engelhardt and Chalmers Johnson​

[/FONT]


[FONT=Times New Roman, Times, serif]The dream of the Bush administration – eternal global domination abroad with no other superpower or bloc of powers on the military horizon and a Republican Party dominant at home for at least a generation – long ago evaporated in Iraq. A midterm election and subsequent devastating polling figures tell the tale. The days when neocons, their supporters, and attending pundits talked about the U.S. as the "new Rome" of planet Earth now seem to exist on the other side of some Startrekkian wormhole. [/FONT]

[FONT=Times New Roman, Times, serif]And yet the imperial damage remains everywhere around us. Give the Bush administration credit. They moved the goalposts. They created the sort of dystopian imperial reality (as well as a mess of future-busting proportions) that a generation of relative sanity might not be able to fully reverse. The facts on the ground – the vastness of the Pentagon, the power of the military-industrial complex, the inept but already bloated Homeland Security Department (and the vast security interests coalescing around it), the staggering alphabet (or acronym) soup of the "Intelligence Community" – all of this militates against real change, which is why we need Chalmers Johnson. [/FONT]

[FONT=Times New Roman, Times, serif]Nemesis: The Last Days of the American Republic, the final volume of his Blowback Trilogy, is about to storm your local bookstore (and can be pre-ordered at Amazon now). It is a reminder of just how far we've moved from the sort of democratic America that the President is always holding up as a model to the rest of the world. As with Blowback and The Sorrows of Empire before it, Nemesis, Johnson's grand, if grim, conclusion to our American tragedy, is simply a must-read. While you're waiting for the book to arrive in your hands, you can get a little preview of its themes below. ~ Tom[/FONT]

[FONT=Times New Roman, Times, serif]Empire v. Democracy: [/FONT][FONT=Times New Roman, Times, serif]Why Nemesis Is at Our Door[/FONT]
[FONT=Times New Roman, Times, serif]By Chalmers Johnson [/FONT]

[FONT=Times New Roman, Times, serif]History tells us that one of the most unstable political combinations is a country – like the United States today – that tries to be a domestic democracy and a foreign imperialist. Why this is so can be a very abstract subject. Perhaps the best way to offer my thoughts on this is to say a few words about my new book, Nemesis, and explain why I gave it the subtitle, "The Last Days of the American Republic." Nemesis is the third book to have grown out of my research over the past eight years. I never set out to write a trilogy on our increasingly endangered democracy, but as I kept stumbling on ever more evidence of the legacy of the imperialist pressures we put on many other countries as well as the nature and size of our military empire, one book led to another. [/FONT]

[FONT=Times New Roman, Times, serif]Professionally, I am a specialist in the history and politics of East Asia. In 2000, I published Blowback: The Costs and Consequences of American Empire, because my research on China, Japan, and the two Koreas persuaded me that our policies there would have serious future consequences. The book was noticed at the time, but only after 9/11 did the CIA term I adapted for the title – "blowback" – become a household word and my volume a bestseller. [/FONT]

[FONT=Times New Roman, Times, serif]I had set out to explain how exactly our government came to be so hated around the world. As a CIA term of tradecraft, "blowback" does not just mean retaliation for things our government has done to, and in, foreign countries. It refers specifically to retaliation for illegal operations carried out abroad that were kept totally secret from the American public. These operations have included the clandestine overthrow of governments various administrations did not like, the training of foreign militaries in the techniques of state terrorism, the rigging of elections in foreign countries, interference with the economic viability of countries that seemed to threaten the interests of influential American corporations, as well as the torture or assassination of selected foreigners. The fact that these actions were, at least originally, secret meant that when retaliation does come – as it did so spectacularly on September 11, 2001 – the American public is incapable of putting the events in context. Not surprisingly, then, Americans tend to support speedy acts of revenge intended to punish the actual, or alleged, perpetrators. These moments of lashing out, of course, only prepare the ground for yet another cycle of blowback. [/FONT]

[FONT=Times New Roman, Times, serif]A World of Bases [/FONT]
[FONT=Times New Roman, Times, serif]As a continuation of my own analytical odyssey, I then began doing research on the network of 737 American military bases we maintained around the world (according to the Pentagon's own 2005 official inventory). Not including the Iraq and Afghanistan conflicts, we now station over half a million U.S. troops, spies, contractors, dependents, and others on military bases located in more than 130 countries, many of them presided over by dictatorial regimes that have given their citizens no say in the decision to let us in. [/FONT]

[FONT=Times New Roman, Times, serif]As but one striking example of imperial basing policy: For the past sixty-one years, the U.S. military has garrisoned the small Japanese island of Okinawa with 37 bases. Smaller than Kauai in the Hawaiian Islands, Okinawa is home to 1.3 million people who live cheek-by-jowl with 17,000 Marines of the 3rd Marine Division and the largest U.S. installation in East Asia – Kadena Air Force Base. There have been many Okinawan protests against the rapes, crimes, accidents, and pollution caused by this sort of concentration of American troops and weaponry, but so far the U. S. military – in collusion with the Japanese government – has ignored them. My research into our base world resulted in The Sorrows of Empire: Militarism, Secrecy, and the End of the Republic, written during the run-up to the Iraq invasion. [/FONT]

[FONT=Times New Roman, Times, serif]As our occupations of Afghanistan and Iraq turned into major fiascoes, discrediting our military leadership, ruining our public finances, and bringing death and destruction to hundreds of thousands of civilians in those countries, I continued to ponder the issue of empire. In these years, it became ever clearer that George W. Bush, Dick Cheney, and their supporters were claiming, and actively assuming, powers specifically denied to a president by our Constitution. It became no less clear that Congress had almost completely abdicated its responsibilities to balance the power of the executive branch. Despite the Democratic sweep in the 2006 election, it remains to be seen whether these tendencies can, in the long run, be controlled, let alone reversed. [/FONT]

[FONT=Times New Roman, Times, serif]Until the 2004 presidential election, ordinary citizens of the United States could at least claim that our foreign policy, including our illegal invasion of Iraq, was the work of George Bush's administration and that we had not put him in office. After all, in 2000, Bush lost the popular vote and was appointed president thanks to the intervention of the Supreme Court in a 5-4 decision. But in November 2004, regardless of claims about voter fraud, Bush actually won the popular vote by over 3.5 million ballots, making his regime and his wars ours. [/FONT]

[FONT=Times New Roman, Times, serif]Whether Americans intended it or not, we are now seen around the world as approving the torture of captives at Abu Ghraib prison in Iraq, at Bagram Air Base in Kabul, at Guantánamo Bay, Cuba, and at a global network of secret CIA prisons, as well as having endorsed Bush's claim that, as commander-in-chief in "wartime," he is beyond all constraints of the Constitution or international law. We are now saddled with a rigged economy based on record-setting trade and fiscal deficits, the most secretive and intrusive government in our country's memory, and the pursuit of "preventive" war as a basis for foreign policy. Don't forget as well the potential epidemic of nuclear proliferation as other nations attempt to adjust to and defend themselves against Bush's preventive wars, while our own already staggering nuclear arsenal expands toward first-strike primacy and we expend unimaginable billions on futuristic ideas for warfare in outer space. [/FONT]

[FONT=Times New Roman, Times, serif]The Choice Ahead [/FONT]
[FONT=Times New Roman, Times, serif]By the time I came to write Nemesis, I no longer doubted that maintaining our empire abroad required resources and commitments that would inevitably undercut, or simply skirt, what was left of our domestic democracy and that might, in the end, produce a military dictatorship or – far more likely – its civilian equivalent. The combination of huge standing armies, almost continuous wars, an ever-growing economic dependence on the military-industrial complex and the making of weaponry, and ruinous military expenses as well as a vast, bloated "defense" budget, not to speak of the creation of a whole second Defense Department (known as the Department of Homeland Security) has been destroying our republican structure of governing in favor of an imperial presidency. By republican structure, of course, I mean the separation of powers and the elaborate checks and balances that the founders of our country wrote into the Constitution as the main bulwarks against dictatorship and tyranny, which they greatly feared. [/FONT]
[FONT=Times New Roman, Times, serif]We are on the brink of losing our democracy for the sake of keeping our empire. Once a nation starts down that path, the dynamics that apply to all empires come into play – isolation, overstretch, the uniting of local and global forces opposed to imperialism, and in the end bankruptcy. [/FONT]

[FONT=Times New Roman, Times, serif]History is instructive on this dilemma. If we choose to keep our empire, as the Roman republic did, we will certainly lose our democracy and grimly await the eventual blowback that imperialism generates. There is an alternative, however. We could, like the British Empire after World War II, keep our democracy by giving up our empire. The British did not do a particularly brilliant job of liquidating their empire and there were several clear cases where British imperialists defied their nation's commitment to democracy in order to hang on to foreign privileges. The war against the Kikuyu in Kenya in the 1950s and the Anglo-French-Israeli invasion of Egypt in 1956 are particularly savage examples of that. But the overall thrust of postwar British history is clear: the people of the British Isles chose democracy over imperialism. [/FONT]

[FONT=Times New Roman, Times, serif]In her book The Origins of Totalitarianism, the political philosopher Hannah Arendt offered the following summary of British imperialism and its fate: [/FONT]

[FONT=Times New Roman, Times, serif]I agree with this judgment. When one looks at Prime Minister Tony Blair's unnecessary and futile support of Bush's invasion and occupation of Iraq, one can only conclude that it was an atavistic response, that it represented a British longing to relive the glories – and cruelties – of a past that should have been ancient history. [/FONT]

[FONT=Times New Roman, Times, serif]As a form of government, imperialism does not seek or require the consent of the governed. It is a pure form of tyranny. The American attempt to combine domestic democracy with such tyrannical control over foreigners is hopelessly contradictory and hypocritical. A country can be democratic or it can be imperialistic, but it cannot be both. [/FONT]

[FONT=Times New Roman, Times, serif]The Road to Imperial Bankruptcy [/FONT]
[FONT=Times New Roman, Times, serif]The American political system failed to prevent this combination from developing – and may now be incapable of correcting it. The evidence strongly suggests that the legislative and judicial branches of our government have become so servile in the presence of the imperial Presidency that they have largely lost the ability to respond in a principled and independent manner. Even in the present moment of congressional stirring, there seems to be a deep sense of helplessness. Various members of Congress have already attempted to explain how the one clear power they retain – to cut off funds for a disastrous program – is not one they are currently prepared to use. [/FONT]

[FONT=Times New Roman, Times, serif]So the question becomes, if not Congress, could the people themselves restore Constitutional government? A grass-roots movement to abolish secret government, to bring the CIA and other illegal spying operations and private armies out of the closet of imperial power and into the light, to break the hold of the military-industrial complex, and to establish genuine public financing of elections may be at least theoretically conceivable. But given the conglomerate control of our mass media and the difficulties of mobilizing our large and diverse population, such an opting for popular democracy, as we remember it from our past, seems unlikely. [/FONT]
[FONT=Times New Roman, Times, serif]It is possible that, at some future moment, the U.S. military could actually take over the government and declare a dictatorship (though its commanders would undoubtedly find a gentler, more user-friendly name for it). That is, after all, how the Roman republic ended – by being turned over to a populist general, Julius Caesar, who had just been declared dictator for life. After his assassination and a short interregnum, it was his grandnephew Octavian who succeeded him and became the first Roman emperor, Augustus Caesar. The American military is unlikely to go that route. But one cannot ignore the fact that professional military officers seem to have played a considerable role in getting rid of their civilian overlord, Secretary of Defense Donald Rumsfeld. The new directors of the CIA, its main internal branches, the National Security Agency, and many other key organs of the "defense establishment" are now military (or ex-military) officers, strongly suggesting that the military does not need to take over the government in order to control it. Meanwhile, the all-volunteer army has emerged as an ever more separate institution in our society, its profile less and less like that of the general populace. [/FONT]

[FONT=Times New Roman, Times, serif]Nonetheless, military coups, however decorous, are not part of the American tradition, nor that of the officer corps, which might well worry about how the citizenry would react to a move toward open military dictatorship. Moreover, prosecutions of low-level military torturers from Abu Ghraib prison and killers of civilians in Iraq have demonstrated to enlisted troops that obedience to illegal orders can result in dire punishment in a situation where those of higher rank go free. No one knows whether ordinary soldiers, even from what is no longer in any normal sense a citizen army, would obey clearly illegal orders to oust an elected government or whether the officer corps would ever have sufficient confidence to issue such orders. In addition, the present system already offers the military high command so much – in funds, prestige, and future employment via the famed "revolving door" of the military-industrial complex – that a perilous transition to anything like direct military rule would make little sense under reasonably normal conditions. [/FONT]

[FONT=Times New Roman, Times, serif]Whatever future developments may prove to be, my best guess is that the U.S. will continue to maintain a façade of Constitutional government and drift along until financial bankruptcy overtakes it. Of course, bankruptcy will not mean the literal end of the U.S. any more than it did for Germany in 1923, China in 1948, or Argentina in 2001–2002. It might, in fact, open the way for an unexpected restoration of the American system – or for military rule, revolution, or simply some new development we cannot yet imagine. [/FONT]

[FONT=Times New Roman, Times, serif]Certainly, such a bankruptcy would mean a drastic lowering of our standard of living, a further loss of control over international affairs, a sudden need to adjust to the rise of other powers, including China and India, and a further discrediting of the notion that the United States is somehow exceptional compared to other nations. We will have to learn what it means to be a far poorer country – and the attitudes and manners that go with it. As Anatol Lieven, author of America Right or Wrong: An Anatomy of American Nationalism, observes: [/FONT]

[FONT=Times New Roman, Times, serif]In February 2006, the Bush administration submitted to Congress a $439 billion defense appropriation budget for fiscal year 2007. As the country enters 2007, the administration is about to present a nearly $100 billion supplementary request to Congress just for the Iraq and Afghan wars. At the same time, the deficit in the country's current account – the imbalance in the trading of goods and services as well as the shortfall in all other cross-border payments from interest income and rents to dividends and profits on direct investments – underwent its fastest ever quarterly deterioration. For 2005, the current account deficit was $805 billion, 6.4% of national income. In 2005, the U.S. trade deficit, the largest component of the current account deficit, soared to an all-time high of $725.8 billion, the fourth consecutive year that America's trade debts set records. The trade deficit with China alone rose to $201.6 billion, the highest imbalance ever recorded with any country. Meanwhile, since mid-2000, the country has lost nearly three million manufacturing jobs. [/FONT]

[FONT=Times New Roman, Times, serif]To try to cope with these imbalances, on March 16, 2006, Congress raised the national debt limit from $8.2 trillion to $8.96 trillion. This was the fourth time since George W. Bush took office that it had to be raised. The national debt is the total amount owed by the government and should not be confused with the federal budget deficit, the annual amount by which federal spending exceeds revenue. Had Congress not raised the debt limit, the U.S. government would not have been able to borrow more money and would have had to default on its massive debts. [/FONT]
[FONT=Times New Roman, Times, serif]Among the creditors that finance these unprecedented sums, the two largest are the central banks of China (with $853.7 billion in reserves) and Japan (with $831.58 billion in reserves), both of which are the managers of the huge trade surpluses these countries enjoy with the United States. This helps explain why our debt burden has not yet triggered what standard economic theory would dictate: a steep decline in the value of the U.S. dollar followed by a severe contraction of the American economy when we found we could no longer afford the foreign goods we like so much. So far, both the Chinese and Japanese governments continue to be willing to be paid in dollars in order to sustain American purchases of their exports. [/FONT]

[FONT=Times New Roman, Times, serif]For the sake of their own domestic employment, both countries lend huge amounts to the American treasury, but there is no guarantee of how long they will want to, or be able to do so. Marshall Auerback, an international financial strategist, says we have become a "Blanche Dubois economy" (so named after the leading character in the Tennessee Williams play A Streetcar Named Desire) heavily dependent on "the kindness of strangers." Unfortunately, in our case, as in Blanche's, there are ever fewer strangers willing to support our illusions. [/FONT]

[FONT=Times New Roman, Times, serif]So my own hope is that – if the American people do not find a way to choose democracy over empire – at least our imperial venture will end not with a nuclear bang but a financial whimper. From the present vantage point, it certainly seems a daunting challenge for any President (or Congress) from either party even to begin the task of dismantling the military-industrial complex, ending the pall of "national security" secrecy and the "black budgets" that make public oversight of what our government does impossible, and bringing the president's secret army, the CIA, under democratic control. It's evident that Nemesis – in Greek mythology the goddess of vengeance, the punisher of hubris and arrogance – is already a visitor in our country, simply biding her time before she makes her presence known.[/FONT]

[FONT=Times New Roman, Times, serif]February 1, 2007[/FONT]