Dulles, Virginia — This week’s G-20 summit may be one of America’s most embarrassing moments since President Barack Obama gave 25 DVDs and a bag of Jiffy Pop to Prime Minister Gordon Brown. Granted, that was only a few weeks ago, but when Obama presented the department store gift set as a symbol of our national friendship, Americans cringed. At the time, we believed it to be thoughtless. Now we realize it was all we could afford.
That point is not lost on other world leaders. In these past few weeks, communists and socialists have taken to lecturing Americans about our irresponsible fiscal behavior. Since taking office, Obama has flooded the U.S. economy with red ink and is twisting G-20 arms to do the same. “The United States is ready to lead, and we call upon our partners to join us with a sense of urgency and common purpose,” the President wrote in a newspaper column distributed across the globe. Europeans, who only a year ago worshipped Obama, now are beginning to see him as a false prophet.
Mirek Topol??¡nek, President of the European Union and the Czech Prime Minister, condemned Obamanomics, saying it has America on “the way to hell.” In Germany, Prime Minister Angela Merkel has refused Obama’s advice for more government spending. Her beliefs were recently echoed by Axel Weber, the president of the Bundesbank, who flatly rejected Obama’s fixation for fiscal stimulus. “The expectation,” he warned, “that we could neutralise this synchronised recession through short-term fiscal policy measures is false. We should not even try.”
In London, Gordon Brown’s dream of a Global New Deal was rebuked by the Bank of England’s Mervyn King. “Given how big our deficits are,” King said in a speech to U.K. lawmakers, “I think it would be sensible to be cautious about going further in using discretionary measures to expand the size of those deficits.” He added, “I think the fiscal position in the UK is not one where we could say, ‘Well, why don’t we just engage in another significant round of fiscal expansion?’”
It is time for some economic introspection. These world leaders realize that President Obama is writing a subprime mortgage on America’s future. This year, Obama’s government will spend twice as much as it takes in. On top of the trillions he has already spent, the President’s budget over the next ten years will add $9.3 trillion to the national debt — which currently tops $11 trillion. The Heritage Foundation’s Brian Riedl says Obama’s stimulus package adds $9,400 of debt to every American household.
National debt, which Thomas Jefferson called “the greatest of dangers,” is mounting at a faster pace than at any time in history. Massive tax increases will be needed to keep up with interest payments on the debt which, in 2008, topped $400 billion. By their own admission, this administration is continuing the practices that created the current mess. Writing in the Wall Street Journal, Treasury Secretary Tim Geithner cited as one cause of the crisis the fact that “as a nation we borrowed too much and let our financial system take on irresponsible levels of risk.”
All this borrowing makes debt service one of the largest components of the federal budget. Because foreigners hold more than 40 percent of America’s red ink, it is increasingly becoming a risk to American sovereignty. China is the largest holder of America’s debt instruments, and, last week, America’s communist banker warned the Obama administration that the U.S. may not qualify for a 2nd and 3rd mortgage. Reminding the administration of the “huge amounts of money,” China has invested in the United States, Premier Wen Jiabao said “of course” the Chinese “are concerned about the safety of our assets.”
That was followed by Zhou Xiaochuan of the People’s Bank of China, echoing Russia’s call for a global monetary unit to replace the dollar as the world’s reserve currency. “The outbreak of the crisis and its spillover to the entire world,” Zhou observed, “reflected the inherent vulnerabilities and systemic risks in the existing international monetary system.” The remark confused Secretary Geithner who, in a matter of hours, both endorsed and opposed Zhou’s proposal for a global currency. The President was forced to defend the dollar’s relevance and assure China that America is a safe investment.
Though the dollar is not about to be replaced by a world currency in the near future, China’s challenge is cause for concern. They, as well as the Europeans, are “not letting a crisis go to waste” and are exploiting America’s economic troubles to remake global institutions and the world economy in their own image.
London’s G-20 is Obama’s first performance in a lead role on the world stage. Let’s hope this movie has a happy ending.