Bush's China Legacy

While election returns were coming in on November 4th I had a telephone conversation with a good friend of mine known in the blogosphere as UpInVermont. He blogs over at Duplicitous Primates and we've been conversing/debating about public policy for over twenty years since meeting in college (when the hell did I get old anyway?). My friend noted how desperate America was for China to continue financing our debt. He sagely warned that contrary to popular belief, the Chinese are not nearly as dependent on America anymore and could decide to stop anytime.

I thought of that conversation while reading Fareed Zakaria's article today about the American-Chinese relationship. It's a sobering read and painful reminder of another pathetic George W. Bush legacy: China has America by the economic short hairs.

America needs to spend its way out of our current economic morass. Obama is right to target massive spending on neglected infrastructure needs to repair our transportation, modernize America's approach to energy and create jobs. Most agree, including me that the deficit can't be a priority with millions of Americans on the cusp of homelessness and destitution. Yet as Zakaria writes,

"But to run up these deficits -- which could total somewhere between $1 trillion and $1.5 trillion, or between 7 and 11 percent of gross domestic product -- America has to get someone to buy its debt. And the only country with the cash to do so is China."

Zakaria references the analysis of Joseph Stiglitz and Niall Ferguson in noting that China has options other than bankrolling America's consumers. Indeed, the Chinese may well decide they're not getting enough of a return on such an investment and opt to finance their own consumers instead. Beijing recently announced their own massive stimulus plan of $600 billion. At all costs the Communist Party in Beijing wants to preserve stability to stay in power. Translation: they don't want unemployment and strikes facilitating a political climate that threatens their hold on power. If $600 billion isn't enough they will spend more. If that requires sacrificing their financing of American consumers we're in trouble. Then what?

President George W. Bush and his band of neocons justified their reckless pursuit of empire in the name of freedom. Ironic that America's economic destiny may be determined by Communist dictators in Beijing because of their combined policies of predatory crony capitalism, de-regulation and imperialism on steroids. I know Democrats are talking bipartisanship but I can't forget or forgive how conservatives have imperiled my country and the world.