Govt. Stimulus Masks Long-Term Economic Decline And Leads To Loss Of U.S. Sovereignty
By Richard A. McCormack
The United States economy will soon be facing a more severe crisis due to the Obama administration’s spending splurge that is harming America’s long-term prosperity. Obama’s policies are focused on fixing a cyclical housing market downturn, and they do nothing to restore the U.S. manufacturing base — the true source of wealth. Moreover, Obama has put the United States deeper into debt to the Chinese, who refuse to change their mercantilist trade policies that continue to destroy American industry, according to Peter Navarro, professor at the Merage School of Business at the University of California-Irvine and author of the best-selling book The Coming China Wars.
“The long-run road to prosperity lies with the reinvigoration of manufacturing and what the Obama administration is doing with the fiscal stimulus as well as its [financial bailout] packages leads us further away from that,” says Navarro. “Without a strong industrial base, U.S. consumption, business investment and exports won’t be strong enough to drive long-term growth. Basically he is indenturing us further to China.”
Spending trillions of borrowed dollars will provide the economy with a short-term economic uptick, Navarro told a recent meeting in Washington of the Coalition for a Prosperous America. But when the spending ends, the economic decline the country has been experiencing for 20 or more years will return “because without a robust manufacturing sector there is no horsepower to drive the economy,” says Navarro. “Manufacturing is totally off the table because [the Obama administration] has a vested interest in not talking about it. If they talk about it, it brings into play all of the other choices that they have to make with regards to China.” These include dealing aggressively with Chinese trade abuses and its continued manipulation of its currency.
Obama’s stimulus package and the Troubled Asset Relief Program for the financial sector have changed the equation in a “profoundly disturbing way,” says Navarro. The United States now has to borrow $3 billion a day to cover its trade and budget deficits. China has become America’s banker. “This is the worst case scenario,” Navarro says. “I thought that a new administration would address China’s unfair trade practices and begin to restore American industry. But now that we need China’s money and the economy is so perilous, it becomes more difficult to do that.”
Obama is “mortgaging America’s future to solve the cyclical housing bubble recession,” Navarro says. Secretary of State Hillary Clinton “on her knees in Beijing begging China for money….puts the United States in a weak negotiating position on trade reform and will prevent solving our manufacturing recession.”
The only way to fix the economy is to restore the U.S. manufacturing base, and that can only happen by dealing with unfair trade issues. Rising unemployment coupled with losses of stock market and real estate wealth means the country cannot rely on consumer spending to drive economic growth. “Incomes only rise with restoration of manufacturing and increased productivity,” Navarro notes. “Manufacturing jobs pay more and have a higher job multiplier.” Only by leveling the trading playing field will U. S. companies begin reinvesting in production and thereby drive productivity and growth.
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