I wish my Bank would give me an ever increasing overdraft that I can pay in my next reincarnation. The USA certainly seems to have one. On a serious note, I am loathe to agree with the Tea Party. They are simply not my type. Although their real reason to play chicken on the debt ceiling is to get rid of Obama, their official concern on debt is worth noting. Because the financial future is no longer 'the world according to Uncle Sam'.
A decade and half ago, the United States enjoyed a status that God would have envied. Un-countable money, un-contestable military power and un-challengeable political clout. It was Super -super- super power, or mega super power. Even the Popes never had all three.
But then the US of A dared the graveyard of Empires, the Pushtoonland of Afghanistan. Ten years later it is still throwing money borrowed from the ever rising debt ceiling as if there is no tomorrow. It was to be a $80 Billion war, but after the biggest cost overrun in history it has nearly reached £4 Trillion according to Stiglitz. And all it wants is to come out from that poppy land with dignity and still have clout as a Super power.
As the USA was busy fighting these rusty Pushtoons from mud house villages with all the miracles of silicon valley and satellite technology, the rest of the world was building itself up in other ways. China is predicted to surpass the USA as the biggest economy in about two decades if not earlier. India has also become substantively powerful in the money muscle. Brazil is not far away.
So what? The USA has seen off other superpowers and near powers last century. See what became of the Soviet Union. One wonders why anyone was fearful of Stalin's ghost land.
The fact is that the difference between the cold war and now is immense. The cold war was a competition for ideological dominance over the world, a very European type of conflict. Hidden within the communist-capitalist agenda was also access to resources. But the Soviet had no corporate ambition to replace the dollar as the premier currency of capitalism. If anything, its official campaign was to make workers the official economic exchange rate. Labour power.
The new cold war is an economic war. China has what every red blooded capitalist corporation thrives on. A non democratic, authoritarian regime (the executive Board) believing in free market access and freedom to make as much money as possible without guilt or altruism. China is not hampered by the dramas of America's democracy.
Chinese politicians do not play chicken with each other like Tea Party, Republicans and Democrats. They negotiate deals with extreme confidence on the world stage. China has the best of both evils. It is a communist regime that distributes power from top to bottom. No need to consult people. The communist party decides for them. And it has converted from communist idealism of equal poverty for all, to a money making capitalist machine. With the speed it is going, sooner or later the Renminbi (Yuan) will become a reserve currency.
And sooner or later, these chicken games in American Budget politics will erode the patience of all those good capitalists and countries buying US bonds and swearing loyalty to the dollar. Like all good capitalist they will switch over to the stability and predictability of the Chinese currency.
Following a capital exodus the US will lose its golden crown as the premier reserve currency. Then life might become a little difficult for US Budget machismo. The no limit debt will become a real debt and the US will have reached its glass ceiling.
Of course Obama should do everything to raise the current ceiling including the possibility of using Amendment 14.4. Only so that I can continue to pay my mortgage and my house price remains stable. But in the long run, the USA has to take the loathsome tea party chants seriously.
Perhaps Obama could redirect the bipartisan National Commission on Fiscal Responsibility and Reform to come up instead with a 20 year plan to reduce the US deficit to double billion figures, shed off some of the luxuries the USA has developed a habit for, such as going into long wars that it loses. It could draw back on the CIA so more Governments around the world can stay in power according to their own people's wishes instead of Pentagon's diktat. The State department could learn the art of diplomacy without coercion. And it could introduce a bit of a balanced approach to internal security. Trillions more than the 4 Trillion suggested by the Commission can be saved in future by changing habits.
By re-engaging this bipartisan committee, Obama will outwit the Tea Party. He will acknowledge now and for future generations that the Dollar is not invincible. The USA needs to take its foot off the hydraulic pump of debt.