Monday, May 7, 2012

China doesn't own the U.S.

$15,673,229,738,379.13. Yep, that’s it. Every penny classified as the United States debt. Now when people see this number, they are often drawn to think about China. That’s been the scare for the last decade or so as its GDP steadily advances, but ultimately, we have to look at both sides of the “China owns half of the United States debate”. First off, that’s wrong, but not far off. This year, it is expected that our national debt will top our total GDP. Basically, the United States now costs more than it generates. In simple terms, we’re upside down. But, notwithstanding this, China still doesn’t hold the majority of this debt. Only about 8% in fact. That’s only about four states actually, maybe five if one of them was Wyoming. Regardless, it means that as far as debt has gone, the United States has played its cards right and hasn’t given any one country a huge portion of control over us. However, that doesn’t mean it’s not dangerous. Having the world’s superpower owe extravagant amounts of money is usually not a recipe for continued stability. Granted, the United States, has been in this position before—debt-wise—just following World War II. But debt quickly dwindled after that as the economy soared, and our puttering economy doesn’t demonstrate that that is the case currently.
China's rapid development in energy, military and economy
has become a major concern to those looking to forward U.S.
            The United States first gained its economic power about nine decades ago, with the end of World War I. The massive scale of the war resulted in spending that could only be financed by the United States. As a result, the economic center of the world shifted from London to New York. At this point, the United States still wasn’t considered the leading power, and it would take involvement in World War II and demonstration of military prowess to solidify that role. China only trails the United States by nine billion in terms of GDP, but given that currently we are indebted to them for about 1.2 billion and their economy flourishes while ours stagnates, it doesn’t seem so much of a stretch. Additionally, the second half of that equation is still relevant, and in the last decade, China has more than quadrupled its military spending to 114.3 billion dollars. Now is not the time to fall behind.
Social Security, Healthcare and other
programs make up the majority of U.S. debt
            Looking at these numbers, it’s easy to instinctively blame government extravagance and corruption, but pork and small favors are not what composes the majority of debt. In fact, the term debt refers to two entirely separate entities. The first of these refers to public debt, in which the government borrows money on the open market from foreign or domestic lenders. The other, and by far the larger, refers to intra-governmental debt, in which the government owes itself money for certain programs. And the largest component of this debt? Social security and healthcare. That’s it. That’s the problem. And it’s not even necessarily a problem. Just some perspective. While we remain critical of the government’s discretionary spending in areas like energy and military, its important to realize that the majority is drawn from mandatory spending fueled by our own misguided concept of entitlement. The danger of China is nothing compared to the individual’s demand for security. Like I said, healthcare and social security are not inherently bad, but as they continue to drain away America’s resources, we must ask ourselves not what our country can do for us, but what we can do for our country.

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