America's Huge International Debt Is a Risky Affair

News and Opinion for Democrats Against Bush -- Part II

America's Huge International Debt Is a Risky Affair

"Talk to American officials about it and they'll say not to worry, this country can always handle a little more international debt. Sure, the same way an alcoholic can always handle another drink." -- Kenneth Rogoff, Washington Post

"The US is shipping a rising portion of interest payments on that debt abroad. That means less of that money stays at home to be spent or invested. And it also can weaken confidence in the dollar. ... Already, foreigners receive more than a third of the interest paid on the $4 trillion in federal debt now held by the public."

--David R. Francis, Christian Science Monitor

Washington Post

washingtonpost.com

The Debtor's Empire

By Kenneth Rogoff

Monday, October 20, 2003; Page A23

The complete article may be purchased from the Washington Post archives at-- http://pqasb.pqarchiver.com/washingtonpost/search.html?nav=left

Excerpt--

Isn't it just a little twisted that the United States, the world's richest country, is on track to borrow more than $500 billion from abroad this year? Isn't it even stranger that this borrowing includes sizable chunks from countries such as India and China, many of whose 2.3 billion people live on less than a dollar or two a day? ...

Even with the morality of it all set aside, pure self-interest ought to dictate that the United States be a net lender to the rest of the world rather than a borrower. We are an aging population that ought to be saving for retirement in real assets abroad. ...

The writer is an economics professor at Harvard and former chief economist at the International Monetary Fund.

http://www.washingtonpost.com/wp-dyn/articles/A50923-2003Oct19.html?referrer=email

Christian Science Monitor

from the December 01, 2003 edition

Why America's debt is a risky foreign affair

By David R. Francis

The complete article is currently (3/27/04) available on the Christian Science Monitor website at-- http://www.csmonitor.com/2003/1201/p16s01-coop.html

Excerpt--

In the throes of the Great Depression, Franklin Roosevelt tried to pump up the economy with deficit spending. He also used a memorable phrase to sell the idea to a wary nation: "After all, we owe it to ourselves."

It was a clever summation of why federal deficits aren't always bad. When the government goes into debt, the interest it pays on that debt used to flow back to the nation's own banks and individuals.

That's not nearly so true today in the United States, and it's troubling. Left unchecked, mounting deficits are never good news. Making it worse, the US is shipping a rising portion of interest payments on that debt abroad.

The problem isn't foreigners. By lending their money to Uncle Sam, they've kept interest rates low and indirectly helped finance US economic growth. The real culprit is America's mounting debt. And with Washington on a pre-election spending binge, the debt outlook is bleak. ...

Since 2001 and the start of the Bush administration, total federal expenditures have grown 16 percent. In fiscal 2003, federal spending topped $20,000 per household for the first time since World War II. That sum is adjusted for inflation....

http://www.csmonitor.com/2003/1201/p16s01-coop.html

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