Philip Klein concludes his Op-Ed about how the welfare state is destroying America with further nonsense (you can’t claim he isn’t consistent). Reciting yet another right-wing myth, Klein asserts that because of Social Security and Medicare, the bond markets in general and the Chinese government in particular will stop lending America money and interest rates will skyrocket, destroying the American economy, yadda yadda yadda:
Just this past August, Standard and Poor’s downgraded U.S. debt for the first time in American history. Once bond holders abandon America, the nation will either have to dramatically cut spending, raise taxes steeply, or print money to buy up the debt — which would trigger massive inflation.
Where has he been since last August? Even a senior editorial writer at the Washington Examiner should be aware that the downgrading of America’s credit rating was followed by a rush of money into American bonds, not out of them, in defiance of the predictions of the deficit hawks. Evidently the bond markets think America is the world’s safe haven and are not terribly worried about long-term American entitlement costs.
The growing debt burden is also a national security risk, because it reduces America’s leverage against nations such as China, which owns a substantial amount of U.S. debt. And the fiscal crunch will force devastating cuts to our military — far beyond anything contemplated today.
Somebody should tell Klein that China’s export-oriented growth model depends on keeping its currency undervalued and accumulating dollars, which it then uses to buy dollar-denominated debt like U.S. Treasury bonds. If China revalued its currency, it would stop buying bonds to the detriment of its industries and to the benefit of many American exporters. If this were to happen, the U.S. deficit would shrink and we would need less external financing. Hurrah! In the long run there doubtless will be increases in U.S. interest rates, but they are unlikely to come about for the reasons that Klein and other apocalyptics on the right predict.
As for the Pentagon, the chief threat to the future of the U.S. military is neither the American welfare state nor the Chinese financial authorities, but the conservative wing of the Republican Party, which prefers round after round of tax cuts for the rich to the taxes that would permit the U.S. to fund both an adequate military and an affordable welfare state.
Klein concludes inescapably:
Thus, the conclusion is inescapable that, if America doesn’t end the welfare state as we have known it since 1935, it will end America as we know it today.
It may seem cruel to pick on Philip Klein, who is, after all, simply one of many minor hacks in the right-wing media machine controlled by billionaires like Anshutz and the Koch brothers. But it is worth reading the right’s propaganda now and then, just to find out how it is that so many of our conservative fellow citizens can have been so deceived.