A Risk of Excessive Government Spending

“Be nice to the countries that lend you money.” ~Gao Xiqing, president of the China Investment Corporation


Obama’s Radical Spending Exposes U.S. to China Threat
Monday, March 16, 2009 9:12 AM
By: Ronald Kessler

President Barack Obama’s reckless spending plans now threaten our national security. Last week, Chinese Premier Wen Jinbao expressed concern that the U.S. may not be good for the billions of dollars of debt China holds, foreshadowing the possibility that China may think twice about investing further in U.S. obligations.

At the end of the National People’s Congress in Beijing, he demanded that the Obama administration “guarantee the safety” of its $1 trillion in American bonds as the U.S. goes further into debt.

“We have lent a huge amount of money to the U.S.,” the Chinese premier said. “Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.”

China is Washington’s biggest foreign creditor. The Obama administration is counting on the Chinese to help pay for the $787 billion economic stimulus package by buying U.S. bonds — not to mention the administration’s expectation that China will help finance trillions in additional proposed deficit spending.

Obama’s budget blueprint would raise total spending to $3.9 trillion in 2009, or 28 percent of the gross national product, an increase of nearly 32 percent. This is the highest level since World War II. In the next five years, his plan would double the national debt. In 10 years, the debt would triple.

If China did indeed stop purchases or, worse, stage a sell-off, it could deal a calamitous blow to the U.S. economy by jeopardizing credit ratings and driving up the cost of borrowing. Moreover, China can now use the threat of halting further investment to bully the U.S. into making concessions on any number of trade and national security issues.

Not to worry, Obama told a reporter. The Chinese and other foreign investors should have “absolute confidence” in the soundness of their investments in the U.S., he said.

Obama’s reassurance is worth as much as his campaign promise to fight congressional earmarks, a vow he reiterated even as he signed a spending bill containing 9,000 of them. Press secretary Robert Gibbs’ claim that Obama’s proposed budget is “more fiscally responsible” than any in “quite some time” suggests that the administration has lost sight of reality.

Aside from President Obama’s growing lack of credibility, what is most disturbing is his apparent lack of concern about the national security implications of being economically beholden to China. As it is, Obama has been rolling back the Bush administration policies which have prevented another terrorist attack for more than seven years:

• Without knowing where terrorists would be relocated, the president has said he will close the prison camp at Guantanamo Bay.
• He has banned coercive interrogation techniques, which led to uncovering plots that would have killed thousands of Americans.
• He has signaled a soft approach to terrorism by putting the term “war on terror” in mothballs.
• He has retired the term “enemy combatant,” preferring to call imprisoned terrorists “detainees,” as if they have the same legal rights as U.S. citizens.

Obama’s naïveté about protecting the country was evident during the campaign, when he cited the government’s prosecution and incarceration of those responsible for the 1993 World Trade Center bombing as the correct way to deal with terrorism.

Apparently, Obama had been asleep for the nearly seven years since 9/11. He missed having learned that the 9/11 hijackers are dead and thus could not have been prosecuted. He missed learning that they wanted to be martyrs and were prepared to be jailed or killed. No threat of prosecution would have deterred them.

Now that Obama is president, he is rolling the dice with our safety when it comes to the economy. As it is, in a veiled threat, Gao Xiqing, president of the China Investment Corporation, recently told James Fallows of the Atlantic Monthly, “Be nice to the countries that lend you money.”

The new nexus between the economy and national security should unite those who are scared by Obama’s economic policies and those who are scared by his national security policies.

Now only congressional action to reject Obama’s wild spending plans can avert placing the country at the mercy of China and potential economic blackmail.

Ronald Kessler is chief Washington correspondent of Newsmax.com.

© 2009 Newsmax. All rights reserved.