Ohio Congresswoman Marcy Kaptur (D-OH-Toledo) gave a speech on the House floor a few minutes ago lamenting the power that China, OPEC countries, and other unpleasant governments in Africa, Latin America, and Asia possess over the United States.
The source of that power? Their decision whether to buy U.S. government-issued debt. Here’s the argument: by selling off their accumulated U.S. Treasury Bonds or by simply refusing to buy more, they could cause the value of the dollar to crash relative to other currencies. They can supposedly use this leverage to influence U.S. policy.
Leaving aside the fact that a weak U.S. dollar would increase our exports (a policy she favors) because U.S.-produced goods would be cheaper for foreigners, it was striking that she railed against the symptom without even mentioning the cause.
If not for persistent deficits (column D), our government would have no need to issue debt in the form of bonds. Of course, eliminating the deficit requires cutting spending (the reasonable course), raising taxes (an especially bad idea during a recession), or some of both.
But then again, most politicians are known better for empty rhetoric than for making real decisions.
Monday, February 23, 2009
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