U.S. debt from 1940 to 2010. Red lines indicate the Debt Held by the Public (net public debt) and black lines indicate the Total Public Debt Outstanding (gross public debt), the difference being that the gross debt includes that held by the federal government itself. The second panel shows the two debt figures as a percentage of U.S. GDP (dollar value of U.S. economic production for that year). The top panel is deflated so every year is in 2010 dollars. (Photo credit: Wikipedia)
The increasingly partisan struggle over America’s mountainous national debt and budget crisis reminds me of a famous quote by the Roman political theorist Cicero:
“The budget should be balanced, the treasury refilled, public debt reduced, the arrogance of officialdom tempered and controlled, and the assistance to foreign lands curtailed, lest Rome become bankrupt”
With the current outrage over the outsourcing of middle-class jobs to China and Mexico, insistence on acting as the world’s policeman resulting in foreign entanglements ironically causing more problems than they have solved; and never-ending foreign aid to foreign nations during a domestic economic downturn, is it time for the United States to return to its original foreign policy of isolationism during this time of economic crises?
Isolationism is a foreign policy of non-interventionism and economic protectionism in which a nation refuses to enter alliances or international agreements with other nations in hopes of avoiding wars not related to direct self-defense. Nations practicing isolationism avoid all foreign entanglements and focus all their resources into self-advancement within its own borders. Can a return to this way of thinking ultimately solve America’s national debt crisis? Is a return to isolationism even possible today?
According to the International Monetary Fund (IMF), China will surpass the United States and become the world’s number one economy by 2016. Rick Horowitz of the Huffington Post examines this issue in his blog by comparing the Untied States economy to a sinking ship. A rising China along with a declining America marks an end to an era…or does it? Free-trade policies are arguably the source for both China’s rapid economic rise of and America’s rapid fall. As such, is it time for the United States to embrace a more protectionist economic policy? Protectionism is an economic policy in which a nation discourages imports and foreign influence of domestic markets via methods such as tariffs on imported goods and trade embargoes .
However, protectionist policies might start a trade war with China which could be extremely problematic for the United States considering China’s colossal manufacturing base along with its rapid economic and technological growth. Moreover, the United States is heavily indebted to China so trade embargoes are practically infeasible. Theoretically, China could simply dump the $900 billion U.S. Treasury bonds they currently hold at a loss triggering a panic to sell mentality among the other countries that also hold U.S. Treasury bonds, in turn clasping the American economy outright.
What should the United States do to remain the world’s number one economy?
Look beyond today’s headlines with our analysis of American politics! This blog is a feature of Pearson’s MyPoliSciLab, the most popular online learning solution for American government courses. To learn more about MyPoliSciLab, visit www.mypoliscilab.com.