Mark Nicolich
West Amwell
In last week’s paper (Jan. 12), Mary Bell indicated that she is concerned about the U.S. debt and how President Barack Obama and his “huge spending on social programs” are a “big part of the blame.”
Some research on the Internet shows that much of the current debt was incurred during the Ronald Reagan and George W. Bush administrations, and an important part of the reason for the increased debt is because of the tax cuts on corporations and the high-income earners.
Ms. Bell worries that because China owns so much of our debt they will become our new landlord. But, as the Nobel Prize-winning economist, Paul Krugman, stated in a recent column: “It’s true that foreigners now hold large claims on the United States, including a fair amount of government debt. But every dollar’s worth of foreign claims on America is matched by 89 cents’ worth of U.S. claims on foreigners. And because foreigners tend to put their U.S. investments into safe, low-yield assets, America actually earns more from its assets abroad than it pays to foreign investors. If your image is of a nation that’s already deep in hock to the Chinese, you’ve been misinformed. Nor are we heading rapidly in that direction.”
As for the size of the debt, Mr. Krugman also pointed out that Britain’s debt exceeded its GDP by more than 100 percent in 81 of the past 170 years, and it is still doing well.
Our country needs strong leaders who understand the relationship between government spending, GDP, and the need for current spending to increase employment. The rush to cut taxes and decrease spending will get us into more trouble in a similar way in which the conservative don’t-spend tactics of the Hoover Administration worsened the last great recession. We also need an informed public that is not swayed by vitriolic harangues, but by reasoned arguments such as those of Mr. Krugman.