It is a complicated topic and most Americans have no idea how compromised we are by the financing of our debt. But Friedman takes a break from his endless hand-wringing on Iraq to explain,
...when it comes to China, the Bush administration is engaged in one of the greatest acts of unilateral disarmament ever seen in U.S. foreign policy.Do you now understand why Bush had little to say about recent Chinese assertions of war should Taiwan declare independance?
National security is about so much more than just military deployments. It is also about our tax, energy and competitiveness policies. And if you look at all these areas, the Bush team has not only been steadily eroding America's leverage and room for maneuver vis-à-vis its biggest long-term competitor - China - but it has actually been making us more dependent than ever on Beijing. Indeed, if the Bush policies were wrapped into a single legislative bill it could be called "The U.S.-China Dependency Act."
The excessive tax cuts for the rich, combined with a total lack of discipline on spending by the Bush team and its Republican-run Congress, have helped China become the second-largest holder of U.S. debt, with a little under $200 billion worth. No, I don't think China will start dumping its T-bills on a whim. But don't tell me that as China buys up more and more of our debt - and that is the only way we can finance the tax holiday the Bush team wants to make permanent - it won't limit our room to maneuver with Beijing, should it take aggressive steps toward Taiwan.
What China might do with all its U.S. T-bills in the event of a clash over Taiwan is a total wild card that we have put in Beijing's hands.
And ANWR? If drilling actually takes place, it will be due to at least $30 BILLION in tax-payer subsidies to oil companies,
On energy, the Bush team's obsession with drilling in the Alaskan wilderness to increase supply is mind-boggling. "I am sure China will be thrilled with the Bush decision to drill in Alaska," said the noted energy economist Philip Verleger Jr. "Oil in Alaska cannot easily or efficiently be shipped to our Gulf Coast refineries. The logical markets are on the West Coast of the United States and in Asia. Consumers in China and Japan, not the U.S., will be the real beneficiaries of any big Alaska find.
"With a big find, China and Japan will be able to increase imports from a dependable supplier - the U.S. - while consumers in the U.S. will still be at the mercy of unreliable suppliers, such as Venezuela and Saudi Arabia. It is simple geography. [Also], a big find will lead to lower prices in the short term, promoting more emissions and more warming."