'Don’t buy deficit bunkum'

Published on line: Monday, April 14, 2008 8:18 AM EDT
http://www.timesonline.com/articles/2008/04/14/opinion/letters_to_the_editor/doc47ff7c24c10de932929178.txt

When George W. Bush took office in 2001, the national debt was $5.7 trillion.

Today, it is $9.5 trillion, an increase of 66.67 percent or $3.8 trillion.

Bush and the Republicans have tried to convince American taxpayers that the war on terror has caused this balloon in the national debt.

Not true.

Before two Senate committees, top U.S. military commander in Iraq, Army Gen. David Petraeus said that since 2003, the cost of the war in Iraq has now exceeded $500 billion, or $0.50 trillion.

If you work the numbers, $3.8 trillion minus $0.50 trillion equals $3.3 trillion. Excluding Iraq, the national debt would still have increased by $3.3 trillion. Bush and the Republicans are lying to all Americans by blaming the war on terror for the significant rise in the national debt.

The U.S. foreign trade deficit for 2007 was $708.5 billion. The United States has not run a foreign trade surplus since 1973.

Combining our national debt and foreign trade deficit, trillions of dollars have left this country and are now being held in foreign banks (China, Great Britain, Japan, etc.)

Let’s apply supply and demand economic theories to the above.

Foreign countries have trillions of American dollars. Supply of dollars is high.

The demand for the U.S. dollar is low because we have switched from a manufacturing-based economy to a service/consumer-based economy.

High supply of U.S. dollars and low demand, the value of the dollar drops on the world money markets. As the value of the dollar drops, foreign companies increase the prices of their goods to offset the drop in the dollar value.

That’s why the price of a barrel of oil now sells for over $110. And that’s why the cost of a gallon of gasoline is expected to reach $3.60 this summer.

Nikola (Nick) Drobac
Aliquippa, PA 15001

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