Obama Says U.S. Can No Longer Participate in Foolhardy Spending

Filed under: News, Politics, President Obama

After 9/11, President Bush urged Americans to shop to help boost the economy.

All that spending has finally caught up with us. The United States has gone into deep debt to be the biggest consumer in the world. And that debt has left us in deep financial and political trouble.

Now, President Obama is left to pick up the pieces. On an Asian swing to discuss economic issues, Obama has said what Americans and world leaders need to hear. The AP reports:

Obama's message is that the United States cannot be the world's consumer, propping up others by borrowing and spending. He is pitching for a balanced recovery across the globe - tougher to achieve when national interests collide.

"The foundation for a strong and durable recovery will not materialize if American households stop saving and go back to spending based on borrowing," the President wrote in a letter to G-20 leaders.

It's impossible to base an economy solely on spending. We learned that the hard way as the U.S. economy almost collapsed under the weight of Americans' debt.

The average American household has $7,394 in consumer debt. That includes credit cards and home equity lines of credit. Consumer debt is falling but it still stands at $116 trillion. During the economic boom years, Americans borrowed money from their homes to go on vacation and buy cars under the false belief that their homes would increase in value indefinitely.

Many people now know that is not the case. But Americans have been warned about spending since the days of Jimmy Carter.

Now, there is a very real possibility that we could feel the political and economic results of our lavish spending. A Chinese rating agency had some very harsh comments about the American economy. The New York Times writes that the agency cited the United States for "deteriorating debt repayment capability" and "the serious defects in the United States economic development and management model," which it predicted would lead to "fundamentally lowering the national solvency."

It's not good when your lien holder no longer feels you are a good credit risk. Countries around the world are not happy that the Federal Reserve is pumping $600 million into the economy.

"It would be more desirable for the U.S. to fix its own industries, fix its structure and become more competitive," Cho Gyeong-lyeob, an economist at the Korea Economic Research Institute, a research organization, told the New York Times. "Instead, it chose the easy way out."

I'm not going to pretend I understand every intricacy of the global economy, but I know one easy way that regular Americans can deal with the problems our huge debt is causing: Cut excessive spending.

 

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