BY HUGO ODIOGOR
When the Republican Party leaders decided to hold President Barack Obama hostage over the request to raise the debt ceiling and save the United States (US) from defaulting in its fiscal obligation, it was an act of political hostage taking that has downgraded America and dealt a mortal blow to the image of the last superpower of the 21st century.
Led by the Speaker of the Republican Party dominated Congress, Mr. John Boehner, the lawmakers pushed America to the precipice before they agreed on half-measure deals that averted the August 2,2011 deadline to raise the debt ceiling. They invariably blighted America’s image as a world power.
But, more importantly, the crisis raised the issue of the social and economic costs of the American foreign military operations which have stretched its resources to the limits with little or no tangible results.
Credit rating agency, Standard and Poor’s, compounded their woes when it downgraded US credit rating from its Triple A status to Double A plus and rattled the global markets, pushing them into negative territory for the greater part of last week
Obama was put on the spot and he had to appeal directly to Americans to put pressure on their Congress men and women to end the “war of attrition” and put the interest of their country above partisan politics. For the Tea Party, which won some seats in the November mid term election, it was an opportunity to push their ultra right wing agenda. Secretly supported by the Republican Party, they teamed up to frustrate what they called the liberal agenda of the ruling Democratic Party.
Comedians and talkshow hosts had a field day during the deficit budget debate which they tagged “Obamaggedon” or “Barackapocalypse”. They ridiculed their country, making it look as if it was Obama that plunged America into battles in Afghanistan, Iraq and the NATO operations in Libya. It was lost on Americans that when the Bush administration was in office, the debt ceiling was raised eight times without the world being treated to the shameful spectacle that Speaker Boehner, the Ohio Republican Party representative, took them through.
Secondly, when former President George W. Bush returned to the bellicose ways of his father, American played down social and financial implications of embarking on military campaigns in Afghanistan and Iraq. His spin doctors told Americans that the wars in Afghanistan and Iraq were going to be fast, decisive and less expensive. His military advisers said they expected a quick and inexpensive conflict, but “we have a war that is costing more than anyone could have imagined”.
The disruptive debate over capping the US debt and proposed 12-man committee to decide on areas of cut in the next ten years can be best seen from the prism that the foreign military campaigns have crippled the American economy and, by extension, put the global economy in peril. For the Republican Party, their philosophy was that a black man, who must be punished for having the audacity to become US president at a time of fiscal recklessness of embarking on war in three different fronts, was exerting its impact on the US and global economy.
The global economy and the cost of war
The author of the Global Economic Recession and the Human Condition: An African Perspective, Mrs. Uchenna C. Ekwueme, said: “As we all know, the origin of the current financial crisis can be best understood as a crisis of global political economy enveloping the United States, Europe and China, with one overriding issue of illiquidity and the relationship between macro-economic management in political and economic life of nations in the international system”.
She described what is happening as a crisis of political economy of the world’s major economies, but “at the national level, there was the subprime mortgage meltdown in the United States in 2008 when the financial sector began to generate paper assets whose value depended on the prices of housing”. According to her, people at that time were encouraged to borrow at subprime rate to purchase houses. This was based on the assumption that the price of property would always rise but if the prices were to fluctuate, the value of the paper could still be determined.
“The price of housing declined and, worse still, the value of the paper assets became indeterminate. This placed the entire American financial system in a state of gridlock. Because of the process of globalisation, it spread to Europe where many financial institutions had purchased the paper as well”, she added. Dr. Awele Maduemezie, another expert in international relations, said:” The attempt to use deficit budgeting to power the economy seems to have failed Americans as they tried to promote an economic principle that you have your bread and bullet at the same time but they have failed as we saw in the deficit budget debate.
America has since become less productive in viable economic fields. It has gone into unproductive military economics, leaving the field for China, Japan, Germany, India and Brazil to produce goods and services that support human existence while Americans specialize in producing weapons to exterminate life. See where it has landed them. They have failed to recognize that the economic law of opportunity cost is still operative.”
Paul Kennedy’s prophetic book: The Rise and fall of the Great Powers (1987), prophesied the global financial meltdown that manifested in 2008, based on the fact that the manufacturing capacity of the economy was eroding while budget deficit and defence budget were rising. Kennedy noted that “in 1929, the US claimed 43% of the world manufacturing production, but, by 1991, it had shrunk to 22%, by 2008 it had declined to 16%”. The idea of Americans living above their income became the vogue during the 1980s, thereby resulting in low savings and mobilisation of capital for investment purpose. There was high rate of consumption among the people with the attainment of efficiency in technology and high income. This reached its zenith before the economic recession in 2008.
In their book: The Three Trillion Dollar War (2008), the former World Bank chief economist and the 2001 Nobel Prize winner for Economics, Joseph Stiglitz, and Harvard University lecturer in public policy, Linda Bilmes, attributed America’s economic woes to its policy of fiscal profligacy in the past two decades. According to them:“The US Treasure has been borrowing and using paper money to finance the foreign military campaigns.
It has refused to raise taxes which will affect the average American yet they are patronising the upper class that will reap maximum benefits from post-war construction contracts”. They said the operational cost of the war in Iraq is as high as that of the 12-year old Vietnam War. It doubled the cost of the Korean War, and “ten times higher than the cost of the first Gulf War” According to them, “the Second World War, which gulped $ 16.3 million in a period four years, was the most expensive; by contrast, the Iraq war is costing upward of $400,000 per troop.”
When the cost of the war in Iraq was first estimated at $200 billion eight years ago, former Defence Secretary, Donald Rumsfeld, lampooned the projected cost. He rather put the cost of the war at between $50 billion to $60 billion, but the coalition partners would share in the cost. He insisted that the post-war reconstruction contracts and increased oil revenues could pay for the war. But eight years into the conflict in Iraq, Obama has hit a monthly expenditure of $10.5 billion a month. The budget of nine states in America is squandered in Afghanistan, where America spends about $16 billion a month.
The cost of the war has been hidden from the public but Stiglitz and Blime said: “The figure we arrive at is more than $3 trillion, incurred only by the United States. It does not reflect the enormous cost to the rest of the world, or to Iraq.” At another front, US military officials argue that maintaining a no-fly zone covering just the northern portion of Libya, likely will cost between $30 million and $100 million per week. But because it required coalition forces to deal with Libyan air defense systems, there are one-time bills that could cost between $400 million and $800 million. There are fears that the costs of the Libyan operations “could rise up to $1 billion or $1.5 billion, if the war drags on for 12 months”. So far, NATO has not established any edge in the battle for Libya after four month of military strikes.
The rise and fall of America
Americans have been counting the cost of the wars that they are involved in. Notable among the issues that dominated the discussion of US debt ceiling debates was the cuts in military spending. While both sides (Democrats and Republicans) agree on the need to cut down on military budget, there were significant differences to ensure that the lives of US troops on foreign missions are not endangered.
Dr. Francis Oshodi, an expert in international affairs, said the crisis does not mean the collapse of the US as the country has substantial political legitimacy to count on. He said: “There was a crisis of confidence in the financial system and a crisis of confidence in the political system. There are so many sub-systems namely the military, the financial, the academic and so on. It is one of the systems, the financial system, that failed, due to the decisions made by the financial elite. This created a massive political problem centered not so much on the quality of leadership of President Obama because he is still rated high in the way that he handled the crisis; his competence is not in doubt and we cannot say that it was a sign of no confidence in his leadership. The crisis started before he came to office and the wars, apart from the no fly zone in Libya, were already there before he came to office. “
Origin of the crisis
On her own, Mrs. Ekwueme said, “We must recognize the fact that the American financial elite violated all principles of fiduciary, social and moral responsibility, in seeking its own personal gain, at the expense of the entire society. Obama and the political leadership have tried to stabilize the financial system by offering them bail outs to deal with the failures in the system but this has failed to achieve the desired result because of the huge cost of prosecuting the wars.
This is still draining the treasury. The disenchantment with the economic system created another level of crisis in the political cycle where the Tea Party sprang up to challenge the political status quo in Washington. It is all about the sovereign debt crisis and the power game in Washington. Its argument was that the political class has used the financial crisis to increase the power over the people”. London based Pastor Bisi Odoh said the years ahead will be difficult for Americans who will have to contend with regimes of austerity measures, saying it is time for them to have a taste of the pill they have been advocating for the third world countries. Are we seeing the demise of the last super power. How are the mighty fallen!