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Eurosclerosis comes to America

By Peter Morici
web posted November 4, 2013

Abroad and at home, President Barack Obama with unprincipled pragmatism is undermining America's most cherished values, economy and liberties.

When the Egyptian military ousted a duly elected government, Obama did not cut off aid, as required by U.S. law. Instead he validated a libertine mob, generals and bureaucrats who felt their interests threatened by the majority of voters who preferred a more conservative regime founded on traditional Arab values.

Limiting U.S. objectives in the region is justified as part of the U.S. pivot toward Asia, which the Commander in Chief fashions as countering Chinese influence. However, whether it is currency manipulation, refusal to behave responsibly on environmental issues or human rights, the president protests verbally but appeases Beijing in his actions with terrible loss of jobs at home and face with Asian allies.

The commitment of additional naval resources to the Pacific is small and wholly inadequate. This leaves Japanese Prime Minister Shinzo Abe to weigh bending Japan's post-war constitution and rearming, lest he risk American abandonment when it counts in its territorial disputes with China and access to Middle East oil.

It's really all about a diminished America retreating because the president has persistently cut military spending to expand the welfare state and now can't afford the fleet the country needs to sustain its historic commitments.

The Europeans from France and Spain to Greece have demonstrated governments obsessed with sheltering their citizens from all risk and redistributing income can't grow.

Now, Eurosclerosis has come to America.

The Congressional budget office projects that if federal spending on health care, social security and other pensions continue on the course charted by the president, Americans at all levels will pay more taxes over the next two decades than those prior to the financial crisis, deficits will spin out of control and economic growth well below 3 percent will be the norm through the mid-century. The country simply won't be able to sustain its military at anything like its present level as entitlement spending squeezes out resources for defense, science and technology, and just about everything else.

Corporations and wealthy individuals are already taking their money to foreign shores -- even changing their nationality and citizenship -- to avoid stagnant opportunities and oppressive taxation.

Now, many more ordinary Americans receive means-tested federal benefits than work, and the number of adults not wanting any job at all is at a record level. The combination of guaranteed health care, other benefits and high taxes has noticeable consequences for ordinary people's inclination to work for a living.

Obama is right about two things, a nation with a leisure class at the bottom will reliably vote Democratic, making party elite happy. However, the United States can't afford the military it needs to defend its interest or meet its foreign obligations and will have to seek whatever accommodation it can with a rising China over the next several decades.

The pivot to Asia and "changing America" are nothing more than a veiled surrender, not to France as many conservative critics lament, but to China.

Anyone who cares about liberty should be frightened by that more than anything else. ESR

Peter Morici is an economist and professor at the Smith School of Business, University of Maryland School, and a widely published columnist. He tweets @pmorici1





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