Dependence Day

From Gretchen Hamel, at IBD, "On This Independence Day, We're Dependent On Deficits and Debt":

As we celebrate the July 4th holiday marking the U.S.' historic break with Great Britain, it's worth considering: Are we as independent as we think we are?

In fact, the numbers suggest that we are deeply dependent — on deficit spending and debt. Our nation's current debt, nearing $16 trillion, and our annual budget deficit of $1.2 trillion, indicate that our government's addiction to spending is nowhere near its limit.

Of that $16 trillion debt, the U.S. owes more than $5 trillion to foreign nations, an all-time high. So much for independence. We're now a debtor nation, and unless we get our fiscal house in order, that debt will endanger our nation's prospects for long-term growth.

If that sounds alarmist, consider this: In August 2011, Vice President Joe Biden visited China. This wasn't just any diplomatic visit — it was the supplication of a debtor, in which Biden undertook to reassure our Chinese debtors that their investment is sound.

Biden assured his hosts that they had "nothing to worry about" when it comes to the U.S. honoring its obligations. It wasn't the first time a high-ranking U.S. official has had to offer soothing words to our creditors, and at this rate it won't be the last....

Ultimately, our heavy reliance on foreign debt is the symptom of a much larger problem, which is our nation's relentless addiction to government spending that drives up deficits and demands continued foreign investment, regardless of the risk and the cost.

So as we commemorate our independence, it's worth reflecting on the ways in which our nation's leadership has made us deeply dependent on other nations, and the risks that dependence brings. If there's good news, it's that this crisis can be averted — if policymakers in Washington take action to cut spending, reduce the deficit and pay down our nearly $16 trillion debt.

That achievement would be almost like a second declaration of independence and well worth celebrating.

Read the whole thing.

Photo: Gretchen Hamel, Executive Director of Public Notice.