Op-ed: Thanks, China (maybe)

  • By Cal Thomas
  • Tuesday, January 16, 2018 10:01am
  • Opinion

“When prosperity comes, do not use all of it.” — Confucius

Is China about to do the United States a big favor, however unwittingly?

According to Bloomberg, China is considering whether to slow, or even stop, purchases of U.S. Treasuries. At $3.14 trillion, China holds the world’s largest foreign exchange reserves. It is also the largest underwriter of U.S. debt. Financial experts and political observers have long worried that becoming financially dependent on an unfriendly and rival nation is not good for the U.S. in the long term.

In the short term, however, should Beijing choose to pull back its major underwriting of America’s $20 trillion debt, it could force politicians to do something they have heretofore seemed incapable of doing: halt spending and start reforming or eliminating unnecessary and outmoded government programs.

Most of us who are not billionaires have had a “we can’t afford it” moment when considering purchases for which we don’t have the money. It usually doesn’t take long before what was once considered essential becomes, upon reflection, nonessential. Not so with government. Most politicians see everything government does as essential and since they don’t have to pay for anything with their own money, they are reluctant to cut spending, which they believe helps extend their careers.

Before he ran up the debt more than any other president, Barack Obama criticized George W. Bush for increasing America’s debt. While a senator from Illinois and during a debate about whether to raise the debt ceiling, Obama said, “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure.”

Debt rose by $3.5 trillion in Bush’s first five years in office, partially the result of the terrorist attack of September 11, 2001 and the subsequent war in Afghanistan. During Obama’s two terms, the debt increased by $8.9 trillion.

How credible is China’s reported consideration of slowing or halting the purchase of U.S. treasuries? For one answer I turn to Ric Edelman, my financial adviser, whom Barron’s has consistently ranked high among the nation’s top 100 independent financial advisers.

Responding by email to a question about Chinese intentions, Edelman says, “I’m not sure I buy it — either that the Chinese will pare down its U.S. debt holdings, or that doing so will cause Congress to rein in spending. On the former, what will the Chinese buy, if not Treasuries? It’s not like there’s a huge array of alternatives for them. On the latter, I don’t think I need to elaborate.”

He may be right on both counts.

One of the reasons empires and great nations have collapsed throughout history is burdensome debt. No individual can keep spending as if there is no tomorrow, so why would anyone think that a nation can continue deficit spending and still expect a tomorrow?

Companies that consistently spend more than they take in usually go bankrupt. Nations that consistently spend more than they take in and continue borrowing to keep the illusion of prosperity going usually just collapse.

There is always a day of reckoning for such irresponsible behavior. It is not a matter of if, but a matter of when.

Whether China actually slows or stops buying U.S. Treasuries, just the threat should awaken sober minds in Washington. Unfortunately, I fear Mr. Edelman is right in his skepticism and sober minds hardly exist in a capital that is drunk on spending.

Readers may email Cal Thomas at tcaeditors@tribpub.com.

More in Opinion

This screenshot of an Alaska Department of Environmental Conservation map of PFAS sites in Alaska shows that contamination from so-called “forever chemicals” is observable throughout the state. (Screenshot | Alaska Department of Environmental Conservation)
Opinion: More action must be taken on PFAS

Toxic forever chemicals present in high concentrations in Nikishka Bay Utility Water Supply

Logo courtesy of League of Women Voters.
League of Women Voters of Alaska: Join us in calling for campaign finance limits

The involvement of money in our elections is a huge barrier for everyday Alaskans who run for public office

Promise garden flowers are assembled for the Walk to End Alzheimer’s at the Soldotna Regional Sports Complex in Soldotna, Alaska, on Saturday, Sept. 16, 2023. (Jake Dye/Peninsula Clarion)
Opinion: Let’s keep momentum in the fight against Alzheimer’s

It’s time to reauthorize these bills to keep up our momentum in the fight to end Alzheimer’s and all other types of Dementia.

Jacquelyn Martin / Associated Press
Sen. Tommy Tuberville, R-Ala., questions Navy Adm. Lisa Franchetti during a Senate Armed Services Committee hearing on Sept. 14 on Capitol Hill.
Opinion: Music to the ears of America’s adversaries

Russia and China have interest in seeing America’s democracy and standing in the world weakened

Dr. Sarah Spencer. (Photo by Maureen Todd and courtesy of Dr. Sarah Spencer)
Opinion: Alaskans needs better access to addiction treatment. Telehealth can help.

I have witnessed firsthand the struggles patients face in accessing addiction care

Former Gov. Frank Murkowski speaks on a range of subjects during an interview with the Juneau Empire in May 2019. (Michael Penn / Juneau Empire File)
Opinion: Need for accounting and legislative oversight of the permanent fund

There is a growing threat to the permanent fund, and it is coming from the trustees themselves

(Juneau Empire File)
Opinion: Imagine the cost of health and happiness if set by prescription drug companies

If you didn’t have heartburn before seeing the price, you will soon — and that requires another prescription

Mike Arnold testifies in opposition to the use of calcium chloride by the Alaska Department of Transportation and Public Facilities on Kenai Peninsula roads during a Kenai Peninsula Borough Assembly meeting on Tuesday, Aug. 2, 2023, in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Kenai Peninsula Votes: Civic actions that carried weight

Watching an impressive display of testimony, going to an event, or one post, can help so many people learn about something they were not even aware of

The Kasilof River is seen from the Kasilof River Recreation Area, July 30, 2019, in Kasilof, Alaska. (Photo by Erin Thompson/Peninsula Clarion)
Opinion: Helicopter fishing a detriment to fish and fishers

Proposal would prohibit helicopter transport for anglers on southern peninsula

The cover of the October 2023 edition of Alaska Economic Trends magazine, a product of the Alaska Department of Labor and Workforce Development. (Image via department website)
Dunleavy administration’s muzzling of teacher pay report is troubling

Alaska Economic Trends is recognized both in Alaska and nationally as an essential tool for understanding Alaska’s unique economy

Image via weseeyou.community
5 tips for creating a culture of caring in our high schools

Our message: No matter what challenges you’re facing, we see you. We support you. And we’re here for you.

The Alaska State Capitol is photographed in Juneau, Alaska. (Clarise Larson/Juneau Empire File)
Opinion: Vance’s bill misguided approach to Middle East crisis

In arguing for her legislation, Vance offers a simplistic, one-dimensional understanding of the conflict