Many of us already knew that the Bush tax cuts were a bad idea. For one, who has tax cuts in a time of war? If you aren’t bringing in tax revenue, just how do you pay for such a huge undertaking?

Well, if you’re George Bush and Co., you simply borrow the money from other countries. Before George Bush took office, our foreign debt was around $1 trillion. This is after 42 Presidents and over 200 years. In less than 6 years, Bush more than doubled our foreign debt. Yes, we are now about $2 trillion in foreign debt. China holds the greatest amount of our foreign debt. Right now, China holds nearly $700 billion U.S. dollars in its reserves and, roughly, $300 billion in U.S. treasury bond. Do you think they may get some say in our foreign policy? If China were to sell off all its U.S. currency, we could see an almost immediate collapse in our economy.

If I remember correctly, the next 3 countries holding the greatest amounts of our debt are Japan, Saudi Arabia and Germany. So, as you can see, we are in a tenuous position.

So, how would this play out domestically?

If we were being responsible, we would be dealing in a “pay as you go” model. This is the Clinton model that turned our national debt into a surplus. This would not totally eliminate our foreign debt but, it could hugely reduce it. However, it would require a rollback of the tax cuts (mainly going to the top 1% of Americans anyway). Bush has flatly declined this proposition.

We have heard about how these cuts are supposedly “stimulating the economy” but, something came out last week that blows this notion out of the water.

In a hearing on Thursday, David M. Walker, Comptroller General of the United States, lays out a pretty grim picture. He says that, basically, government spending is so out of control now that, in 2040, we would either have to cut government spending by 60% or double the tax rate in order to balance the budget. Walker says that the 2006 gains Bush is touting have no real effect on the long-term outlook.

So, the choice is “pay now or pay (more) later”.

Instead of fiscal responsibility, we get $100 billion requests for more money in Iraq (with no oversight). Then, we wonder why we are stretched so thin financially in this country.

The full report can be found here.

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