By: Jamal Kanj*

August 04, 2011

I just came back after spending my summer break in San Diego, California. Having lived in San Diego for the most part of my life, I have many acquaintances from all walks of life in the private business and from the public service sector. During my visit, the state of the US economy dominated most of our conversations.

Friends who worked in real estate development or related businesses talked of the lurking economic uncertainties; others from the public sector opted early retirement to maintain a better health insurance plan, or stayed on hoping for better days in the future.

In the US, the Consumer Confidence Report is an important gauge of the state of the national economy. The consumers I met during my three weeks stay in San Diego, while naturally hopeful, almost all betokened negatively of their level of confidence of the economy.

The recent US Congress political infighting to raise federal debt ceiling level did not help. The Republicans interpreted their sweep victory in last congressional election as a mandate to advance their agenda. Aware of the public sentiment regarding the runaway government spending, the far right wing of the Republicans, known as the Tea party, played parochial party politics by turning the debate to increase the US debt ceiling into a political mudsling.

The hidebound Tea party of political neophytes left a pockmark on the current US economic recovery, and raised serious questions on the financial viability of the US Bond market. The long term impact of this fiasco on the overall US economy is yet to be appreciated.

Historically raising US debt ceiling, allowing the US government to borrow money to pay for its obligations has been a standard procedure. In fact, since 1917 when the statuary limit was passed by US Congress, the US government raised the debt limit 78 times, 49 of which were under Republican administrations and 29 under a Democratic presidents.

Purportedly, Republicans are proponent of Federal expenditure control. But in actuality, the US debt ceiling was raised, routinely, more by Republican than Democratic presidents. In fact, under the latest Republican president, Bush, federal spending rose from $1.9 trillion a year to $3.2 trillion. While under current Democratic president, federal spending went from $3.2 trillion to $3.8 trillion.

In other words, spending under Bush increased twice as much as it did under Obama. Indeed, the increase in federal spending under Obama was mostly due to his $800 billion stimulus package intended to offset the enormous recession inherited from the Bush administration.  

The increase in federal spending under Bush, compiled with his tax cut to the rich, depriving the US treasury with more than $400 billion in tax receipts, portended disaster to the US economy. After taken over a budget of surplus, Bush left the US treasury with a large deficit, and the US economy with a huge recession.

Yet, instead of capitalizing on the Republican’s economic failings, Obama succumbed to the nay Sayers of the Tea party, and agreed to cut on social domestic programs rather than a fairer tax system whereby the richest two per cent share the pain with the rest of the middle class tax payers in reducing the national deficit.

Meanwhile, Democrats and Republicans can claim America and promote world justice if they are willing to consider other bold alternatives to reduce the US budget deficit. The US can contribute to peace in the Middle East and save more than $50 billion in ten years if it cuts its superfluous aid granted to the non taxpaying state of Israel. US tax payers are certainly more deserving of the money than the subsidized illegal Israeli colonies over Palestinian land.    

*Jamal Kanj writes frequently on Arab World issues and the author of “Children of Catastrophe, Journey from a Palestinian Refugee Camp to America”, Garnet Publishing, UK. Jamal’s articles can be read at www.jamalkanj.com, his email address is jkanj@yahoo.com