US government deficits entail a moral risk

By Phil Lawler ( bio - articles - email ) | Feb 17, 2010

If your neighbors know that you're living far beyond your means, they're not likely to recognize you as a moral authority. That principle applies to nations, too. Lech Walesa has questioned how long the US can remain the leader of the free world while racking up huge debts, year after year. Now with the federal government projecting massive deficits every year into the distant future, the moral cost of debt is becoming evident.

Writing in the Wall Street Journal, Judy Shelton (the author of Money Meltdown) explains how America's economic problems undermine American foreign policy. She notes that China is hinting that if President Obama goes through with a scheduled meeting with the Dalai Lama, Chinese investors might think twice about continuing to buy US Treasury bills. China is already the world's largest holder of IOU notes from Uncle Sam. If Beijing cuts back on its lending to the US, the Treasury will feel the sting. As Shelton puts it:

China sees a clear link between America's ability to stand up for human rights and its economic interests—and Beijing isn't afraid to exploit it.

Ordinarily we don't notice a connection between the government policies that promote human rights and those that promote economic growth. But the connection is there. Again Judy Shelton puts the matter succinctly:

Unless we quit our debilitating borrowing habit, we will not be able to overcome the timidity that comes from being reliant on the kindness of strangers. Standing on our own two feet is the only way to ensure that we stand on principle.