Fallows again

Okay, his current article in the Atlantic Monthly, "Countdown to a Meltdown", is a bit over the top in an attempt to warn us of the folly of our current strategies. The real meat is in the footnotes, which detail some of the history of the past several years.

Unsurprisingly, he nails Bush's tax cuts as a prime mover in our downward path. The Congressional Budget Office in January of this year reported that 48% of the increased deficit over Bush's first term could be attributed to the tax cuts. The tax cuts have lowered the federal government's share of GDP to 16%, a level not seen since 1959 and significantly lower than the 17.5% to 20% they consumed from 1962 to 2002. The GAO warns that if the tax cuts are made permanent, by 2015 we would barely cover our fixed costs.

Of course, the problem is not simply the tax cuts. We just don't save very much any more; our savings rate has gone from 8% of disposable income in the 1950s to virtually zero today. So, we are not buying bonds to finance our government, China and other foreign governments are, making us vulnerable to the needs and wishes of these foreign governments. We are placing a very big bet on these foreign governments' willingness to finance our deficit.

Fallows has an interesting take on the oil situation with regard to China and India. He claims they are using their oil for their factories, we are using our oil for our cars. And he has some numbers to back up his claim about our use. In 1973 we used 35 quadrillion BTUs of oil. In 2003 that number had grown to 39 quadrillion, but consumption by industry has been flat, and two-thirds of the oil is being used for transportation.

Did you know that Gwinnett County in Georgia imported 27 teachers from Hyderabad in 2004? Or, that England outsourced grading of high school exams to India? I would have thought that education would always be a local affair. I guess I was wrong.

Our phenomenal growth over the past 200+ years has been based on savings, investment, education and innovation. We've talked about the savings problem. Here are some footnotes apropos to investment, education and innovation.

In 2005 the American Society of Civil Engineers gave a grade of D to our infrastructure - roads, bridges, etc.

One third of our high schools students fail to graduate on time.

California, a leader in public education in the post WWII world, now spends less on education than the average of other states and is now just above Arkansas.

In 2003 Shanghai opened a 'maglev' train system in which the trains averaged 267 mph and were on time 99.7% of the time. (Is the Acela back in service yet?)

What will people think of Fallows' article in 2016, his dateline. Will we miss the opportunities we have today? Will we return soon to the principles and actions that made this country great? Will we heed the Cassandras of today?