The U.S. National Debt and the Dollar

A cynically clever strategy on the part of the powerful interests that benefit from war and militarism: instead of financing their wars of choice by paying taxes proportionate to their income, they give themselves tax cuts, finance their wars through borrowing, and then turn around and lend money (unpaid taxes) to the government and earn interest.

Viewed in this light, the staggering U.S. national debt of nearly $9 trillion, which is more than two thirds of gross nation product (GNP), represents a subtle redistribution of national resources from the bottom to the top: it represents unpaid taxes by the wealthy, which has to be financed by cutting non-military public spending—both now and in the future.

This means that the wealthy has successfully converted their tax obligations to credit claims, that is, lending instead of paying taxes—which is in essence a disguised form of theft or robbery.

This cynical policy of increasing military spending, cutting taxes for the wealthy and, thereby, accumulating national debt cannot continue for ever, as it might eventually lead to national or Federal insolvency, collapse of the dollar, and paralysis of financial markets—not only in the United States but perhaps also in broader global markets.

[The author, Ismael Hossein-zadeh, is an economics professor at Drake University, Des Moines, Iowa. This excerpt above draws upon his recently published book, The Political Economy of U.S. Militarism ]