A Glide Path to Ruin

By NICHOLAS D. KRISTOF
Published: June 26, 2005
The biggest risk we Americans face to our way of life and our place in the world probably doesn't come from Al Qaeda or the Iraq war.

Rather, the biggest risk may come from this administration's fiscal recklessness and the way this is putting us in hock to China.


"I think the greatest threat to our future is our fiscal irresponsibility," warns David Walker, the comptroller general of the United States. Mr. Walker, an accountant by training, asserts that last year may have been the most fiscally reckless in the history of our Republic. Aside from the budget deficit, Congress enacted the prescription drug benefit - possibly an $8 trillion obligation - without figuring out how to pay for it.

Mr. Walker, America's watchdog in chief and head of the Government Accountability Office, is no Bush-basher. He started out his career as a conservative Democrat, then became a moderate Republican and has been an independent since 1997.

Now he's running around with his hair on fire, shrieking about America's finances. Well, as much as any accountant ever shrieks.

I asked Mr. Walker about Paul Volcker's warning that within five years we face a 75 percent chance of a serious financial crisis.

"If we don't get serious soon," Mr. Walker replied, "it's not a question of whether it'll come, but when and how serious."

Joseph Stiglitz, the Nobel-winning economist, says he is also "very worried."

"I find it very difficult to know how to put a number" on the probability of a crisis, he added, "but there's a widespread sense in the market that there is a substantial chance."

Another issue is that three-fourths of our new debt is now being purchased by foreigners, with China the biggest buyer of all. That gives China leverage over us, and it undermines our national security.

On fiscal matters both parties have much to be ashamed of, but Republicans should be particularly embarrassed at their tumble. Traditionally, Republicans were prudent, while Democrats held great parties. But these days, the Bush administration is managing America's finances like a team of drunken sailors, and most Republicans keep quiet in a way that betrays their conservative principles.

Senator Chuck Hagel, a Republican, wrote a couple of years ago: "Republicans used to believe in balanced budgets. ... We have lost our way." He's right. (...)

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See today's NY Times for balance of this editorial.