The China-Japan Economic Dependency Act

Everyone wants taxes to be cut, but no one wants services to be cut, which is why Democrats have to reframe the debate — and show President Bush for what he really is: a man who is not putting money into your pocket, but who is removing government services and safety nets from your life.

Ditto on foreign policy. As we and our government continue to spend and invest more than we save, we will become even more dependent on the outside world to finance the gap. Foreigners will have to buy even more of our T-bills and other assets. And do you know on whom we'll be most dependent for that? China and Japan. Yes, that China — the one the Bush team says is our biggest geopolitical rival.

"In the 1990's, Japan's and China's excess savings were financing our private sector investment, because the government was in surplus," says Robert Hormats, vice chairman of Goldman Sachs International. "Now, with these looming deficits, China and Japan are being asked to finance our government's actual operations." That makes us very dependent on their willingness to continue sending us hundreds of billions of dollars of their savings. Should China and Japan not want to play along, your services will very likely be cut even sooner (unless you believe in "voodoo economics"). Which is why Democrats should rename this tax bill the China-Japan Economic Dependency Act.

An interesting (Krugmanesque in The Note's assessment) point of view from Tom. Considering our dependence on foreign investment, we might want to consider playing nicer with others.

[via The Note]