As the graph above shows American debt has grown dramatically over the last 30 years. The credit agencies have stripped the country of its triple A status, so borrowing will cost more and the struggle to reduce the deficit will be all the harder. A major default looks increasingly likely. The USA has historically gone into debt after wars; the War of Independence, the Civil War, First and Second World Wars. In periods of peace debt was repaid. This time it is different. This is only the second time in history, the other being towards the end of World War 2, that US debt has exceeded 100% of GDP. Why is America in this mess?
Again wars have played their part. Iraq and Afghanistan have been costly, financially and ethically. But this debt crisis is about much more that the cost of these relatively small wars. Personal indebtedness caused by unrealistic levels of expenditure in pursuit of the lifestyle of the American Dream is at the heart of the current crisis. This pattern of competitive overconsumption is socially corrosive, damaging to the health of the American people and it is destroying the planet.
The American Dream has been based on cheap oil. That era is over. As Al Gore has repeatedly said, borrowing ever more money from the Chinese, to pay the Arabs for ever more oil to live lifestyles that are destroying the planet just doesn’t make sense. USA is by far the world’s biggest importer of oil. In a post peak oil era prices are set to rise, leading directly to increased import costs and further economic recession, so further damaging the chances of debt reduction.
The American Dream has been a dangerous delusion. The winner takes all mentality has encouraged adulation of the rich and famous and destitution and disregard of the poor. America needs to reduce military spending, tax the rich, invest in jobs in energy efficiency and renewables, learn the pleasures of frugality and create a new American Dream based on greater equality and sustainability, if it is to reduce both its oil addiction and its indebtedness. And it might just find it can solve a whole raft of other social, political, economic and environmental problems at the same time!
See Ros Coward in the Guardian on American debt, environmental degradation, frugality and the American Dream. http://www.guardian.co.uk/commentisfree/cifamerica/2011/jul/29/us-debt-crisis-environment