That End-Of-Empire Feeling

Is the United States in the last throes of empire?

That sounds like an ideologically loaded, fatalistic and defeatist question. But it's what I've been wondering about at the start of this holiday season.

Might future historians look back at the Bush II days and ask if this was the point when the country started slipping? Might the war in Iraq be regarded as a desperate act of a superpower that had already peaked? Will economists of the latter 21st century examine our economic decisions and say, "What were they thinking?" Or has the Grinch gotten to me?

Treasury Secretary John Snow says 'tis the season to be merry because the malls are crowded and the American economy, under the watchful gaze of George W. Bush, is on the move. But perhaps a touch of foreboding is merited. The White House and its conservative pals, trying to take advantage of the cheery season, have recently started a new campaign that claims Bush has been denied the credit for an economy that is expanding at a decent clip and that produced 215,000 jobs last month.

In fact, polls show that most Americans -- whether they're happy in the malls or not -- have a downbeat view of the economy. And there are solid reasons why Americans should not put aside concerns about the country's long-term economic prospects and why Bush should not be pronounced the savior of the American economy.

First, the correlation between presidential action (especially tax cuts) and economic performance is iffy. How many conservatives credited Bill Clinton, who raised taxes on the wealthy and balanced the budget, for the explosive economic boom that occurred in the 1990s? By contrast, the results -- and costs -- of a military invasion are easier to tie directly to a commander in chief than economic developments. If most of the public believes Bush deliberately misled the nation into a bad war -- which is what most do think at the present time -- then Americans can be excused for not hailing Bush for the uptick in economic numbers for which he might or might not bear responsibility.

Perhaps Americans also know -- or feel -- that wage growth has lagged behind GDP growth. Or that the growing economy is a hot-money economy fueled by reckless borrowing (which could be read as a sign of national fading glory). Nervous Nellies like Alan Greenspan warn that, despite the recent economic growth, Bush is driving the federal budget off a cliff by creating trillions of dollars of debt that will have to be paid off after he leaves office. The current fiscal policy and the ballooning federal deficits, Greenspan claims, are "unsustainable."

The outgoing Federal Reserve chairman is mostly fretting about a budget crunch that will be provoked by Medicare and Social Security obligations. But he also has noted that the growing trade deficit -- and the spiraling cost of servicing it -- poses a serious threat. A friend who is building a private equity fund for emerging markets summed up the macro situation for me this way: "What a great system. The Chinese lend us money to buy their goods. Then we have to pay back the loans with interest. They make money off us on both ends." Who are the better capitalists?

If the American economy is being hollowed out in age of globalization, do the traditional numbers -- jobs produced, the unemployment rate -- have the same meaning as they did in days of greater stability? Job creation may be up for the moment. But long-term job security and right-now health care security are less certain. Middle-class Americans can no longer expect to remain in a well-paying job for decades, as many American workers once assumed they would. Consider this: GM recently announced it will be dumping 30,000 jobs and closing several plants. Shortly after that, I heard CNN anchor Miles O'Brien gushing about a Toyota truck plant being built in San Antonio, Texas, that will create up to 2000 jobs paying $9 to $11 an hour. That's about $20,000 a year -- much less than what unionized autoworkers have made. Despite O'Brien's enthusiasm, this is hardly a tit for GM's tat.