America's budget is in crisis. Thanks to Bush's tax cuts and military spending, which have contributed to budget deficits of US$500 billion per year, the US will have to raise taxes and limit budget spending, whether or not Bush is re-elected. The annual military budget, which has increased by US$150 billion since Bush took office, will need to be cut in coming years to get the budget under control.
The US is borrowing massively from abroad. Asia's central banks have bought hundreds of billions of dollars in US securities. Japan alone has foreign exchange reserves of around US$750 billion, much of that in US treasury bills. China, Hong Kong, India, Korea, Singapore and Taiwan together have another US$1.1 trillion or so in reported foreign exchange reserves. In short, the US is in deep and growing debt to Asia. Only massive buying of treasury bills by Asian central banks has prevented the dollar from falling even more precipitously than it has.
The rest of the world is catching up. America's big technological lead will narrow relative to Brazil, China, India and other major economic regions of the developing world. China will have an economy larger than the US economy within 25 years -- potentially 50 percent larger by 2050. India, considerably poorer on average than China, will also close the wealth gap. By 2050, India will conceivably have an economy the size of America's, with four times the population and roughly one-fourth of the average income level per person.
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