The Pilgrims celebrated the first American Thanksgiving in 1621 and it was both a religious and political event.
The grateful Pilgrims invited 90 members of the Wampanoag Nation, including the tribe’s chief, King Massasoit.
When the Mayflower landed, the Pilgrims were at the mercy of the powerful Wampanoag. King Massasoit welcomed the Europeans and his nation even helped the Pilgrims with their first harvest. The first Thanksgiving was not only about bountiful harvest before the winter, but about vulnerability and a people of another nation stepping forward to assist.
Fast forward nearly 400 years and 2005 brings us to a new era of vulnerability – and I suggest new political candidates for America’s Thanksgiving gratitude. Bill Clinton raised the point several weeks ago. Clinton is concerned not only about runaway national debt, but about the growing foreign ownership of our debt. Clinton argues that we have allowed foreign governments to become our bankers. This inherently limits our future foreign policy options – say confronting China on issues such as the continued survival of Taiwan or the proliferation of nuclear weaponry among terrorist nations.
In my lifetime, we have transitioned from the world’s largest creditor nation to the world’s largest debtor. When a family of four celebrated Thanksgiving a generation ago (1980) its share of America’s national debt was about $16,000 (total debt was $1 trillion). With the Tax Reduction Act of 1981, Reagan set America on a course of unprecedented new debt, continued by Bush #41 and now Bush #43. (Clinton actually reversed the trend with budget surpluses of nearly half a trillion in the later years of his administration).
This Thanksgiving, in addition to the cost of the turkey, a family of four owes $108,000 to America’s creditors. Just last month the national debt crossed the magic $8 trillion mark. A fourth of that, $2 trillion, is owed to foreign interests. Just servicing the debt has become a huge burden. When Reagan took office the annual interest payment on the debt was $10 billion. Today it is $340 billion and rising. Bush #43 spends more financing the debt each year than his father spent on defense.
Incredibly, your personal share of the debt owed to all foreigners is $6,434 and rising daily. China and Japan own nearly half of the foreign held American debt. Just as the Pilgrims owed gratitude to the Wampanoag, we owe gratitude to the foreign interests who continue to hold our T-bills and who show up each week to buy more and more of our newly issued bonds. Were our offshore bankers to suddenly elect to dump their holdings or refuse to buy new debt, the dollar would plummet in value and interest rates would skyrocket. Nobody is quite sure of all the potential ramifications as we have never mortgaged America to foreigners before.
Arguably, we are now far more dependent upon foreign capital for our continued prosperity than we are upon foreign oil.
There is a fundamental difference between the vulnerability of the Pilgrims and our vulnerability today. The Pilgrims faced threats beyond their control. In contrast, deeding America’s future prosperity to offshore bankers is a voluntary vulnerability, the result of premeditated Reagan-Bush #41-Bush #43 fiscal policy that slashed government revenue but not government spending.So as you pause to give thanks this very special weekend, you just might want to thank China, Japan and the other foreign interests who have extended massive credit to America, and pray that they show up for next Tuesday’s T-bill auction and continue to do so as benevolent bankers until the next Thanksgiving.