The odds are now better than even that the U.S. economy is sliding or has already slid into a recession. The housing market downturn and sub prime mortgage crisis are the catalysts for a major economic downswing that looks to last well into 2009. The latest retail reports indicate a decline in sales, the unemployment rate is back over 5 percent (a two-year high), oil prices have breached the $100 high-water mark and food prices are rising. 

Meanwhile, the President is asking for more than $100 billion in increased spending for the wars in Iraq and Afghanistan – the first wars in America’s history in which all Americans have not been asked to sacrifice. The President has offered no means to pay for this war spending; it’s being financed solely through increased borrowing. Apparently the idea is to borrow money from China to spend on oil, driving up prices that benefit Iran, to fight the war on terrorism. Does that make any sense? What a terrible legacy for our next generation.

The U.S. is sending an astounding $60 million a day of our tax dollars just to pay the interest on our debt that China holds. America has never been so deeply in debt to another country in our nation's history. Our current arrangement with China — we issue Treasury bonds to cover our deficits, they buy our bonds to earn a return on their national savings — is the equivalent of every American borrowing $4,000 from China over the last ten years. 

It's a precarious position we’ve gotten ourselves into, one that can't go on indefinitely.

And so it won't.

The Chinese are barely getting enough of a return on their investment in U.S. Treasury notes and bonds to cover the decline in the value of the dollar versus their national currency. It’s not inconceivable that they could begin to shift more of their investments into other currencies (i.e. the euro) and away from the dollar, which it is estimated comprises 65-70 percent of their foreign holdings. Even a small shift would have major repercussions for the U.S. economy and global markets.

But every cloud has a silver lining. With a major election coming, we have an opportunity to set a new course for America. One in which we pay for what we want rather than pile on the equivalent of credit card debt — debt that must be paid for by future generations. It’s a debt that, if it continues growing at the current rate, will hobble our children and grandchildren’s pursuit of economic opportunity and a better life. I believe every American is willing to make a sacrifice towards making tomorrow better than today.

We just need a leader to ask.