Why Fred Thompson is right to not sign the "No increase in taxes" pledge.

There are atleast three good reason a Presidential candidate should not take the pledge.

1. The President is to uphold the constitution - not choose every decision in advance

2.We can’t keep living on Chinese credit cards - the paid for the Iraq war but we spent money the government does not have.

3. Grover Norquist - why would any American want to follow him or anyone associated with CAIR, Hamas and Hezbollah?

The vulnerability of the American economy is discussed in political but its a slow story, not sexy at all. But it is real.

When a household greatly increases their spending but the father stops working his second job that family goes into debt. If they owe money to bank of America, they are beholden to Bank of America but BOA wants basically the same things the family wants, a strong, secure economy so BOA can make money. This was the situation when the Reagan administration took us deeply into debt. We mainly borrowed from the Japanese and since our military keeps Japan safe that wasn't such bad people to owe money to. And the second job is the analogy is extra taxes. Like a father with a second job, high taxes have a real cost to the American family.

Under the Bush43 administration, the borrowing is largely from the Chinese. That's not quite as bad as a father borrowing from a loan shark, but China is not our friend. This makes us vulnerable to Chinese threats to disrupt our economy if China wishes to punish us.

The next President need to stop borrowing so much money from the Chinese. The Bush43 tax cuts were empty tax cuts - paid by borrowing not by cutting spending. If we cannot cut spending the President needs the option of raising taxes (or at least threatening to raise taxes) or we find that we owe China so much money our independence is threatened.


>>China threatens 'nuclear option' of dollar sales

By Ambrose Evans-Pritchard

Last Updated: 8:39pm BST 10/08/2007

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Fistful of dollars - China's trade surplus reached $26.9bn in June

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.<<


http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml