The Circle of Crude – New York Times
Editorial from the New York Times (link):
The public derision of Republicans’ idea for a $100 gasoline rebate has focused on the desperate political pandering embodied in the proposal. But there’s another view that makes it seem even worse. Consider the China angle.
With the nation already deeply in debt – and with Congress angling this week to cut taxes for affluent investors by more than $20 billion – lawmakers would need to borrow $10 billion to make the rebates happen. Since more than 80 percent of the immense borrowing of the Bush years has been from foreigners, it’s safe to assume that most of the rebates would be courtesy of foreign lenders, of which China has been one of the most willing.
It’s the circle of crude: China’s competition for the world’s oil is pushing up prices. Congress piles on more debt to calm angry consumers with a rebate. The increased debt is a prescription for a weaker dollar, which in turn would make imports, including oil, even more expensive.