Global Studies

The second Bush Administration will face many demanding challenges in foreign economic policy – the Doha Round of multilateral trade talks, regional and bilateral trade negotiations, poor-country debt problems, rising energy prices, the competitive threat of China, and more. But most demanding of all will be the critical issue of America's balance of payments. Persistent external deficits have led to an unprecedented growth of foreign debt for the United States, now in excess of $3 trillion ($3,000,000,000) on a net basis. For the first time in history, the world’s greatest superpower is also the world's greatest debtor. If not managed effectively, America's Super Debt could become a grave source of strain on financial markets and possibly even trigger a global economic crisis. It is hardly an exaggeration to say that the fate of the world economy hangs in the balance. Is the Bush Administration up to the challenge?