Irwin Stelzer has a must-read piece in the Weekly Standard. It's about how the Bush administration's fiscal policy has left the U.S. so indebted to China that we have no leverage over North Korea. Money quote:
It is indeed true that the Bush tax cuts were key to ending the recession the Republicans inherited from the Clinton administration. And it is also true that some of the tax cuts have proved to be revenue generators for the Treasury. That has enabled the administration to gloat over a 22 percent reduction of the budget deficit from last year's $319 billion. But in a booming economy, a continued deficit of $248 billion is hardly chopped liver, as the analysts in New York's delis say. And when those deficits result in stacks of IOUs held by China, America's diplomats are forced to walk softly, lest they antagonize so large a creditor.
It is this fiscal situation, this unwillingness to rein in spending so that the boom in tax receipts can be used to provide support for American diplomacy, that has made it impossible for America to have an effective foreign policy. Indeed, it is arguable that George W. Bush has presided over the largest decline in America's ability to influence world events since, well, since the 1920s, when we decided it was in the nation's interests to let the world take care of itself while we partied at that era's equivalents of today's discos - the jazz joints and speakeasies that offered solace to the Wall Street crowd after a hard day of share-price manipulation.