Nobody should blame any politician for normal market forces working on commodity prices. Most politicians rightly keep their hands off a well-regulated market. But there is one exception to this rule: if a currency is considered a commodity, then we must remind ourselves that politicians control the economics that underlie the currency of a nation. The bankrupt economy of Zimbabwe, where inflation now tops 2 million percent, can only be blamed on the disastrous economic policies of Robert Mugabe and his corrupt regime. Because of Mugabe, the Zimbabwean dollar is now utterly worthless: the newly-issued Z$100 billion bank-note is not enough to buy lunch.

The US dollar isn't in such dire straits; but it isn't doing well, and hasn't been for a long time. And the decline in the value of the dollar is one of the most important reasons for the rise in oil prices. During the same period that the price of oil in dollars rose from $31 to $131 per barrel, the price of oil when measured in Euros rose from €30 to just €82. At the same time, a dollar that used to buy 0.96 Euros then is only buying 0.63 Euros today. This implies that 45% of the increase in the price of oil since 2003 is due to the falling value of the dollar. Since both oil and currency markets fluctuate, this percentage changes daily. Over the past few months, the percentage has ranged from 41% to 49%, but 45% is a good recent average.

So why is the dollar declining? That is entirely due to the economic policies of the Bush administration, which has continued to run up hundreds of billions of dollars in deficits while cutting taxes for the rich in a time of war. The currency market knows that these policies are self-defeating and unsustainable, and the market has hammered the dollar as a result. And the consumer is paying the price at the gas pump.

It's no coincidence that while the national debt increased by 49% during the Norm Coleman years, the price of a Euro was increasing by 51%, nearly the same amount. You can't fool the markets for very long: massive budget deficits reaching out as far as the eye can see lead to an eroding confidence in the US and its currency. This results in a hidden tax on everything we buy from abroad - which today means almost everything we buy, period. In the case of gasoline, the GOP's hidden deficit tax amounts to more than $1 per gallon.

When Bill Clinton was President, he handed a $236 billion budget surplus to George W. Bush - who promptly gave it away in the biggest tax cut to the richest 1% of Americans we have ever seen. John McCain voted against that at the time, and continued to oppose the Bush tax cut right up until the time he decided to run for President. Then, in a pander to his party's right wing, he reversed course and now supports making that tax cut permanent. He also claims that he wants to balance the budget, but has yet to come up with a credible plan of how he could ever accomplish that goal.

The United States is not Zimbabwe, thank God. But we don't need politicians with the same sense of magical thinking about deficits that Robert Mugabe demonstrates. This November, let's vote to repeal the GOP's hidden deficit tax that has added $1 to the price of gas. Let's return to the pay-as-you-go ethic of the Clinton years. The best way to do that is to remove from office congressmen, like Norm Coleman and John Kline, who have voted to support George W. Bush and his deficits almost 90% of the time.

Further reading:
Reuters
The Financial Express

Cross-posted at DKos