So not only is Canada economically freer than the United States, with government spending and taxes about to be lower than ours, now the Canadian navy has saved an American ship from a pirate attack off Somalia. It may be time to play “The World Turned Upside Down” again.

Appearing on Larry Kudlow’s CNBC show, I warn that tax-and-spend policies are turning California into an American version of France. But for those who want all the gory details, Reason TV has an excellent new video.

The administration’s presumption that America can borrow its way to prosperity has taken a couple of big hits over the last couple days.

First, just as the Third World debt crisis destroyed the belief among international bankers that countries don’t go bankrupt, so is the West’s borrowing binge ending the belief among international investors that the U.S. and other Western nations are safe economic bets.

Reports the Wall Street Journal:

Britain was warned by Standard & Poor’s Ratings Service that it may lose its coveted triple‑A credit rating, triggering a drop in U.K. bonds and sparking global fears about the consequences of massive debts being incurred by the U.S. and other major nations as they try to dig out from the economic crisis.

…

The announcement quickly sent waves across the Atlantic. Investors initially dumped U.K. bonds and the pound, heading for the relative safety of U.S. Treasurys. But within hours, worries about an onslaught of new U.S. bond sales and the security of America’s own triple‑A rating drove down the prices of U.S. Treasurys.

The yield of the benchmark U.S. 10-year bond, which moves in the opposite direction to the price, rose by 0.15 percentage point from Wednesday to 3.355%, its highest level in six months.

The relative gloom about the U.K. and the U.S. was apparent Thursday in the market for credit-default swaps, where investors can buy and sell insurance against sovereign defaults. Five years of insurance on $10 million in U.K. debt jumped to around $81,000 a year, from $72,000 earlier in the day. U.S. debt insurance cost the equivalent of $37,500 — in the same range as France at $38,000, and Germany at $35,000.

A shot across the bow of the American ship of state, some analysts have called it.

But shots also were being fired from another direction: East Asia. The Chinese are starting to have doubts about Uncle Sam’s creditworthiness. Reports the New York Times:

Leaders in both Washington and Beijing have been fretting openly about the mutual dependence — some would say codependence — created by China’s vast holdings of United States bonds. But beyond the talk, the relationship is already changing with surprising speed.

China is growing more picky about which American debt it is willing to finance, and is changing laws to make it easier for Chinese companies to invest abroad the billions of dollars they take in each year by exporting to America. For its part, the United States is becoming relatively less dependent on Chinese financing.

…

Financial statistics released by both countries in recent days show that China paradoxically stepped up its lending to the American government over the winter even as it virtually stopped putting fresh money into dollars.

This combination is possible because China has been exchanging one dollar-denominated asset for another — selling the debt of government-sponsored enterprises like Fannie Mae and Freddie Mac in a hurry to buy Treasuries. While this has been clear for months, new data shows that China is also trading long-term Treasuries for short-term notes, highlighting Beijing’s concerns that inflation will erode the dollar’s value in the long run as America amasses record debt.

The national debt is over $11 trillion. This year’s deficit will run nearly $2 trillion. Next year the deficit is projected to be $1.2 trillion, but it undoubtedly will run more. The administration projects an extra $10 trillion in red ink over the coming decade.

Fannie Mae and Freddie Mac need more money. The Pension Benefit Guaranty Corporation is in trouble. The FDIC will need more cash to clean up failed banks. The effectively nationalized auto companies will soak up more funds. Then there’s the more than $70 trillion in unfunded Social Security and Medicare liabilities.

But don’t worry, be happy!

California voters have spoken, and they said no to California’s high tax budget balancing proposals in a special election Tuesday.

Cato scholar Dan Mitchell debated Air America founder Mark Walsh on CNBC yesterday, and called California “The France of America,” for their tax and spend policies:

Ben Goddard writes in The Hill about the new taxpayer revolt in California this week. The political establishment put together a package of initiatives that it thought would fix the budget process there — but the people weren’t buying it. The only thing they passed was the measure to ban salary increases for legislators if they didn’t balance the budget.

There are similar proposals floating around Capitol Hill. If bills were subject to a popular vote, it seems like such a thing would be likely to pass.

The Pew Research Center has come out with the report of its latest survey on trends in political values. There is much interesting stuff here. For example:

The public continues to broadly support stricter environmental laws and regulation, but its willingness to pay higher prices, and suffer slower economic growth for the sake of environmental protection has declined substantially from two years ago. In the new poll, 51% agree that protecting the environment should be given priority even if it causes slower economic growth and some job losses, down from 66% in 2007. At the same time, the share saying that people should be willing to pay higher prices in order to protect the environment has dropped from 60% in 2007 to 49% currently. This represents a 17-year low point on this measure. Surprisingly, declines since 2007 in support for economic sacrifices to protect the environment have been particularly large among young people and political independents.

These results suggest one reason cap-and-trade is having trouble in Congress. Imagine what might happen if the public actually had to pay more for Obama’s green agenda.

The results are also consistent with the hypothesis that support for government spending should begin to decline almost immediately after Obama took office.

During the campaign, President Obama asserted that tax havens “cost” the Treasury $100 billion per year (see, for instance, 8:07 of this video), echoing the assertions made by demagogues such as Michigan’s Democratic Senator, Carl Levin. Many gullible journalists proceeded to disseminate this number, even though I repeatedly warned that it was a blatant fabrication. Indeed, it was the first falsehood that I punctured in my video entitled, Tax Havens: Myths vs Facts.

So it was with considerable interest that I read about the recent testimony of IRS Commissioner, Douglas Shulman, who acknowledged that the Obama-Levin numbers are “wild estimates” that “don’t have much basis.” Here is the key passage from a report from Bloomberg:

Internal Revenue Service Commissioner Douglas Shulman said projections that the US loses $US100 billion annually to offshore tax havens are “wild estimates” that “don’t have much basis”. …“Those numbers are pretty broad numbers,” Shulman said. The $US100 billion figure, a compilation of private-sector estimates, is often cited by Michigan Senator Carl Levin… North Dakota Senator Byron Dorgan also frequently cites the $US100 billion figure.

This, of course, raises an interesting question. If politicians are willing to use dishonest numbers to push a certain policy, what does that suggest about the merits of the policy?