The Tax-Cut Pendulum and the Pit

[Stocat]

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When Bush took office in January 2001, the government was forecasting a $5.6 trillion budget surplus between then and 2011. Instead, it is now expecting to accumulate an extra $3 trillion in debt -- including a record $415 billion in the fiscal year that ended Sept. 30. The government has to borrow an average of more than $1.1 billion a day to pay its bills, and it spends more on interest payments on the federal debt each year -- about $159 billion -- than it does on education, homeland security, justice and law enforcement, veterans, international aid, and space exploration combined.

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The consequences are just coming into view. The White House has ordered draft budgets for 2006 that would cut spending on homeland security, veterans affairs and education, according to White House documents. Some economists -- although by no means most -- see a reckoning on the horizon, when foreign lenders reject U.S. debt, interest rates rise, and the value of the dollar crashes.

"The pressures going forward are too great to allow us to borrow these kinds of moneys on the international market on a sustained basis," said Douglas Holtz-Eakin, a former White House economist who heads the Congressional Budget Office (news - web sites).
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Mush More:
http://story.news.yahoo.com/news?tmpl=story&cid=1803&e=1&u=/washpost/20041008/pl_washpost/a16134_2004oct7