Running on empty

September 12, 2004

AS OF TODAY, total U.S. government debt stands, roughly, just short of $7.4 trillion, or more than $25,000 for every man, woman and child in this country. We say roughly because the red ink mounts with every passing second -- at a pace that has strikingly and dangerously quickened during the Bush administration.

President Bush and his team talk of plans to break from his growing annual federal budget deficits -- indeed, of halving them by 2009. But last week, the Congressional Budget Office announced a record deficit of $422 billion for the 2004 fiscal year. And it added that the annual deficit might be lowered in five years if all troops are soon withdrawn from Iraq and Afghanistan, but even then by not nearly as much as Mr. Bush predicts.

Over the next decade, the CBO projects, the federal government will run up $2.3 trillion more debt under current law. And if the president's record tax cuts are kept alive through the decade and spending doesn't drop sharply, the added debt really gets astronomical -- on the order of $5 trillion.

Let us consider how far this nation's fiscal situation has deteriorated under Mr. Bush's watch: When he took office, the federal budget was running an annual surplus of about $150 billion, the national debt stood at about $5.7 trillion and there were serious projections of wiping that out by 2010.

What happened?

Well, of course, tax revenues suffered in the recession, and then those record tax cuts drove revenues as a share of the economy down to their lowest level since 1959. Wars have driven military spending up by a third. And not least, the president and the Republican-controlled Congress have spent like drunken sailors: Federal nondefense discretionary spending has risen under Mr. Bush by almost 20 percent -- the fastest rate since President Richard M. Nixon's second term 30 years ago.

The numbers here may be fantastical -- the federal government could be $12 trillion in the hole just as the baby boomers start to retire in droves -- but the fiscal principles are pretty basic: Washington can't keep giving today's taxpayers breaks that essentially are debts passed on to the next generation, and it can't keep spending like there's no tomorrow.

Right now, the world is financing the combined U.S. budget and current-account deficits by investing more than $2 billion a day in U.S. securities. But as with any heavy debtor, America at some point may not be viewed by world investors as such a safe harbor. Obviously, it would be far less dangerous for the next president and Congress to adopt the needed long-run budget discipline than to have it imposed from abroad.

In the face of rapidly rising budgets in the early 1990s, Washington reached that sort of responsible political consensus, a critical part of the groundwork for the late 1990s' surpluses. Neither Mr. Bush nor Democratic challenger John Kerry has yet embraced that hard and sweeping political challenge, but it should be among their top priorities.

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