4.5% annual interest on a $6 trillion increase in the federal deficit implies $270 billion in annual interest payments. Consider how large that is, relative to the proposed FY05 defense budget of $402 billion!
http://www.whitehouse.gov/omb/budget/fy2005/tables.html
Before most of us retire - before our younger children start their working lives - indeed, perhaps even during the term of Bush's unlucky successor - the cost of servicing the federal deficit will be creating an increasingly painful squeeze on the United States' ability to pay for even its most cherished priorities.
Here is an analysis, prepared by the Office of Management and Budget in 2/04, of the deficit situation.
http://www.ombwatch.org/budget/pdf/2005_Budget_3.pdf
A few highlights:
- "From 2000 to 2004, federal revenue as a share of GDP has declined by 5.2 percentage points - which is larger than the current deficit"
- "This reduction in federal revenue has created a long-term structural deficit for the federal budget, since spending levels have not changed to the same degree"
- "The current deficit is not a result of a weak economy"
- "we are unlikely to grow our way out of massive deficits in the near term"
- "over the next 10 years the President is proposing $1.1 trillion in revenue reductions - most of which (87%) will occur after the 2005-2009 window included in the budget"
- "current massive deficits are merely difficult times before an even sharper deterioration. As the baby-boom generation reaches retirement age, the deficit will dramatically worsen under current policy"
The Republican party's ideological drive to cut taxes, while lacking the will to actually cut spending, is headed for fiscal disaster. The fact is, that the Presidents after Bush will have to raise taxes on someone (individuals or coporates), or make deep and painful cuts in spending.
I respected Kerry for coming right out and proposing a tax increase on incomes >$200K. Of course, he lost - as has every Presidential candidate who has ever said he'd raise taxes, as far as I can recall. The majority of the American electorate apparently loves living on credit cards, and wants its government to do so too.