Now we have at deficit that looks like this:
(From post at Powerline, referencing a graph from Strategas).
And that is before the Omnibus passes and every other spending program the Dems are planning.
So, my question is, how do we scale the amount of the budget that will be going to pay for the debt?
I think we've increased the overall debt by a couple of trillion in just the last few months, which amounts to 10-20% increase in a year. So, I guess we should be up around 27-30% of Bush's budget now going to service the debt.
What I keep thinking about is: where is the money coming from. It has to come from one of two places: 1) people/governments buying treasury bills, 2) the US government heating up the printing presses and making it out of thin air.
Both are troublesome. A large number of Japanese investors believe that the US is at risk of default. Whether that is true or not, a lot of investors will demand a better return on investment, because their investment looks riskier than it used to. Also, with China's exports tanking due to a global recession, they don't have asi much money to pay for our profligate ways. In addition, the unrest in the provinces in China which has been going on for years, is only going to intensify as more and more Chinese factories close. The Commies might just decide that money is better spent preserving their own skin and pacifying the peasants, than spent on our underwater mortgages. They too, might require a higher interest rate in order to get them to send their money to us. All of that makes the debt more expensive to us.
The second option is printing money, which is inflationary. Instead of taking the money out of China, the government will take it out of our pockets by making every dollar less valuable--the equivalent of a sales tax on every dollar spent.
Acting like a drunken sailor means one heck of a hangover when you sober up, not to mention chlamydia.
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