$2 billion a day

Russell Sadler

Follow the money.

No, I don’t mean the streams of federal cash going out to Katrina’s victims and flowing like honey to administration cronies and their companies. I mean look where the money to pay out that cash comes from.

Our federal government is broke, you see.

With the exception of Social Security, where taxes actually bring in more money than the government pays out to beneficiaries, Congress and the Bush administration have cut tax revenues so dramatically in recent years that the government must borrow $2 billion a day to pay its bills. That is not a typographical error.

Even before Katrina slammed into the Gulf Coast, the administration was borrowing $2 billion a day -- largely from selling treasury bills to China. The Chinese government is gratefully buying our debt with the trade surplus dollars they accumulate by selling us their exported manufactured goods that were once manufactured by Americans in the United States.

As soon as the magnitude of the Katrina disaster became clear, the Republican-controlled Congress behaved like the Republicans claim the Democrats always do -- they threw money at the problem. An initial appropriation of $10 billion was quickly followed by another appropriation of $51.1 billion. The Administration strategy? Spend money. Worry about the bills and the consequences later.

"Nothing can salve the wounds like money," an official who helped develop the strategy told Time Magazine, insisting on anonymity, of course.

The billions will be borrowed at the same time Congress is talking making permanent the tax cuts that created these deficits. and repealing what remains of the estate tax reducing revenue even further.

Before Katrina devastated the Gulf Coast, the White House Office of Management and Budget declared the estimate of this year’s deficit had declined from $412 billion to $331 billion. “It’s a sign that our economy is strong, and it’s a sign our tax relief plan, our pro growth policies are working,” trumpeted President Bush.

It was all pure spin. The reduced estimate of the deficit did not include the continuing cost of the war in Iraq and used an unreasonably low estimate of the new Medicare prescription drug benefit.

The real tale of the Bush administration’s fiscal recklessness is told in a different set of numbers that get very little publicity -- the congressionally approved annual increases in the federal debt limit. In 2002, Congress approved adding $450 billion to the national debt of $6.2 trillion at the time. In 2003, Congress approved an additional $984 billion in debt. In 2004, an additional $800 billion was approved. So far this year, the House has approved another $781 billion in debt. The Senate has not acted on the bill yet, but it does not include the $61.1 billion both houses just appropriated for the victims of Katrina and the clean up and restoration.

The bottom line? An astonishing $3 trillion added to the national debt in four years and counting.

But wait. There is more. This fiscal recklessness is apparently what passes for Republican policy at the state level as well. In the last dozen years, the Oregon Republican legislative leadership “refunded” about $1.3 billion “back” to personal and corporate income taxpayers in “kicker rebates.” During the same period the Legislature borrowed about $1.3 billion to pay its operating bills and build prisons and other capital construction projects once paid for out of current tax revenues to avoid interest costs. This practice of “borrow and spend” avoided tax increases but stuck the taxpayers with the interest cost of borrowing the money. It’s not a small expense.

Principle and interest payments on this borrowed money were $167 million in the state’s 2005-07 budget period. It’s another $162 million in the 2007-09 budget and another $149 million in the 2009-11 budget. By the time the last payments are made in the 2029-31 budget, Oregon taxpayers will shell out $1.2 billion -- almost the amount of the “rebates.”

Opponents of both state and federal Republican practices of “borrow and spend” wring their hands and moan about the “generations” that it will take to pay off the debt. No, it won’t take generations. The longest term debt instruments involved are 30 years.

Barring some nation foolish enough to refinance America’s fiscal follies, this crushing debt load, recklessly run up in the last few years by those who call themselves Republican conservatives, will come due within the next 30 years. Your children will face only two realistic choices -- raise taxes to pay it off or default.

The consequences of either choice will not be pretty. It's not a very happy inheritance to leave the kids -- a Republican birth tax on everyone born over the next three decades.

By Russell Sadler Sept. 18, 2005