corrente

Robert Reich writes for the LA Times here:

So what's the problem with Bush's deficits? The crunch will come a few years from now, once the economy is back on track. Then, the projected deficits will create havoc because they will use up scarce capital. The Medicare drug benefit that Bush wants is likely to balloon as boomers retire. Huge military outlays, combined with the billions needed for rebuilding Iraq and ensuring homeland security, will continue because the war against terrorism is likely to go on and on. And if Bush gets his way and makes permanent his temporary tax breaks, the budget gap will only get worse.

This means interest rates will go sky-high. They may already be heading that way. Wall Street is just beginning to feel nervous about the projected deficits. Mortgage rates are moving upward in many parts of the country. It stands to reason. Who wants to lend money at 6% for 15 years when there's a good chance of a capital squeeze in a few years that pushes long-term rates north of 10%?

Higher long-term rates can stall the recovery and hurt Bush's chance of being reelected. In other words, if Bush chokes on the projected red ink, it won't be because of Democrats or Republicans. It will be because Wall Street starts to worry about the future.

But who cares? The bill will come due after Bush and his cronies have left town, bulging sacks of cash over their shoulders.