Economy: The Next President is Already Screwed

Economy

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Democrats have high hopes for the 2008 election. And they should. Bush's policies have done an incredible amount of damage to the Republicans. It's doubtful they will recover anytime soon. But should a Democrat win, the fiscal mess left by Bush has already predetermined the next president's primary policy goal: to clean-up the mess Bush is leaving behind.

There are two inter-related data sets that illustrate this problem.

The first comes from the Treasury Department:


 09/30/2006    $8,506,973,899,215.23
 09/30/2005    $7,932,709,661,723.50
 09/30/2004    $7,379,052,696,330.32
 09/30/2003    $6,783,231,062,743.62
 09/30/2002    $6,228,235,965,597.16
 09/30/2001    $5,807,463,412,200.06
Total Debt Outstanding: $9,016,288,006,279.21

From the end of fiscal 2001 to the current total debt we have a total increase of about 3.2 trillion dollars in total debt outstanding. Also notice the total amount of debt outstanding has been increasing at a high rate per year for the last 5 years. This indicates the deficit -- despite claims to the contrary -- is nowhere near under control. Basically, somewhere in the US budget structure there is a serious problem that needs to be addressed now.

The second data set is a long-term chart of the dollar.



Notice the dollar is currently trading near its lowest level in over 35 years. This tells us a very simple fact: foreigners are losing confidence in the dollar's value. This makes the dollar extremely vulnerable to a random economic event.

The combined reality of these two data sets is simple. Either we start to realistically deal with the deficit now, or the deficit will start to deal with us. And frankly, it's best for us to deal with it. If random economic events make us deal with it, it's going to hurt a whole lot more.

The bottom line is Bush has already made it impossible for the next president to do anything accept raise taxes and cut spending. That of course makes electoral victory beyond 4 years from now extremely difficult.

















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