Window of Ignorance

The latest budget news is worse than even the most dour pessimists had thought possible. But the unfolding fiscal disaster hasn't yet penetrated the public's consciousness — and the administration is trying to exploit that window of ignorance.

In fiscal 2000 the federal budget was in surplus by $236 billion. This year's deficit will be more than $100 billion, possibly more than $150 billion. Only the Treasury Department knows exactly how much money is coming in, but the renewed push to raise the debt limit, which will allow the government to borrow more money, suggests that the news is grim indeed. A year ago Treasury officials said they could stay within the current debt limit until 2008; in April they said they could make it into June; now they say they'll hit the wall in a couple of weeks.

And it's not a temporary shortfall. One insider told me to watch the plans for next week's auction of federal bonds: "If Treasury auctions five-year rather than one-year bonds, that could tip their hand that we have a chronic, long-term problem." Sure enough, most of the bonds auctioned next week will be five-year.
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thanks to Cursor