To understand the fiscal catastrophe that awaits the United States, consider a single number from Monday's budget proposal by President Obama: $700 billion. That is the revenue windfall to the Treasury over the next decade if Congress allows the Bush tax cuts for the wealthy to expire, as Obama wants. Yet by 2020 that entire amount will be swallowed up in a single year just making the additional interest payments due on the accumulating federal debt.
As bad as the budget news has been for close to a decade, it has become seriously worse. That is because, while the headlines will focus on the annual deficits (a record $1.6 trillion is the 2010 projection), budget shortfalls cumulate. This year's budget must pay off the interest on last year's debts and all the ones that came before. As long as deficits continue, the burden grows each year. A decade from now, even under some pretty rosy assumptions about economic growth, interest on the accumulated debt will be the third-largest budget item at more than $900 billion a year, only slightly less than the costs of Social Security and Medicare. For any country, that is a road to ruin-or in the antiseptic language of the budget documents, "the fiscal position is not sustainable in the long run without future policy changes."