Found this and it explains a few things better than I could. This is
not an isolated interpretation of where this country may be headed.

Renata



By Daniel N. Shaviro, Newsday

What's the difference between Pete Rose and the George W. Bush
administration?

The main one is that at least Pete Rose has admitted he had a
compulsion and promises that if reinstated he will not act on it
again. You may believe him or not, but admission is a necessary first
step.

The Bush administration isn't hooked on sports gambling. Instead, what
it likes to do is spend money in wild binges while also constantly
cutting taxes and pretending that nothing has to be paid for.

Eighty-seven billion dollars for a year in Iraq, with the occupation
expected by many to continue indefinitely? No problem.

A new Medicare prescription drug benefit, with no financing and an
estimated long-term cost of $12 trillion, or more than our entire
economy produces in a year? Why not?



A permanent space station on the moon, plus manned trips to Mars
within a decade? Sounds expensive, but who's counting?

Repeal any of the Bush tax cuts of the last few years? Unthinkable.

The administration is also, at long last, facing something akin to the
baseball commissioner, albeit lacking his powers: The International
Monetary Fund. The IMF - long the scourge of political leaders from
Brazil to Kenya to Indonesia for its insistence on budget discipline -
has now trained its sights on American policy. The IMF notes that,
within a few years, our trade debts to the rest of the world may
exceed 40 percent of the size of our economy - and this before the
Baby Boomers' retirement puts our budget even more massively and
permanently in the red. It warns that our ever-expanding budget and
trade deficits and national debt endanger not just our own economy,
but worldwide economic growth.

Only, unlike in Brazil or Kenya, the IMF cannot threaten to pull the
plug on us, because there is no plug to pull. We have not borrowed
money from the IMF, or at least not yet. Keeping the Bush
administration's budget policies in place would make about as much
sense as letting Pete Rose manage the Cincinnati Reds again and bet on
their games as much as he likes. What happens if the federal debt
keeps growing and growing, with no end in sight?

A recent Congressional Budget Office report lays out this scenario:
"Foreign investors could stop investing in U.S. securities, the
exchange value of the dollar could plunge (as is already happening),
interest rates could climb, consumer prices could shoot up, or the
economy could contract sharply.

"Amid the anticipation of declining profits and rising inflation and
interest rates, stock markets could collapse and consumers might
suddenly reduce their consumption."

Now for the bad news: That is only Step 1. At some point, if the
United States continues to increase spending while cutting taxes, the
government may no longer be able to sell enough bonds at any
reasonable interest rate. At that point, with seniors clamoring for
their Social Security and Medicare benefits and tax increases a
political third rail, the temptation to keep things going a bit longer
by printing money may become irresistible.

The Congressional Budget Office therefore feels compelled to point out
that this would "lead to hyperinflation (as happened in Germany in the
1920s, Hungary in the 1940s, Argentina in the 1980s, and Yugoslavia in
the 1990s)." Quite extraordinary company, even if it is just
hypothetical for now, for the world's largest economy and greatest
democracy to keep. Even Bush's chief economist, Gregory Mankiw, the
chair of his Council of Economic Advisers, has warned about this
scenario - although not, at least publicly, since taking office.

Back in 1995, when the debt and deficit picture was much more
innocuous than it is now, he warned about a capital market meltdown
involving the U.S. government and wrote that it is "hard to think
about because things can go wrong in such a rich variety of ways."

What is keeping us on this disastrous course? Three main things: The
first is the administration's total and reckless disregard for
elementary principles of fiscal probity. The second is the moral
failure of Republicans and conservative intellectuals who know better
but say nothing because they want to play on the team, or else care
just about the next election. And the third is the political cowardice
of Democrats who dare neither to challenge the Bush tax cuts head-on
nor to tell seniors that they cannot keep on getting ever-larger
government handouts.

As Pete Rose is learning, when you do something wrong it is not
necessarily enough to later come clean. But at least coming clean
about its disastrous budget policies would be a start for the Bush
administration, which continues to deny the undeniable.

Daniel N. Shaviro is a law professor at New York University and author
of "Making Sense of Social Security Reform."

Copyright © 2004, Newsday, Inc.

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