I agree Kharn, that these budget problems are huge, though I disagree with Rosh that the problem is mostly one of immigrants, or even illegal immigrants which is primarily a local problem due in large part to bad federal policies. Rather, I think the problem is one of policy.
The current administration has been spending heavily, perhaps to get us out of economic decline or as payback to political allies. But the republican administrations have been reluctant to tax, especially the wealthier populations of the country. At the same time spending has gone to corporate welfare while cuts have been given to the poorest classes.
Clinton managed fiscal responsibility by increasing taxes and thereby creating more confidence in the economy, especially by paying down the debt.
The Republican agenda has been based on a notion of giving tax breaks to the wealthy, cutting government costs in welfare and ideally spurring on the economy. To some extent that makes sense. Lower taxes leads to more investable capital, leading to more future returns. This is Mancur Olson's Prosperity and Power book. The less the 'stationary bandit' (government) takes, the more the people can reinvest in their own livelihoods to create more individual surplus, leading to more growth.
Unfortunately, at the same time this has been happening economic power has become increasingly held in the hands of a few to the detriment of the many. These few have an interest in sustaining and defending class privilege over the rest, and are happy playing divide and conquer over the rest of us. So poor americans fight with poor immigrants who are also fightting with poor minorities over a declining share of the welfare redistribution. Meanwhile, tax breaks to the wealthy is another for of income distribution as the tax burden falls increasingly to poor and middle classes (and the middle class sees itself threatened from its privilege by the poor - minorities and immigrants).
This is bad politics.
So you are right. The US pays more per capita for private medical plans than Europeans pay for their public plans. Furthermore the Europeans are doing more to preserve and update their energy infrastructure than the US by developing alternative energy sources- meanwhile one big hurricane in the South sends shocks through the US energy infrastructure (and profits to the oil companies). That said, we both seem to be having the same problem with immigration these days as native borns look to immigrants as a threat, not realizing that these folks are going to be the labor force of the next generation as the current greys itself into the grave.
As the article points out- fiscal responsibility makes for bad politics. No one wants to know that taxes are going up. Hell I was against Clinton when he said he would raise taxes. No one likes the idea of cutting back. It can be done even with a responsible governor. Virginia's Mark Warner is a very popular governor in part because shown responsibility in dealing with the state's budget problems.
But paying down the deficit has less political punch at the pools than getting a nice tax break.
What will happen?
Bush may begin to change policies, or may just lame duck himself into irrelevancy because his administration is both corrupt and ineffective. Either way the Republicans have to win the next election and Bush is painfully unpopular. So they will have to start becoming fiscally more conservative.
Democrats may grow some balls and start being more serious about stalling tax cuts.
The administration will probably pull us out of Iraq under barrage of calls for troop pullouts and claim that the job was done (again) when the Iraqi army is large enough to do the job itself (regardless if whether civil war occurs there or not). Hopefully the Iraqi's will be able to wise up and form a stable political order, but if not- there is always Iran. Overall, if Iraq turns to civil war it's a failure, if Iraq's 'liberation' doesn't secure stable oil, it's a disaster. But it's unlikely that the current administration will admit it.
What leviathan gives, leviathan can take away. Therefore the next administration will probably have to raise taxes, including on the wealthiest classes. I doubt the 'death tax' will be repealed, and if it does- it's a problem since states also rely on 'estate taxes'. States will probably also have to raise local income taxes (which is part of the immigration problem as the costs are paid locally).
This is not a big surprise. Bush's dad inherited the mess left over from Reagan's economic policy and raised taxes (and lost the election). Clinton had to raise taxes even more- and the Democrats lost the Congress but not the White House. The next president will probably raise taxes- and thus the economy will seem more stable.
I also see the US reduce military spending. TO some extent Rumsfeld has been trying to do this, but he also has a war to deal with. The next administration will probably have to cut back on defense spending. Thank God. Defense spending is largely a waste of money anyway.
