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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Oeconomicus who wrote (521063)	1/7/2004 8:01:28 PM
From: Kenneth E. Phillipps	Read Replies (2) \| Respond to of 769667

they'll be way up to 1963 levels What was the size of the national debt in 1963?

To: Oeconomicus who wrote (521063)	1/8/2004 12:28:04 AM
From: steve dietrich	Read Replies (1) \| Respond to of 769667

Here's an interesting article about the national debt: IMF Report Sees U.S. Budget Gap Driving Up Rates By GREG IP Staff Reporter of THE WALL STREET JOURNAL WASHINGTON -- Soaring U.S. government debt will drive up interest rates world-wide by as much as a full percentage point, hampering investment and growth, the International Monetary Fund says. According to an IMF report, if cumulative budget deficits rise by 15% of gross domestic product, as the Congressional Budget Office expects, world interest rates would be pushed up by one-half to one percentage point over 10 years. The IMF said that U.S. deficits have helped the world economy in the short term by cushioning the effect of the burst stock-market bubble and the September 2001 terrorist attacks. But in coming years, as the economy recovers and the cost of Medicare, Social Security and the Bush tax cuts mount, the deficits will increasingly put a drag on growth. World capital markets are more and more integrated, and budget deficits in one country draw on a global pool of savings. For example, foreigners own 31% of all Treasury debt outstanding, according to Bianco Research LLC, a financial research firm. IMF researchers found that when U.S. inflation-adjusted interest rates move one percentage point, average world rates move 0.6 point. Federal Reserve Governor Donald Kohn sounded a similar warning yesterday, saying that "If the fiscal path does not change ... interest rates will be higher than they otherwise would be." That would reduce capital spending and purchases of houses and autos, he said. In the late 1990s, large inflows of foreign investment and a government surplus helped finance domestic investment, he said in a speech to the Federal Reserve Bank of Atlanta. "A few years from now we may have less of the former and none of the latter." The Bush administration expects the budget deficit to top $500 billion in the current fiscal year, or about 4.5% of GDP. Yesterday, Treasury Secretary John Snow said the administration would cut the deficit to 2% of GDP over five years. "The current deficit is certainly larger than we like, and it's unwelcome and it has to be addressed," Mr. Snow told the U.S. Chamber of Commerce. The Fed's Mr. Kohn said the decline in the dollar's value in recent years suggests foreign investors may be less willing to buy U.S. stocks and bonds to finance the U.S. current account gap -- the shortfall on U.S. trade and investment income with the rest of the world. But he discounted concerns that this could abruptly push down the dollar and stock prices and push up bond yields. These markets are "highly liquid" and can absorb even a big drop in demand with "very small changes in prices."