Time Bomb Ticks Beneath the Economy
Huge Federal Deficits Could Stall Investment and Send Interest Rates Soaring
by Robert B. Reich

The Congressional Budget Office reported this week that the federal budget is completely out of control. Even if spending doesn't grow as a share of the national economy, the green eyeshades at the budget office forecast $400-billion deficits as far as the eye can see. The last time the budget was nearly this far out of whack, the country got up in arms. In 1992, Bill Clinton used the runaway budget to beat up the elder George Bush. Once elected, Clinton had to shelve most of his "public investment" agenda to reduce what was then a $29-billion-a-year deficit and calm Wall Street's jitters. In 1995, Newt Gingrich threatened to push through a balanced budget amendment until Clinton agreed to cut spending even more. By this time, there was a consensus in both parties that deficit spending had to be reined in. By 1997, as the economy recovered, the deficit disappeared. Now we're in worse shape than in 1992, but the deficit doesn't seem to arouse more than a giant yawn. What gives?
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