At its heart is a fiscal crisis. After the 2009 deficit of $1.4 trillion, we are running a 2010 deficit of $1.6 trillion. Trillion-dollar deficits are projected through the Obama years, be they four or eight. Long before 2016, however, holders of U.S. public debt will stop buying Treasury bills or start demanding higher interest rates to cover the growing risk of a default.
This week, a smoke detector went off. China, in December, had unloaded $45 billion of its $790 billion in T-bills. Is Beijing bailing out?
To assure the world we are not Greece writ large, the United States must soon adopt a visible plan for slashing the deficit.
