oh....by the way
Deficits were conspicuous omissions
February 4, 2005
THE PRESIDENT'S State of the Union Address swept under the rug two of the country's most threatening problems: the federal budget deficit and the trade deficit. Both of these have grown by leaps and bounds under Bush's stewardship, and together they increasingly threaten our economic well-being.
The federal budget yielded large surpluses under President Clinton's tenure and has descended into huge deficits in recent years -- $412 billion last year -- with no real improvement in sight.
The annual trade deficit has grown despite the steep decline in the dollar compared to the euro and the yen -- a development that is supposed to shrink this deficit rapidly.
We finance these deficits by borrowing abroad -- in China, Taiwan, Japan, and elsewhere. Foreign lenders are becoming increasingly reluctant to continue lending to us. When they stop lending altogether and even start flooding the market with the mountains of US Treasury securities in their hands, the dollar will decline more precipitously, and the Federal Reserve will be forced to hike interest rates, throwing large numbers of businesses and individuals into bankruptcy.
This is not a pretty prospect, and the president ignored it.