One Trillion

I wonder whether Barack Obama has not, in less than a month in office, already sealed his fate. Maybe the rest of his time will be spent trying to pay up the one trillion he spent in a couple of weeks.

It depends crucially on the bond markets, but if they normalise and US treasury bond yields go up (ie, the federal government starts paying more interest), then this could easily become the number one priority for the administration for the next couple of years. A big part of Bush’s mis-handling of the budget was due to the unusual tameness of the once fierce bond markets over the last 10 years (the rest was Bush’s irresponsibility, of course).