Matt, you might want to read this (linked to two days in a row by Andrew Tobias):

 http://tinyurl.com/meq6s

Deficits won't matter, until they do matter. By that point it will be too late. The US government debt is so high that it can only be sustained by paying it off by printing currency (the Federal Reserve Bank buys US gov't bonds).

This 'inflates' the currency, and dollars are worth less. This decreases the standard of living, and what a dollar will buy. Inflation eats up savings. The federal reserve will not raise interest rates above the real level of inflation, so savers will lose money, but the debt will be worth less over time.  Foreigners will flee the dollar.  The prospect of the US inflating and printing our way out of debt is what has driven investors to dump the dollar for gold, silver and other resources.

Good point.

And if Democrats don't have a political issue in either deficit reduction or health care (and affordability?), what issues do Democrats own that they can take to the voters?

Woo Woo!  Have you seen my shiny new HDTV!

In the monthly deficit reports, we actually were running surpluses for December and January. The December surplus was a little under $11 billion and the January surplus was almost $21 billion. Some supply siders were ecstatic and declared victory upon the reportage of those numbers. Think again, since February’s deficit rocketed to over $119 billion.

Now comes the interesting part. When I found these numbers at the U. S. Treasury site, it appeared slightly confusing since the monthly deficits were positive numbers and surpluses were negative numbers. Here is a copy and paste of the legend:

DEFICIT/SURPLUS (-)

Perhaps they always reported these numbers in such a manner, but it seems quite odd since a deficit is usually reported as a negative number.

One advantage the Bush Administration had is that they began to run up deficits during a period of very low interest rates. Bonds have call provisions, meaning that you can call in bonds paying a higher rate of interest and replace them with ones that are issued at a lower rate. Since that time the Federal Reserve has raised its benchmark rate by a quarter percentage point fourteen consecutive times.

The Fed rate currently stands at 4.5 percent. In the past, short term interest rates were comparatively very low, and its likely the Treasury took advantage of that situation by issuing bonds that mature in 2 to 5 years. This means that these issues will mature at relatively higher rates, and have to be refinanced.

 The other aspect for future rates is that bond trading futures currently project at least two more quarter point raises for this month and May, which would take the Fed rate up to 5.0 per cent. The other way the Treasury took advantage of historically low rates was by bringing back the 30 year Treasury bond. As the Federal Reserve tightened rates, short term bond yields went higher, and we are currently experiencing a periodic inversion of the yield curve, where shorter term bonds have a higher yield than the longer term 10 year and 30 year Treasury bonds. Historically, an inverted yield curve has given cause to a recession.

Although foreign money loves 10 year Treasuries, the Fed tightening and the continued jawboning on the part of various Fed governors seems to have had an effect. Longer term maturities now have gradually increased in yield, and if we return to a normal yield curve, where longer term Treasuries yield more than the shorter term, it will mean increased interest expense across the board. Although over the longer term, overall interest rates may remain lower by historical standards, it will still mean our debt and continued Bush deficits will have to be serviced by higher rates of interest than in the immediate past years.

This may be why the deficit is currently of lesser concern. Unfortunately, we are dealing with very large sums of debt financing and even small changes in the prevailing interest expense can have profound effects upon our current accounts and future budgetary considerations.

How many Americans carry creditcard balances?  46%? 

All that matters is the monthly payment and what methods you have available to stretch that out if you have a tough month.

   Oil will keep going up in price because the sellers of oil want to preserve the real value of the dollar. People with money in the bank will want more interest so they can stay ahead of inflation. Banks will have to charge consumers more interests to support and intice investors to put or keep their money on deposit. 

   The worker will be told " Tighten your belts and whip inflation" We can go back to the days of Nixon and have our wages frozen. price controls. Work longer hours to make ends meet. Work longer years because you can't afford to retire.  

   The hypocrisy of these conservative Republicans. When Clinton wanted to expand healthcare the Republicans pushed, insisted  for balanced budgets, but when they come to power, to hell with deficits.

    American worker, get used to slavery.  What is the debt now 9 trillion dollars? $30,000.00 dollars for every man, woman, child.

    Bush and friends will be long buried, and will never see the damage done to the next generation. So much for family values. 

   But now I read (CBS Market Watch)that this Dubai failure might bring on a depression because of protectionism (Smoot/Hawley)

    Does anyone know how low wages could go? Do you think some Republicans have made plenty of money now, to ride this depression out. Only this time we won't have FDR to interfere, and a stacked court to make sure of that. I heard rumors about a lot of prisons being built, is this true?