Bush did not cut taxes.  He raised them.  The fact that he didn't present the bill to the american people during his tenure is completely irrelevant (and dishonest).  The federal budget will be roughly $90 billion due to interest expense when he leaves than when he came in (and that is actually an artificially low number).  Whether we borrow money against future tax revenues or tax today to pay them doesn't change the inescapable fact that these are liabilities that will have to be paid by our taxes at some point.

It's as if a child says to his father "I don't need an allowance" and then blows out the credit card.

The facts here are clear and published by the Treasury on it's web site.  In 2008, the interest expense for the federal government will be $451 billion dollars up from $361 in 2000.  That's about the size of the defense budget, so we pay about as much in interest every year as we do to defend our country.  It's pretty bad, but it gets much, much worse...

First, the obvious.  Deficits are expected to continue indefinitely and will probably get worse due to the way the Bush administration has mismanaged the country.  So we'll be paying even more in the future.  That's really bad, but it gets worse...

There is another, more subtle problem that will further increase our interest expense and our tax bill. Our interest bill is not only due to the size of the debt, but also to the interest rate.  Due to the credit crisis and generally poor economic conditions, the Fed is keeping interest rates abnormally low.  When economic times get better, the Fed will have to raise interest rates again and our interest bill will explode.

Let's contrast this to the Clinton years.  The interest bill also grew during his tenure from $292 billion to $361 billion.  That's an increase or $69 billion.  However, our economy was booming during the '90s so the interest rates were higher (not exactly a bad situation).  Moreover, most of that growth was between 1994 and 1995 (due to higher interest rates, not higher debt).  There was virtually no growth in the interest bill between 1997 and 2000.  As another point of comparison, the interest bill grew $78 during Bush one's one term presidency.

Alas, it gets worse still.  The increase in the debt can be atrributed to spending, not investment.  That's important, as Robert Reich pointed out in a NY Times oped.  Borrowing to invest in something useful creates future revenues that will offset the future interest and principal.  Spending money to explode missles in foreign lands or just simply sending out tax rebate checks doesn't have the same positive effect.  

Obama has a very responsible approach to this.  We need to increase the defict because the economy is in the tank, so let's target infrastructure projects and education.  Lets also spend some money to reform health care so that we can get costs down (I wrote about this yesterday, we pay more but get less) Obama's plan makes sense, even if it won't immediately decrease the overall tax bill.

So let's do away with the fiction that Bush cut taxes.  He didn't present a bill, he just kept the tab running.  We still have to pay.

And boy will we...