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Who will pay for mounting federal and trade deficits?

Our children and grandchildren, yes. But the running trade deficit gets a little trickier.

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Here's a critical slant on the Obama administration's projected record $1.7 trillion deficit this year: "Debt Day."

That's the day each year when total government spending exceeds anticipated total federal revenues. Republican House Leader John Boehner recently calculated that Debt Day in 2009 occurred April 26, just six months and 26 days after the fiscal year started Oct. 1, 2008. Washington already has run out of money only halfway through the year, he noted.

The federal budget deficit – $4.7 billion a day if you spread it over the entire year – is one of two major flows of red ink for the United States. The other is the deficit in international trade, which currently is running about $1.5 billion a day, down from the more than $2 billion a day during recent boom years.

Both deficits threaten the nation's living standard and raise the question: Who's going to pay for these massive piles of debt?

Looking at the domestic debt, Mr. Boehner says it will be "our children and grandchildren," which is probably mostly right. Who'll pay for America's running trade deficits gets a little trickier.

In the long run, the twin debts were unsustainable before the recession. The stimulus spending has merely speeded up the day of reckoning.

But on the domestic front, what was the alternative? Charles McMillion, a Washington consulting economist, sees the deficit as the lesser of two evils. Without costly stimulus, the number of unemployed Americans, bankrupt businesses, and home foreclosures would swell even more, he says. Federal revenues would shrink.

The assumption is that a revived economy would make it easier for future presidents – and our offspring – to service the enlarged debt.

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