I hope that Europe won't have its own New Orleans wake-up call.
Athens "Katrina will force hard choices" (Business Outlook, Sept. 26) included the subhead "Rebuilding costs and planned tax relief could swell the deficit." The authors use the terms "deficit" and "red ink" a combined 12 times. But how could the article address federal budget deficits as a serious concern without also mentioning debt and interest? The article reported that economists are already forecasting that Katrina will "swell" next year's budget deficit to over $412 billion. Unmentioned was that the deficit as forecast will also "swell" the government's $8 trillion debt to well beyond $8.5 trillion (including borrowing from Social Security).
"Deficits do matter," the article assured readers. But the debt and its fiscal impact matter far more. Yes, the multiyear total cost of $200 billion for Katrina rebuilding is a "massive bill." But the $355.5 billion the government has already spent in fiscal year 2005 to service interest on the debt is an amount sufficient to have funded both the Iraq war to date and Katrina's "massive bill," with change left over.