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The logical place to start, she argues, is by allowing the Bush-era tax cuts to expire as scheduled at the end of 2010. That would restore tax brackets to where they were in the late 1990s, a period of steady economic growth. Obama has said, however, that he'd extend the Bush tax breaks for all but the richest 5 percent of taxpayers.
Extending the tax cuts in their entirety would add $2.6 trillion to the deficit over 10 years. Ending them for the top 5 percent of earners reaps $600 billion in revenues, but still adds $2 trillion to the deficit over 10 years.
"Congress has to pass an extension and President Obama has to sign it. It's a huge thing that is within our policymakers' control right now and that policy experts know something about," Lim Rogers said. "I call that the big policy lever that is available to us, but we seem to be ignoring that it is sitting there glowing red."
Republicans are campaigning against government spending, offering amendment after amendment in Congress to try to reduce it, something they were unable or unwilling to do when they ran Capitol Hill in the Bush years.
"Democrats have promised their health plan will be paid for and won't add to the deficit, but the facts just don't add up. Right now, just one section of the . . . (health committee's) bill would spend $1.3 trillion. It's not plausible that this wouldn't add to the deficit, which has already swelled by more than a trillion dollars, thanks to bailouts and stimulus money," Senate Minority Leader Mitch McConnell, R-Ky, said recently.
"So when Democrats predict their health care plan won't cause people to lose their current insurance and won't add to the national debt, Americans are right to be skeptical."
The nonpartisan Congressional Budget Office said that major parts of the health care bill would add $611 billion to the deficit, about half of what McConnell said, but still a significant amount given the looming crisis.
For now, Republicans aren't saying how they'd raise sufficient revenue to reduce the long-term deficits that will come from the pending boomer retirement.
"The good news is they're waking up the people. The bad news is it is not evident to me (that) they're willing to sit down and put everything on the table," said Isabel Sawhill, a top-level budget official in the Clinton administration.
Another reason to fear the nation's eroding financial outlook: It could raise the cost of borrowing for everyone. If investors who purchase U.S. government debt, mostly China and Japan, view it as risky or fret that inflation could result, they may demand a higher interest-rate return in exchange for their investments.
That higher interest rate would mean even greater interest payments on the debt. That's no farfetched possibility. In March, Chinese Prime Minister Wen Jiabao worried publicly about the safety of investing in U.S. government debt.
"The fears of the market about higher interest rates, inflation . . . are legitimate. They're justifiable," Marty Regalia, the chief economist of the U.S. Chamber of Commerce, said in a recent interview. "They may prove wrong, but it's not like the meandering of deranged minds. We have put things in train that historically, and theoretically, suggest that we are going to have these problems."
(David Lightman contributed to this article.)
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