How long before our Chinese, Japanese and OPEC creditors conclude that the Americans are depreciating their currency, and dump their U.S. Treasury bonds, or demand a higher rate of interest to cover the risks of their dollar-denominated assets sinking in value?
Can anyone believe the dollar can even retain its present diminished purchasing power if we run $9 trillion in deficits over 10 years? How long before producers conclude the same and start to demand more dollars for their goods -- and inflation takes off?
As Buffett argues, even when the U.S. economy returns to full employment, the new tax revenue it would throw off cannot close a deficit of that size. One must either slash spending or raise taxes to balance a budget where the feds are spending a fourth of gross domestic product.
But how do we cut spending when the five largest items in the budget -- Social Security, Medicare, Medicaid, interest on the debt and national defense -- are untouchables and growing faster then the 3 percent to 4 percent a year a full-employment economy can manage?
Are we going to cut veterans benefits, spending on our crumbling infrastructure or education, when Obama is promising every kid a college degree? Are we going to cut funds for Afghanistan and Iraq, and risk losing both wars? Are we going to cut foreign aid after Hillary Clinton has been touring Africa telling one and all America is here to stay?
How about cutting funds for food stamps and the Earned Income Tax Credit? Good luck. How about PBS and the National Endowment for the Arts? Just try it.
Does either party have any plan to cut federal spending from today's near 28 percent of GDP to the more traditional 21 percent?
George W. Bush didn't even try, and Obama is making that Great Society Republican president look like Ron Paul.
When a democracy reaches a point where the politicians cannot say no to the people, and both parties are competing for votes by promising even more spending or even lower taxes, or both, the experiment is about over.
"Remember," said John Adams, "democracy never lasts long. It soon wastes, exhausts and murders itself. There never was a democracy yet that did not commit suicide."