I fear for the financial stability of the United States.

The threat posed by the rapidly accelerating twin federal deficits --the budget deficit and the trade deficit -- has grown so grave that our nation teeters on the brink of financial catastrophe.

Yet the President and his Republican allies in Congress continue to promote the same failed policies that brought us here-- trillions in tax cuts for those least in need and so-called "free trade" policies that shift U.S. jobs and industries overseas.

On the heels of several reports warning that the federal budget deficit will rise to an all-time high of $400-500 billion this year, Congress approved a $350 billion 10-year tax cut that gives half of all Oregonians a tax cut of $100 or less, and millionaires $90,000-- three times the average Oregonian's salary.

Last week, the House approved an additional $820 billion permanent repeal of the estate tax, benefitting only 2 percent of Americans-- those with estates worth $3 million or more.

Since the President took office, the $5.6 trillion projected 10-year budget surplus has turned into a $4 trillion deficit-- a $10 trillion turnaround, the worst reversal in U.S. history. Every penny in tax cuts will be paid by borrowing money, which will increase the amount of money a family of four pays in interest on the federal debt to nearly $6,500 a year by 2008.

Some, including Oregonian columnist, David Reinhard, argue that the federal debt doesn't matter (5/29/03), but it's already approaching 5 percent of gross domestic product (GDP) and quickly rising. Combined with the U.S. trade deficit, the debt rises to more than 10 percent of GDP. I know of no credible economist who claims this level of borrowing and deficits are sustainable.

According to the President's own budget, the U.S. will be running deficits at least through 2080! This isn't just a short-term outcome of war and recession.

Some also argue that the federal debt is attributable to runaway congressional spending and that the tax cuts will actually increase federal revenue and reduce the deficits.

As one of only 72 Democrats to support the Balanced Budget Amendment in 1996, my budget hawk credentials are well-established. Congressional spending is not the primary cause of the rising federal debt: 60 percent of the increase is caused by tax cuts, 19 percent is spending on homeland security and the recent wars, and 21 percent is related to other spending increases, including non-war related defense increases requested by the President. Even if we eliminated all spending on education and social services, we wouldn't come close to balancing the budget!

Mr. Reinhard pointed out that President Kennedy cut taxes. He failed to note that nearly 60 percent of the benefits from Kennedy's tax cut went to families making under $100,000. Tax cuts targeted at those most in need can indeed boost the economy. But President Bush's latest tax cut only targets around 20 percent to those making under $100,000.

The story on the trade front is similarly grim. The U.S. trade deficit in 2002 was nearly $500 billion, the highest deficit ever recorded. The deficit equates to a loss of approximately $1.5 billion per day in U.S. wealth. Yet, the President wants to expand the failed U.S. trade policies that have exported millions of jobs and entire industries to low wage havens overseas.

The large trade deficit means the U.S. is increasingly in hock to bond holders and foreign investors. Today, foreigners hold 40 percent of U.S. Treasury debt, 24 percent of U.S. corporate bonds, and 13 percent of U.S. stocks. The cumulative debt we owe to foreign investors skyrocketed over the last decade from $49 billion to $1.5 trillion.

These twin deficits are dangerous. Spain in the early-1600s, Holland in the mid-1700s, and Britain in the early-1900s were all hegemonic global economic powers. None are today after experiencing spiraling debt and a hollowing out of their industrial base. There's a lesson in there somewhere.