What happens when the loans come due?

President Barack Obama presented his latest budget, and it was eye popping. There is something in it for everyone as federal spending soars.

He even outlined a "freeze" in spending for a small portion of the budget, but that will not begin until 2011 in an effort to appease those fiscal conservatives. For those who are paying attention, this is 2010, so the freeze on that small portion does not start until next year. If one is having money problems, why wait a year before trying to do something about it?

The amount of money that the government intends to spend is $1.56 trillion more than we expect to collect in taxes. That is called a deficit and all of the deficits over the years add up to the national debt.

This particular deficit is the largest in our history and the prediction is that yearly trillion dollar deficits will continue into our future for the next 10 years. For those who are interested, the national debt is currently more than $14 trillion and rising. The debt ceiling has been raised twice recently by about $4 trillion. This proposed budget - congress actually budgets the money to be spent not the president - includes numerous tax increases. Of course, the president has said on several occasions that "not one additional dime will be paid by those who earn less that $200,000." I suspect that many people who earn less than that are going to be in for one big surprise. The "rich" are going to pay for all of the additional spending so says the administration, but all the additional taxes will hit everyone.

The repeal of the Bush tax cuts, additional taxes on banks and all the various tax increases predict a certain amount of revenue, but the estimates do not consider that individuals and organizations will change their behavior in order to reduce their tax burden. The tax revenue will not be at the level that the government expects and, as a result, the deficit will be even larger.

There is no way that the government can continue to spend at the current rate and expect a positive outcome. China and Japan are the largest bankers for our debt, and they are becoming more and more concerned. When I took over as the general manager of an aerospace company, one of the products that we sold had just completed a contract. I had an analysis of the contract conducted and learned that we were selling this particular product for significantly less than it cost to produce it. Apparently the customer had requested that numerous bells and whistles be added over the years and the price had never been changed to cover the additional costs.

That changed immediately.

Our government is in the same boat. It cannot continue to add more and more programs in the hope that the revenue will somehow appear.

In the past, our debt was primarily covered by Americans. For those old enough, they will remember the bond drives during World War II. Of course, during that time there was nothing else to spend money on since there were no consumer products being produced. We no longer have that luxury and our bankers are becoming wary.

The interest alone is killing us. If our bankers demand payment, what will we do?