Sen. Dirksen is supposed to have said: "A billion here, a billion there, & pretty soon you're talking real money." - Real money, Part II.

Real money Part I was in a 01-05-05 post that noted, among other things; that:

(1) The war and reconstruction efforts in Iraq and Afghanistan are running about $5 billion a month; and that

(2) Interest on the nation's borrowing is a big and growing budget item, one that cannot be cut except by slashing the debt itself. The $168 billion in annual payments, much of it to overseas holders of Treasury bonds, represents just over 7% of the federal spending (that's more than the government will spend on education, housing, transportation, science, space and technology combined).

Real money, Part II: The 2005 Budget Gap to Balloon.

The U.S. budget deficit will be $368 billion in 2005 and some $855 billion in the next decade, the bipartisan Conggressional Budget Office ("CBO") estimated today.

But those estimates don't include the costs of war in Iraq and Afghanistan, privatization plans for Social Security, the extension of expiring tax cuts or a likely reform of the alternative minimum tax.

President Bush is expected to ask for an additional $80 billion this year for wars; his Social Security plans could have an initial price tag of between $1 trillion and $2 trillion; and the CBO estimated that extending expiring tax provisions could add $1.6 trillion to the 10-year deficit, while Alternative Minimum Tax ("AMT") reforms could add some $400 billion to the 10-year deficit.

Lehman Brothers economists, in a research note yesterday, suggested adding about $100 billion to the CBO's estimate for 2005, to account for some of these costs. If they're correct, then this year's budget deficit would be a new record, beating 2004's gap of $412 billion, and putting further downward pressure on an already weakening dollar.

(wsj.)

Hold the ladder steady.