The size of the debt.

• Author: Easterbrook, Gregg
• Position: THE STAKES 2008 - National debt

The announcement that the federal government is planning to pour as much as $700 billion into a bailout of private banking and insurance firms has brought the unpleasant subject of debt back into the news. Debt is an issue that voters don't normally want to hear about, in part because Congress has been borrowing for bailouts, and everyone wants a bailout. But bailouts based on borrowing mean more debt.

The ballooning debt is an issue of vital importance to the nation's future. Debt has to be repaid, and a useful rule of thumb is that every dollar borrowed today subtracts two dollars from future growth. Homeowners borrowed, borrowed, borrowed as if tomorrow would never come, and it came. Why should we think the national balance sheet will be any different?

The two presidential candidates are likely to approach debt in very different ways. Before focusing on the candidates, though, let's take a closer look at the debt monster--a subject that until recently had strangely disappeared from politics and political commentary.

First is the distinction between annual deficits and overall national debt. Even before the latest round of bailouts, the federal deficit was projected to reach a record $482 billion in fiscal 2009. (The true figure is actually $562 billion, but the White House refuses to include war borrowing in its calculations.) Although that $562 billion deficit sounds catastrophic--topping the previous record deficit, in 2004, by nearly $100 billion in real terms--it is not necessarily a killer problem. Because the economy keeps growing, that figure will represent only 3.5 percent of GDP, compared to 6 percent during the mid-1980s. The killer problem is, rather, the national debt--the total amount of government borrowing, plus committed interest costs. Interest causes the national debt to compound, and the national debt is spiraling out of control.

Consider: it took the United States 209 years, from 1789 to 1998, to compile the first $5 trillion in national debt. It has taken just ten years to compile the second $5 trillion. The national debt was $5.7 trillion when George W. Bush took office; currently it is set to rise to $11.3 trillion. Want another shocker number? Just a generation ago, in 1980, the national debt ceiling was $2.3 trillion, stated in today's dollars; in a single generation, the debt has quintupled.

Even adjusting for inflation, there has been more undisciplined spending and runaway borrowing under George W. Bush as...