WP: Foreign Investment Aids Cleanup, Despite Adding to U.S. Deficit

[DeepModem Mom]

Foreign Investment Aids Cleanup, Despite Adding to U.S. Deficit
Congress, Administration Grapple With Repayment Options
By Jonathan Weisman
Washington Post Staff Writer
Wednesday, September 21, 2005; Page A08


On Friday, as official Washington fretted over the potential fiscal calamity of Hurricane Katrina, the Treasury Department let Americans know where the money would come from to rebuild the Gulf Coast: foreign investors.

The latest Treasury report on foreign lending showed that investors abroad poured $101.4 billion into the United States in July alone -- a voracious clip -- to snap up stocks, bonds and everything else available. So while the federal government keeps spending and while tax cuts remain politically sacrosanct, continued foreign investment should help pick up the estimated $200 billion cleanup tab for Katrina and further postpone a final reckoning on the budget deficit.

"We know is an extraordinarily consequential event for the people and the region, but it's one the economy can weather," said Douglas Holtz-Eakin, director of the nonpartisan Congressional Budget Office. "The evidence is, we can finance this with borrowing. I don't see any evidence we couldn't do that."

Any debt must be paid back, with interest, so running up the deficit to reconstruct the Gulf region carries a cost, at least to future generations. Foreign holdings of U.S. government debt exceeded $2.03 trillion in July, meaning that every man, woman and child in the United States owes foreign investors $6,846.

Holtz-Eakin said Congress and President Bush face a choice on how to finance the recovery: raise taxes, cut spending or let foreigners pay. The decision will reveal much about the government's ability to set priorities in the face of far larger challenges, such as the baby boom's nearing retirement, Holtz-Eakin said....


http://www.washingtonpost.com/wp-dyn/content/article/2005/09/20/AR2005092001650.html

[UpInArms]

1. foreign investors having a feeding frenzy

at the "sale" table?

[applegrove]

2. Oh great. They are going to cut foreign aid. $50 says we see that

ex-cia foreign aid worker guy show up again in the press in the next week talking about how all foreign aid is really "bad for people of the poor country".

:puke:

[Rose Siding]

3. kick