Defending America is a number one responsibility and money’s not the first consideration. The first consideration is winning….

But we have always, one way or the other, raised the money to defend America, and in this case to defend America from a different kind of war, the war on terrorism. And it will be done.

He’s right on one account. You fight a war because you must, and the budget concerns should be immaterial. But the original question was, effectively, “Why aren’t lawmakers willing to ask Americans to pay for the costs of protecting the homeland, either through tax hikes or spending cuts elsewhere in the government?”

Grassley ducked it, and his argument that Congress has “always … raised the money to defend America” ignores the truth that, since 2001, the wars in Iraq and Afghanistan have been funded primarily by borrowing from abroad — a particularly curious whitewash in the context of Republican criticisms that health care reform will break the federal budget.

The costs of that failure to ask for shared sacrifice have been tangible. When George W. Bush was elected to the White House in 2000, the nation’s debt was $5.7 trillion. Eight years later — after several rounds of tax cuts and two unfunded wars — the number had jumped to $10.0 trillion.

It’s worth noting that most of the Republicans now criticizing the costs of health care reform, Grassley included, also supported those mid-war tax cuts.

Now, S&P said that America is in no immediate danger of a downgrade (a 100 percent debt ratio would have to be sustained for for some time to earn such treatment), and Moody’s noted today that America’s AAA rating was safe. And while Treasury notes have fallen through the week, indicating that markets are worried about the amount of debt the government is unloading on private markets, the latest debt auction  — of $35 billion in five-year notes — enjoyed the highest level of demand in three months.

There are a number of things going on here.

One is that private investors are losing their appetites for government debt — which they ran to in the flight for safety that characterized the past nine months — just as the government is pouring a great deal of new debt into the market. Another is surely rising levels of nervousness among investors waiting to see how large sovereign debts are going to be paid. And a third is the fear that efforts to juice the American economy will lead to inflation. This is certainly a possibility. But the language being used to talk about this possibility is growing increasingly outlandish. John Taylor, for instance, has been widely mocked today for making a basic arithmetic error in arguing that the threat of a seven percent annual rate of inflation over the next decade is greater than that posed by the credit crisis and current downturn. But Marc Faber takes the cake:

I am 100% sure that the U.S. will go into hyperinflation.

Hm. People seem not to understand that seven percent annual inflation, or 20 percent annual inflation (which would be quite a bit more damaging) do not count as hyperinflation. Countries experiencing hyperinflation, like Zimbabwe, suffer monthly rates of inflation in the millions, billions, trillions, and quadrillions. Really. An American hyperinflation would be impossible without a complete collapse in its governing institutions. Faber may as well have said that he is 100 percent sure America will be seized by a dictator or invaded and left in a state of near-anarchy.

It’s quite fair to worry about how we should pay our debts. But there is not much indication that current monetary and fiscal policies pose a serious threat to future economic health, given reasonable expectations about future economic growth and tax policy changes.

Writing in The Washington Post yesterday, Robert Bixby, who heads the Concord Coalition, a budget watchdog group, pointed out that the request “rang a bit hollow coming from lawmakers who have no plan of their own to avoid a fiscal debacle that could be many times more serious than anything the automakers face.”

From Bixby’s op-ed piece:

Pelosi and Reid declared that the American people “deserve to see a plan that is accountable to taxpayers and that is viable for the long-term,” with “significant sacrifices and major changes to [the automakers'] way of doing business.”

These sound conditions should be applied to the federal budget as well. Unfortunately, though, there is no special guardian of future generations to make such demands. That job belongs to our elected leaders. They, too, must demonstrate significant sacrifices and major changes to their way of doing business. After all, they share responsibility for the nation’s future just as the Big Three executives share responsibility for the future of the auto industry.

Bixby makes a good point. This year the federal debt topped $10 trillion — a figure so large that New York City’s storied debt clock could no longer contain it. And the number is almost certain to leap significantly in the next few years.

Deficit spending in 2009 is expected to top $1 trillion, and there’s mumbling that it could approach $2 trillion. Most economists agree that the Keynesian approach of borrowing to pull through a recession is the right one — and President-elect Barack Obama has plenty of plans to do just that. But there’s been less talk of how Washington policymakers plan a return to balanced budgets when the economy gets better. (All that borrowing, remember, is intended to produce millions of jobs.)

It’s not the first time we’ve heard this warning about out-of-control federal spending. In the days after Congress passed its Wall Street bailout, David Walker, former U.S. comptroller general, pointed out the two significant differences between the current economic crisis and that facing the federal budget: One, the budget crisis is many-fold larger; and two, there’s no one big enough to bail out the federal government.

“My question,” Walker said at the time, “is when are they

Image by: Matt Mahurin

The title of Bixby’s piece is “Congress in a Glass House.” Considering the budget mess the country is in — and considering that Congress has done little to balance its own books, even in the high-flying times of the housing boom — it is certainly apt.