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A budget crisis is returning to the United States. Along with worsening trade deficits, record budget shortfalls projected for the fiscal year 2003 and beyond are reviving a nightmare threat of “twin deficits.” It is worrisome for global growth and security that the world’s only military and economic superpower will be shackled by domestic and external imbalances for years to come.

The U.S. federal budget for fiscal 2004, which begins Oct. 1, totals $2.23 trillion, up 4.2 percent from the current fiscal year, according to the budget proposal that President George W. Bush sent to Congress earlier this month. With the total revenue estimated at $1.92 trillion, up 4.7 percent, a record deficit of $307 billion is forecast, exceeding the $304 billion for fiscal 2003.

The massive deficit has erased in just two years the surpluses generated in the four years through fiscal 2001. The administration of former President Bill Clinton made deep cuts in defense spending, thanks to the end of the Cold War, and used the savings — the “peace dividend” — to begin paying off the massive deficit that had accumulated over the years. It was as if a cherished dream had come true.

The euphoria did not last long, though. The budget slipped back into deficit as the Bush administration reordered spending priorities, shifting its focus to huge cuts in income and corporate taxes. Moreover, the Sept. 11, 2001, terrorist attacks heightened security concerns, leading to a dramatic increase in defense spending. The Bush budget is designed largely to meet new threats in the 21st century — threats from international terrorist groups as well as from states belonging to the president’s “axis of evil.”

The rapid growth in U.S. defense spending is a reminder that the post-Cold War peace dividend is already a thing of the past. The proposed expenditure for fiscal 2004, $397 billion, amounts to a more than 4 percent increase from fiscal 2003, although the rate of growth is less than half of that for the current fiscal year. The Defense Department’s midterm program calls for annual increases of about $20 billion. Meanwhile, defense-military spending by America, the “global policeman,” equals that of the next 10 largest military spenders combined.

The military buildup makes it almost certain that the budget deficit will continue to rise. In fact, the Bush administration expects the gap to widen, to the tune of $200 billion a year, through fiscal 2008. The implication is that if Mr. Bush is re-elected next year, “benign neglect” of the hemorrhage will become a permanent feature of his fiscal policy in the next five years.

The other deficit — the chronic gap in the balance of trade — also threatens the long-term health of the world’s largest economy. Most likely future historians will describe Mr. Bush as a U.S. president who revived the twin deficits in a hasty attempt to maintain and enhance the glory of American power.

For now, however, the U.S. government appears to be taking the budget deficit in stride, saying it has not yet reached serious proportions. That is an optimistic assessment. A runaway deficit is an invitation to fiscal laxity. Along with the widening trade imbalance, the bleeding budget will, over the long haul, weaken the U.S. dollar. An erosion of confidence in the greenback will weaken the U.S. economy as well, with dire implications for the world economy.

A budget tilted heavily toward defense and security reflects, of course, an increasingly uncertain world in which America finds itself. It is difficult to believe, however, that a deficit-financed military buildup is the right recipe for a “strong America.” The more likely prospect, in the long run, is that it will undermine the foundations of American strength.

The U.S. resolve to exterminate international terrorism and promote global peace has the support of the international community, but its rush toward a war with Iraq does not. There are many cogent reasons to avoid military action — particularly the heavy loss of innocent lives, which could accelerate and expand a cycle of hatred and revenge not only in the Middle East but also in other parts of the world.

The economic cost of an Iraq war is also a major concern. Although the budget message includes no estimate, reports cite a range of projections, from $60 billion (if the war ends in a short period, as did the 1991 Persian Gulf War) to $200 billion (if it becomes drawn out). Including the cost of nation-building, the overall cost will reach enormous proportions.

If war comes, Japan and other U.S. allies will be asked not only to pay their share of the military expenditure but also to contribute to a postwar reconstruction fund. That will further inflate Japan’s already bloated budget, which depends far more heavily on debt than the U.S. budget.

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