Mr. Gates is, along with James A. Baker III, perhaps the greatest non-presidential public servant of the post-war age. One more thing. Perhaps better than anyone alive, he knows how the world works.

These days the world isn’t working all that well, and the same can be said about Washington. It’s the latter that preoccupies Mr. Gates, who is to leave office this week. Last Sunday Chris Wallace asked Mr. Gates what was the big lesson he had learned during all that time in the capital. Here’s his answer on Fox News Sunday:

“That when we have been successful in national security and foreign affairs, it has been because there has been bipartisan support. And agreement between the president and the Congress that the fundamental strategy — maybe not all the tactics, maybe not all the specific decisions — but that the fundamental strategy is the correct one. That’s what [happened] through nine presidencies and the Cold War that led to our success, because no major international problem can be solved on one president’s watch. And so, unless it has bipartisan support, unless it can be extended over a period of time, the risks of failure [are] high.”

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Alarmed by a shortage of primary care doctors, Obama administration officials are recruiting a team of “mystery shoppers” to pose as patients, call doctors’ offices and request appointments to see how difficult it is for people to get care when they need it.

The administration says the survey will address a “critical public policy problem”: the increasing shortage of primary care doctors, including specialists in internal medicine and family practice. It will also try to discover whether doctors are accepting patients with private insurance while turning away those in government health programs that pay lower reimbursement rates.

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…in an era of greater regulation the government is writing the rules. The definition of what constitutes an adequate capital cushion keeps going up. For example, at the beginning of this month, Daniel Tarullo, Federal Reserve board governor, suggested that bank capital levels should be far higher than the 7 per cent level required by Basel III.

Regulators have further determined that investment in government securities involves no capital hit, despite the fact that sovereign debt these days is in some cases as risky as lending to companies with junk ratings.

At the same time, governments are raising liquidity requirements and ”“ no surprise ”“ it is government securities that are classified as the most liquid.

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New figures released Wednesday by the Congressional Budget Office (CBO) show debt rising to 190 percent of the gross domestic product by 2035.

The annual long-term budget outlook forecasts a surge in public debt this year that will rise to 70 percent of GDP by the end of fiscal 2011, compared to 62 percent by the end of 2010.

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Spending on the war in Afghanistan has skyrocketed since Mr. Obama took office, to $118.6 billion in 2011. It was $14.7 billion in 2003, when President George W. Bush turned his attention and American resources to the war in Iraq.

The increase is easy to explain. When Mr. Obama took office, he vowed to aggressively pursue what he termed America’s “war of necessity” (Afghanistan) and to withdraw from America’s “war of choice” (Iraq). He has done so; the lines on Iraq and Afghanistan war spending crossed in 2010, when the United States spent $93.8 billion in Afghanistan versus $71.3 billion in Iraq, according to the Congressional Research Service.

But the White House is keenly aware that the president is heading into a re-election campaign; with the country’s jobless rate remaining high, topping 9 percent, his poll numbers on his handling of the domestic economy have plummeted.

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Much of the public focus is on the nation’s public debt, which is $14.3 trillion. But that doesn’t include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.

The government also is on the hook for other debts such as the programs related to the bailout of the financial system following the crisis of 2008 and 2009, government figures show.

Taken together, Gross puts the total at “nearly $100 trillion,” that while perhaps a bit on the high side, places the country in a highly unenviable fiscal position that he said won’t find a solution overnight.

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Faced with a decision on how quickly to draw down troops, President Obama spoke by videoconference with Afghan President Hamid Karzai on Wednesday as his nominee for ambassador to Afghanistan cautioned against walking away from its 10-year-old war.

The U.S. must “ensure that the country doesn’t degenerate into a safe haven for al-Qaeda,” Ryan Crocker told skeptical lawmakers at his Senate confirmation hearing.

The White House, meanwhile, challenged the findings of a Senate Foreign Relations Committee probe of U.S. aid in Afghanistan. The panel’s Democrats issued a report saying that nearly $19 billion in aid over a decade has generated waste and corruption and been of limited success.

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Estimates of monthly GDP indicate that the only growth in the first quarter of 2011 was from February to March. After a temporary rise in March, the economy began sliding again in April, with declines in real wages, in durable-goods orders and manufacturing production, in existing home sales, and in real per-capita disposable incomes. It is not surprising that the index of leading indicators fell in April, only the second decline since it began to rise in the spring of 2009.

The data for May are beginning to arrive and are even worse than April’s. They are marked by a collapse in payroll-employment gains; a higher unemployment rate; manufacturers’ reports of slower orders and production; weak chain-store sales; and a sharp drop in consumer confidence.

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The health insurance program for seniors is the nation’s biggest financial challenge.

The first of 77 million Baby Boomers turn 65 this year and qualify for Medicare. Enrollment will grow from 48 million in 2010 to 64 million in 2020 and 81 million in 2030, according to Medicare actuaries. That 33-million increase in the next 20 years compares with 13 million in the last 20.

This demographic burst ”” combined with the addition of a prescription drug benefit in 2006 and rising health care costs generally ”” has created an unfunded liability of nearly $25 trillion over the lifetime of those now in the program as workers and retirees. That is the taxpayers’ obligation, beyond what Medicare taxes will bring in or seniors will pay in premiums for Medicare Part B ”” also called supplemental coverage ”” that helps pay for doctor visits and other expenses outside the hospital.

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Take a careful look–ugh.

After several months of strong job growth, hiring slowed sharply in May, raising concerns once again about the underlying strength of the economic recovery.

The Labor Department reported on Friday that the United States added 54,000 nonfarm payroll jobs last month, following an increase of 232,000 jobs in April. May’s job gain was about a third of what economists had been forecasting.

The unemployment rate ticked up to 9.1 percent from 9.0 percent in April.

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The White House said Wednesday that taxpayers could lose roughly $14 billion of the money spent on auto industry bailouts, despite the industry’s recent recovery.

The White House cites the potential losses in a report, “The Resurgence of the American Automotive Industry,” released ahead of President Barack Obama’s trip Friday to a Chrysler Group LLC facility in Toledo, Ohio.

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…here’s the question for 2012: If we the people don’t want the higher taxes that are needed to support not only ObamaCare but a growing federal government, are we willing to support the real cuts that go along with that choice? And if we decide we don’t want these programs touched, will we accept the higher taxes that go along with keeping them, including for people making a lot less than $250,000?

This is the heart of the argument shaping up between Mr. Obama and Paul Ryan, chairman of the House Budget Committee. Manifestly Mr. Obama believes that as much as Americans say they want smaller government, the moment they find one of their favorite programs (e.g., Medicare) up for consideration, they balk.

Mr. Ryan and Republicans make the opposite bet: The president’s spending has made Americans more willing to face up to these choices, especially if the alternative is higher taxes on more people.

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The problems of old age (chronic illness, outliving savings, loneliness) are real, but age by itself is not an indicator of need. The blanket defense of existing Social Security and Medicare isn’t “liberal” or “progressive.” It’s simply a political expedient with ruinous consequences. It enlarges budget deficits and forces an unfair share of adjustment ”” higher taxes, lower spending ”” on workers and other government programs. This is the morality of the ballot box.

People do not lose their obligations to the larger society by turning 65. We need to refocus these programs on their original purposes. Social Security was intended to prevent poverty, not finance recipients’ extra cable channels. Medicare provides peace of mind as well as health insurance; wealthier recipients can afford to pay more for their peace of mind. Burden-sharing needs to include the elderly. This is the crux of the budget problem.

Facing it is both a moral and financial imperative. With the 2012 election looming, major overhauls of these programs seem unlikely. Still, more modest changes (slow increases in eligibility ages, added taxation of Social Security benefits, costlier Medicare for upscale beneficiaries) could produce significant savings. If even these are absent, the meaning will be plain: Old stereotypes continue to trump new realities.

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While better than expected, Friday’s employment numbers showed that the national economy still had a long way to go to fully recover. Though down from its peak of 10.1 percent in late 2009, April’s unemployment rate reflects only those Americans who are still actively looking for work.

As such, economists said the April jobs report was part of a larger picture of the economy that remained mixed. The rise in the unemployment rate reflects the survey of households, which indicated a 190,000 decline in employment in April. And recent data on initial jobless claims and other employment indicators have been weak.

“Millions of people are unemployed and many have left the labor market and given up,” Mr. Shapiro said. “Against that we are maybe creating 244,000 jobs. That is all well and good but it just shows you how much further we have to go to make a dent into what has happened in the labor market.”

“It gets the basic debate out there about the economy,” he added. “Is all we have seen the product of government stimulus, and are all the problems coming back or not?”

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It’s obviously been a good week for the Obama administration. But it comes at a dangerous time, for both the administration and the economy. The excitement over tracking down Osama bin Laden could end up making the president and his advisers less panicked over the state of the economy. And they should be a little panicked.

For the second straight year, the recovery seems to be at risk of stalling. The economy grew at an annual rate of only 1.8 percent last quarter ”” eerily similar to the 1.7 percent growth last spring, just when job growth started slowing down. Fully 80 percent of people say the economy is in fairly bad or very bad shape, according to a New York Times/CBS Poll last month. More people say it’s getting worse than getting better, the opposite of a few months ago.

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…while President Obama has presided over an unprecedented federal spending spree, he’s far from the first White House occupant to run up big debt numbers while insisting that he’s moving toward lowering them — eventually.

He’s also not the first politician caught between contradictory public demands of lower spending and higher benefits. A Washington Post-ABC News poll released last week reports that 78 percent of Americans oppose cutting Medicare spending, and 69 percent oppose cutting Medicaid.

Yet even most liberal Democrats, including the president, concede this indisputable point: America’s long-term debt crisis will never be solved without containing the soaring costs of Medicare and Medicaid.

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A group of the largest US banks and fund managers stepped up the pressure on Congress and the Obama administration to reach a deal to increase the country’s debt limit, saying that even a short default could be devastating for the financial markets and economy.

The warning over the debt limit is the strongest yet to come from Wall Street, highlighting growing nervousness among investors about the US political system’s ability to forge a consensus on fiscal policy.

The most pressing budgetary issue confronting Congress and the Obama administration is the need to raise the US debt ceiling, which stands at $14,300 billion.

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Americans are more pessimistic about the nation’s economic outlook and overall direction than they have been at any time since President Obama’s first two months in office, when the country was still officially ensnared in the Great Recession, according to the latest New York Times/CBS News poll.

Amid rising gas prices, stubborn unemployment and a cacophonous debate in Washington over the federal government’s ability to meet its future obligations, the poll presents stark evidence that the slow, if unsteady, gains in public confidence earlier this year that a recovery was under way are now all but gone.

Capturing what appears to be an abrupt change in attitude, the survey shows that the number of Americans who think the economy is getting worse has jumped 13 percentage points in just one month. Though there have been encouraging signs of renewed growth since last fall, many economists are having second thoughts, warning that the pace of expansion might not be fast enough to create significant numbers of new jobs.

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[MARK SHIELDS] I mean [the Republicans] want to go after the social programs. And each time, they take this election win as a mandate to do it, and they end up…

DAVID BROOKS: Well, but I can say, on the substance, they are right each time. I mean…

JIM LEHRER: You think it is courageous to do that?

DAVID BROOKS: Well, I mean, as I said, your average Medicare enrollee, average income, making I don’t know what it is, $50,000 a year, is paying in $145,000 over the lifetime into the system, taking out $450,000.

Well, there is a big gap there. And that is unsustainable. And so the $450,000 has to be brought down over time. And they are absolutely right to try to bring it down. It just happens to be extremely unpopular to try to talk about that.

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“More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures….”

–S&P credit analyst Nikola Swann in a statement today explaining why S and P shifted its outlook on America’s credit to “negative”

This is a timely reminder of the seriousness of America’s fiscal issues, for the country and for the rest of the world.

The continued failure to come up with a credible medium-term fiscal reform program would increase borrowing costs for all segments of US society, thereby undermining investment, employment and growth. It would also curtail foreigners’ appetite to add to their already substantial holdings of US assets. And it would weaken the dollar.

The US also risks eroding its standing at the core of the global monetary system.

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…here’s the truth. Around two-thirds of our budget is spent on Medicare, Medicaid, Social Security, and national security. Programs like unemployment insurance, student loans, veterans’ benefits, and tax credits for working families take up another 20%. What’s left, after interest on the debt, is just 12 percent for everything else. That’s 12 percent for all of our other national priorities like education and clean energy; medical research and transportation; food safety and keeping our air and water clean.

Up until now, the cuts proposed by a lot of folks in Washington have focused almost exclusively on that 12%. But cuts to that 12% alone won’t solve the problem. So any serious plan to tackle our deficit will require us to put everything on the table, and take on excess spending wherever it exists in the budget. A serious plan doesn’t require us to balance our budget overnight ”“ in fact, economists think that with the economy just starting to grow again, we will need a phased-in approach ”“ but it does require tough decisions and support from leaders in both parties. And above all, it will require us to choose a vision of the America we want to see five and ten and twenty years down the road.

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In reality, finding a way to raise taxes may well be the central political problem facing the United States.

As countries become richer, their citizens tend to want more public services, be it a strong military or a decent safety net in retirement. This country is no exception. Yet our political culture is an exception. It has made most tax increases, even to pay for benefits people want, unthinkable.

This is where the Bush tax cuts come in. They have created a way for inertia to be fiscally responsible.

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Every president since Jimmy Carter has called for the country to become more energy independent. Yet none of them have ever done anything to accomplish that. The result is that our reliance on foreign oil has inexorably increased. With the current turmoil in the Mideast, the price of gasoline breaking the $4-a-gallon barrier and the Chinese becoming voracious competitors for imported oil, this would seem an ideal time to pass a law that could lessen our dependence on foreign crude.

Oilmen are incorrigible optimists, and Boone is no exception; he thinks the bill will pass quickly. Not long ago, President Obama spoke out in favor of it, in a speech that included a shout-out for Boone. Already, the bill has attracted 157 co-sponsors. “I think the House can pass it in 30 days,” Boone says.

I hope he’s right. Natural gas is cheaper than oil. It’s cleaner. And it’s ours. If Congress can’t pass this thing, there’s really no hope. ”ƒ

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The scale of America’s deficit and debt problem is staggering.

Thanks to an ageing population, exploding health care costs and inaction from both sides of politics, the Government Accountability Office now estimates that the United States is looking down the barrel of a $90 trillion fiscal gap over the next 75 years.

Treasury secretary Tim Geithner estimates that the US is adding about $125 billion of debt each month and the nation is expected to hit its $14.3 trillion debt ceiling in May.

Former treasury secretary James Baker describes the “debt bomb” as the number one problem for America.

“If we didn’t have the dollar as the de facto reserve currency of the world, we’d be Greece. I mean we are broke,” he exclaimed on CNN.

But doing something about it would take real gumption and the political cycle isn’t helping….

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The US lacks a “credible strategy” to stabilise its mounting public debt, posing a small but significant risk of a new global economic crisis, says the International Monetary Fund.

In an unusually stern rebuke to its largest shareholder, the IMF said the US was the only advanced economy to be increasing its underlying budget deficit in 2011, at a time when its economy was growing fast enough to reduce borrowing.

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The Republican budget released on Tuesday is a daring one in many ways. Above all, it would replace the current Medicare with a system of private health insurance plans subsidized by the government. Whether you like or loathe that idea, it would undeniably reduce Medicare’s long-term funding gap ”” which is by far the biggest source of looming federal deficits.

Yet there is at least one big way in which the plan isn’t daring at all. It asks for a whole lot of sacrifice from everyone under the age of 55 and little from everyone 55 and over. Representative Paul Ryan, the Wisconsin Republican who wrote the plan, calls the budget deficit an “existential threat” to the United States. Then he absolves more than one-third of all adults from responsibility in dealing with that threat.

This decision doesn’t make him unique in Washington. There is nearly a bipartisan consensus that any cuts to Medicare and Social Security should spare the baby boomers and the elderly. And, certainly, retirees or people on the verge of retirement shouldn’t have their benefits changed radically. But the consensus, like Mr. Ryan’s plan, goes too far.

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It really couldn’t be clearer. “The Congress shall have power ”¦ to declare war.” Yet these are probably the most egregiously ignored words in the Constitution. You would think that Republicans, especially, with their showy fondness for “originalism” and “plain meaning” in interpreting the Constitution, would have no problem interpreting the meaning of these words: If a president wants to go to war, he must get the approval of Congress.

Presidents of both parties traditionally ignore the congressional war power when they feel like it. Or they wait until the troops are poised for battle ”” putting Congress in an impossible position ”” before asking permission.

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The above four multi-trillion-dollar liability balls are staggering in their implications. Remember first of all that the nearly $65 trillion of entitlement liabilities shown above are not some estimate of future spending. They are the discounted net present value of current spending should it continue at the projected demographic rate (importantly ­”“ it is much higher than the annual CPI + 1% used as a discounter because demand for healthcare rises much faster than inflation.) And while some Honorable Congressional Le Pews would counter that Medicaid is appropriated annually and therefore requires no discounted reserve, those words would surely count as “sweet nothings,” believable only to those whom they romance every several years at the polls. The incredible reality is that the $9.1 trillion federal debt that constitutes the next-to-tiniest ball in our chart is nothing compared to unfunded Medicaid and Medicare. It is like comparing Pluto to Saturn and Jupiter. The former (the $9.1 trillion current Treasury debt) does not even merit planetary status in our solar system of discounted future liabilities. It’s really just a large asteroid.

Look at it another way and our dire situation becomes equally revealing. Suppose that the $65 trillion of entitlement liabilities were fully funded in a “lockbox,” much like Social Security is falsely imagined to be. Just suppose. And say the cost of that funding (Treasury debt) was the same CPI + 1% that was used to produce the above discounted present value in the first place. Actually, that’s not a bad guesstimate for the average yield of all Treasury debt. If so, then the interest expense on the $75 trillion total debt would equal $2.6 trillion, quite close to the current level of entitlement spending for Social Security, Medicare and Medicaid. What do we pay now in interest? About $250 billion. Our annual “lockbox” tab would rise by $2.35 trillion and our deficit would be close to 15% of GDP! The simple conclusion would be this: Unless you want to drastically reduce entitlement spending or heaven forbid raise taxes, then Pepé, you’ve got a stinker of a problem.

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