The US Treasury doesn't loan money to itself. Why do I even need to say this? It's just SO OBVIOUS that no one can loan money to themselves. Governments get money from issuing securities, which can be bought by foreign governments. I suspect that the fact that you think that the Treasury lends itself money suggests that you really haven't thought about this through, and you're just parrotting (incorrectly) what you've read elsewhere.

As for the rates, this is how it works:

http://www.forbes.com/finance/eventc...eventid=833431

So, given that the deficit is large and they need to sell loads of bonds, I'm guessing that they're going cheap.

You're confused, on both points. I'll take the second point first, that tax revenues always go up when taxes are cut. It's nonsense. It's based on the idea of the Laffer curve, which isn't nonsense in itself. Laffer noticed that if income tax was 0% then no tax would be collected, and also that if it was 100% then no tax would be collected (because no one would bother working). If it is, say, 50%, then some tax will be collected. So, the tax revenue curve meets 0 at both ends, and is higher between those points. Somewhere in the middle is a point, (called B, for reasons I can't remember), where revenues are maximised. If the current tax rate is above that, then by cutting taxes you will increase revenues. So SOMETIMES revenues will increase when you cut tax.

Also, cutting taxes will ALWAYS produce a higher revenue than the amount which it was theoretically reduced to. So, if you cut tax by 30% then receipts will always be greater than 70% of the original receipts. However, there is no guarantee at all that taxes will be greater than 100% of the original receipts.

Extreme supply-siders such as yourself seem to make the logical error of thinking that, because cutting taxes can sometimes increase revenue, that this will always happen. The fact is that no one knows where point B is, or which side of it any tax system is on. It's almost certainly different for different taxes (income tax/ corporation tax etc), and it almost certainly isn't fixed, but in general the evidence suggests that point B is quite high and that cutting taxes will NOT yet increase revenues, which leads me on to your other point, which was that tax revenues have increased under Bush.

Oddly, I found this almost impossible to determine by looking at the internet. However, the fact that you aren't scheduled to come back into the black for as far as the White House predictions go, which is up to 2008, might suggest that it has not happened. However, as you made the claim I'm sure you know where the stats can be found so will enlighten us as to the exact statistics with a helpful cite.