Federal budget and tax issues may seem mystifying, but current policies boil down to something simple:

America is on a borrowing binge.

We have the government borrow a trillion dollars, give most of it to the rich in tax cuts, then stick our children and grandchildren with the bill.

And it’s not just the government.

Standard & Poor’s recently downgraded debt at General Motors and Ford, worried these troubled companies won’t have enough income to pay their mammoth debts.

The current scandal at insurer American International Group involves improper borrowing to make its books look better.

Individuals are racking up huge debts for expensive cars, second homes and other extravagances. And they’re foolishly using home-equity loans to turn short-term debt into long-term debt.

The day of reckoning will come.

The fact that we don’t know when it will come makes it easy to ignore but no less serious.

Among the latest developments was news that the federal government is thinking about bringing back the 30-year U.S. Treasury bond.

All bonds are loans. The person who buys a bond for, say, $1,000, is lending that money to the governmental body or corporation that issues the bond. The issuer pays interest to the bond owner. After a set period, the bond matures and the issuer pays the $1,000 back to the investor.

The 30-year Treasury was dropped in 2001 when the federal budgets had big surpluses. With less need to borrow, it didn’t make sense to keep paying the high interest rates on 30-year bonds. Instead, the government issued bonds with maturities of 10 years or less that had lower rates.

Of course, things didn’t turn out as promised. The Bush administration sold its tax cuts by claiming they would pay for themselves — creating new tax revenues by stimulating economic growth. That didn’t happen.

Now we have huge deficits, as the government spends more than it takes in, making up the difference between income and spending by borrowing through sale of Treasuries.

There’s a ready market for the 30-year bond from pension funds and other investors who want set long-term income. If the government must borrow, it makes sense to do it before interest rates rise.

So restoring the 30-year bond may be a good move. But it’s a tragedy we’re in this situation.

Apologists claim the Bush tax-cut theory was good at the time, and they blame the tax-revenue shortfall on Sept. 11, the war and economic damage from high oil prices. But, clearly, the tax cuts were the biggest factor in the deficit, causing the federal debt to balloon by more than $1 trillion since the first round of tax cuts in 2001.

What will happen?

Basic economics says bigger government borrowing drives interest rates up. It hasn’t, yet, probably because foreigners’ demand for Treasuries means the government doesn’t have to pay high rates to lure investors.

But that demand largely stems from arcane efforts by foreign governments to control currency exchange rates. If conditions in the fickle currency markets change, demand for Treasuries could fall, driving up interest rates in the United States on everything from credit cards to mortgages. Higher rates also would damage corporate earnings, undermining stock prices.

Another reason rates have yet to rise is that investors assume the government will have no choice but to eventually curb its borrowing. Unfortunately, the only practical way to do that is to raise taxes.

So ordinary folk will pay the price for today’s spendthrift habits.

Even if interest rates never rise, all this borrowing would simply raise the level of federal debt that would have to be paid back someday, somehow, by somebody — us, our children and grandchildren.

Currently, it’s $4.5 trillion — and growing. That’s about $15,000 per person. Add interest, and its two or three times as much.