Last week on NPR, a professor in the Sloan School of Management at MIT explained that what is really at stake in the health-care bill is the U.S. government's ability to borrow. In other words, the bill is about cutting health-care costs, not about providing hard-pressed Americans with health care.
The professor said that if we didn't get health-care costs under control, in 30 years the U.S. government would not be able to sell Treasury bonds.
It is not at all clear that the Treasury will be able to sell its debt instruments in 30 months, and it has nothing to do with health-care costs. The Treasury debt-marketing problem has to do with two back-to-back U.S. fiscal year budgets each with a $2 trillion deficit. The size of the U.S. deficit exceeds in these troubled times the supply of world savings available to fund the U.S. government's wars, bailouts and stimulus plans. If the Federal Reserve has to monetize the Treasury's new borrowings by creating demand deposits for the Treasury (printing money), America's foreign creditors might flee the dollar.
The professor didn't seem to know anything about this and gave Washington 30 more years before the proverbial hits the fan.
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