With health bill, Obama has sown the seeds of a budget crisis

Washington Post ^ | March 29, 2010 | Robert Samuelson

[reaganaut1]

When historians recount the momentous events of recent weeks, they will note a curious coincidence. On March 15, Moody's Investors Service -- the bond rating agency -- published a paper warning that the exploding U.S. government debt could cause a downgrade of Treasury bonds. Just six days later, the House of Representatives passed President Obama's health-care legislation costing $900 billion or so over a decade and worsening an already-bleak budget outlook.

Should the United States someday suffer a budget crisis, it will be hard not to conclude that Obama and his allies sowed the seeds, because they ignored conspicuous warnings. A further irony will not escape historians. For two years, Obama and members of Congress have angrily blamed the shortsightedness and selfishness of bankers and rating agencies for causing the recent financial crisis. The president and his supporters, historians will note, were equally shortsighted and self-centered -- though their quest was for political glory, not financial gain.

Let's be clear. A "budget crisis" is not some minor accounting exercise. It's a wrenching political, social and economic upheaval. Large deficits and rising debt -- the accumulation of past deficits -- spook investors, leading to higher interest rates on government loans. The higher rates expand the budget deficit and further unnerve investors. To reverse this calamitous cycle, the government has to cut spending deeply or raise taxes sharply. Lower spending and higher taxes in turn depress the economy and lead to higher unemployment. Not pretty.

Greece is experiencing such a crisis. Until recently, conventional wisdom held that only developing countries -- managed ineptly -- were candidates for true budget crises. No more. Most wealthy societies with aging populations, including the United States, face big gaps between their spending promises and their tax bases. No one in Congress could be unaware of this.

[dumpthelibs]

Ya think? These guys are friggin geniuses. We have been shouting this out since the first bogus Bush bailout and with the Kenyan we’ve just piled on more. Wish these clowns could get their heads out of Obummer’s a** long enough to see the truth.

[incredulous joe]

Actually, I think Samuelson may be a conservative or political indie? In which case, he should probably have identified himself, by composing this article with the caps lock on.

[rarestia]

It’s funny you mention the collusion in DC. A lot of what’s happened in recent American history suggests that globalization interests, esp. billionaire investors like Murdoch and Soros, are imbuing our politicians with this faith that the “world community” will come to our rescue when everything falls into a gaping morass.

G.W. Bush was out of the public spotlight for the most part, and that makes me curious as to his whereabouts with influential world powers. At least with Obama we can see where his loyalties lie since he’s such a whore for the camera.

[Dick Holmes]

Samuelson is pretty level-headed and not partisan. I take his warning seriously. 0 and the dims have made a promise that we won’t be able to keep, and are setting the USA up for a crash!

[Buckeye McFrog]

“A crisis gives you the opportunity to do things that you would probably find impossible to do otherwise”...Rahm Emanuel

Gotta trigger a huge budget crisis to have any hopes of cramming a VAT down our throats then