How do you tell when a congressman is selling you a bill of goods? When he says his huge spending bill will be “paid for”. House Majority leader Hoyer says the giant health care bill will be paid for by spending cuts and it will bring down the deficit. Dream on…
The paid for claim is made by raising taxes four years before benefits kick-in and promising cuts to Medicare which impacts the most political powerful bloc of voters in America, senior citizens. The idea of this bill lowering the deficit is laughable and the markets know it, and fear it.
That is why markets are so concerned by the US’s shaky finances. What began as a cyclical budget blowout due to a deep recession looks likely to become structural, just as the Baby Boom generation heads into retirement. The timing of this program could not be any more ill-conceived, no matter how, well-intentioned it may be.
