Strengthening Constitutional Self-Government

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Economy

The Bond Markets and Obamacare

The indefatigable Michael Barone has an excellent piece this morning on federal bond prices over the last few days. In short, U.S. bonds are ascending to higher levels of risk in the eyes of investors. Buffett's Berkshire Hathaway and Proctor & Gamble are now safer investments. Of course, the increasing expense for the government to borrow, made exponentially worse by Obamacare, raises the next move for Obama. The markets are obviously making decisions that incorporate the future effects of this legislation on U.S. fiscal policy. Thus, the bond markets, not the CBO, accurately reflect the true consequences of the Healthcare reform bill.

We now come to Obama's next move and this is to push for tax increases and some new tax to stabilize this process of escalating borrowing costs for the Treasury. I fear that on a push for a national sales tax or other increases in taxation Obama will be able to paint himself as the responsible one trying to manage government growth  and ensure broad equality. Conservatives will have to engage in persuasion, actually making real arguments and not just venting at Obama, across the electorate to stop this eventuality. The case will have to be made along the lines of Ryan's RoadMap, and the notion, classically expressed by Hayek that we must reintroduce the price system and its crucial role in allocating resources and services back into the healthcare market. To do this in a convincing fashion is now the real test.

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