The blue social model posted a big win today as President Obama signed the Senate’s health care bill into law . I think it’s a bad bill that locks the United States more tightly into a medical system that is unsustainable in the medium term, and it is grossly unfair to the young. But extending health insurance to tens of millions of Americans is not the worst thing in the world, and while doing the right thing in the wrong way isn’t always helpful (look at George W. Bush’s efforts to promote democracy in the Middle East, for example), the bill could have been a lot worse than it is.However, extending the old blue social model further into health care is not going to help matters. On the contrary, it advances the very painful day of reckoning this country faces when the bill for the unsustainable promises we’ve made comes due. Even as the House-passed health bill was making its way to the Senate, the financial system was flashing warning signs.One was this story by Daniel and Brian Keogh on Bloomberg; Berkshire Hathaway two year debt is now paying a lower interest rate than Treasury securities of a similar maturity. In other words, investors think that Warren Buffet is a better credit risk than Barack Obama. Over at the Wall Street Journal, meanwhile, Andrew Biggs was making the case that public employee pension funds in this country are underfunded by $3 trillion and that in order to conceal the true dimensions of the problem, the fund managers are assuming unrealistic rates of return on their portfolios. John P. Lipsky, first managing director of the IMF, warned that the rich countries generally and the United States in particular will have to cut spending sooner rather than later.
There is more bad news. New York State is delaying tax refund checks because of worse-than-expected cash flow problems. Harrisburg, Pennsylvania is flirting with bankruptcy. State budget deficits across the country are spiraling out of control.This is not, I fear, the beginning of a new era of expansive government programs and extended benefits. It’s the start of something darker as our dysfunctional political system grapples with unsustainable deficits. Reading those dark financial stories made me think of something out of Charles Baudelaire: the first stanza to Les Hiboux ( The Owls), one of the haunting sonnets in Les Fleurs du Mal.
Sous les ifs noirs qui les abritent,
Les hiboux se tiennent rangés,
Ainsi que des dieux étrangers,
Dardant leur œil rouge. Ils méditent.
Sheltered beneath the black yews,
The owls sit in rows,
Like strange gods,
Red eyes darting, they meditate.