Be wary of the US healthcare bill
- Source: Global Times
- [16:24 December 28 2009]
- Comments
There's a popular saying: If you owe the bank a small amount, the bank owns you. If you owe the bank a huge sum, you own the bank.
That is basically descriptive of China-US relations now.
President Obama was surely relieved to head to Hawaii for Christmas vacation after the Senate approved the healthcare bill Thursday.
He seemed to be worried least about how the expensive bill is going to be financed.
But as China holds the largest amount of US treasury bonds, around $800 billion, we have many reasons to worry.
Chinas interests have been repeatedly sacrificed for Obamas political maneuvers. In September, the Obama administration levied a punitive tariff on Chinas tire exports to the US in exchange for support from organized labor on healthcare reform.
Creating universal healthcare coverage is a dream every democratic president has aspired to. It is also a political mire that sunk many of Obamas predecessors be-cause of the reforms huge cost and the complicated competing interests.
Both the House and Senate bills came with an expensive price tag: $1.05 trillion over the next decade in the House bill and $871 billion in the Senate bill. Where will the money come from? If it is from either raising taxes or going deeper into debt, it will be a heavy blow to the US economy, which is already in deep turmoil.
It seems to be a dilemma. Without reform, exploding healthcare expenditures will further drag down the US deficit and dilute the dollars value. As the population ages, it will further strain the budget.
The reform, if it goes well, may cut the deficit in the long-run by curbing waste and improving the efficiency of the healthcare bureaucracy. But before getting better, the budget will first get worse. Can the US manage that?
While President Obama cheered his historic feat, made possible by creditors of the US government, we have to once again urge the US government to be more financially disciplined.
Obamas move to change healthcare for American families could create toxic US dollar assets for many holders of US Treasury bonds. His determination to push forward the reform package at a time when the US economy is being hit hard by the economic crisis and two ongoing wars has put the countrys financial soundness in a very precarious situation.
China is being held hostage by Washingtons deficit. It is likely to be further victimized on issues such as trade, climate change, human rights and arm sales to Taiwan.
