Sequestration and a Failure of Leadership | Capital Commentary

Sequestration and a Failure of Leadership | Capital Commentary by Aaron Korthuis.  MGB: From what I have heard during the Senate Budget Committee deliberations, the Appropriations Subcommittees will deal with the long term sequestration issues for next year.  It may be that an across the board cut, followed by supplemental appropriations if necessary, will take care of this year.  In the medium term, the big question is whether Obamacare will work - or more specifically if the subsidies for buying a policy are high enough for the uninsured to get health care or wait until they get sick.  If they are less risk averse than health insurance company investors, then this sector either march into a bankruptcy court which will set up a single-payer system out of the ashes or a deal will be made on a subsidized public option for the uninsurable, with the subsidy coming in the form of payroll taxes or some form of consumption tax, which will also take care of out year problems in Medicare and Medicaid.  The real long term problem is that we are constantly rolling over Net Interest on the Debt in order to have the dollar remain the defacto world currency.  We can't do that forever.  Either taxes have to be raised on wealthier citizens who hold the debt or our tax base needs to expand to include more of the world - which also means allowing them into our polity. Actually, I expect both to happen at some point.