The Land of the Free is starting to look ungovernable. Enough is enough … America enjoys the “exorbitant privilege” of printing the world’s reserve currency. Its government debt is considered a safe haven, which is why Uncle Sam can borrow so much, so cheaply. America will not lose these advantages overnight. But anything that undermines its creditworthiness—as the farce in Washington surely does—risks causing untold damage in the future. It is not just that America would have to pay more to borrow. The repercussions of an American default would be both global and unpredictable. … It would threaten financial markets. Since American Treasuries are very liquid and safe, they are widely used as collateral. They are more than 30% of the collateral that financial institutions such as investment banks use to borrow in the $2 trillion “tri-party repo” market, a source of overnight funding. A default could trigger demands by lenders for more or different collateral; that might cause a financial heart attack like the one prompted by the collapse of Lehman Brothers in 2008. In short, even if Obamacare were as bad as tea-party types say it is (see Lexington), it would still be reckless to use the debt ceiling as a bargaining chip to repeal it, as some Republicans suggest.
In mid-August, Jim DeMint, the South Carolina Republican who quit the Senate in January to become president of the Heritage Foundation, the conservative Washington think tank, set off on a nine-city Defund Obamacare Town Hall Tour. DeMint, 62, is a courtly, polished Southerner who used to own a marketing business. These days he’s selling the idea that it’s not too late to kill the health-care law. In each city, hundreds and sometimes thousands of true believers crammed into hotel ballrooms to hear him explain how, with enough pressure on legislators, Congress could be persuaded to withhold funding for the law and thereby halt it before public enrollment begins on Oct. 1. “The House holds the purse strings,” DeMint told his crowds. If Republicans keep them cinched, he promised, the law would fail. ... DeMint’s idea was initially dismissed as quixotic. For one thing, the Affordable Care Act is mostly paid for by mandatory funds that can’t be blocked. For another, Democrats control the White House and Senate. Even so, the defund push has caught fire in Washington because activists have made it into a crusade.
The building that houses the Heritage Foundation, on Massachusetts Avenue near the Capitol, stands as an eight-story monument to plain-faced perversity. It was here, in 1989, that the intellectual framework was first developed for what would become the Affordable Care Act. And it is here where Needham has spent the last six years trying to exterminate what he sees as the Frankenstein’s Monster that Heritage inadvertently set loose upon the land. ... premiums have been rising because of a variety of structural reasons, and because federal assistance to recipients to offset the costs has been in many cases inadequate. ... it is also because unit costs have continued to soar — like the price of prescription drugs, thanks to the sweetheart deal that the pharmaceutical industry cut with the Democrats in exchange for being an early supporter of the law. Some rural states like Alaska have seen very little competition among insurers — something that a public option might have addressed, had the insurance lobby not spent a fortune to defeat that provision. ... To make Obamacare economically feasible for insurers, the program needed to attract a large pool of young and healthy recipients to offset the costs of providing care for the older and less healthy. That ratio has yet to prove satisfactory for many insurance companies ... Collectively, those groups spent close to $273 million on lobbying during the height of the Obamacare debate. They will surely spend a similar sum haranguing Congress to pass a replacement that favors them.