Sunday, February 24, 2013

Accepting Medicaid Expansion is wise economics

The Montana state legislature is debating whether to accept the Medicaid Expansion program.  The governor and the Democratic legislators are supportive, but the Republicans are voicing opposition based on their stated concerns that the federal government's debt is unsustainable and therefore it cannot be counted on to continue its funding commitment to the state in the future.  I wrote the following letter to the editor of the Helena Independent Record.

Almost all of Montana’s Republican legislators say they will not support Medicaid expansion for our state because the programs impact on the federal government’s budget is of vital concern. 

They claim the federal government is broke, the deficit is out of control, and it will have to borrow from the Chinese putting the future of our children and grandchildren at risk of unsustainable future debt.

None of the above claims about our federal government are true.  They are myths.

Here are some Civics, Macroeconomics, and History 101 facts.

  •  Only our federal government can coin or print money and regulate the value thereof (U.S. Constitution Article I, Section 8).  The federal government is the sole source of all dollars in the world’s economy.  It can never go broke.
  • Our government does not borrow money from China.  China obtains U.S. currency by selling Chinese produced goods to American corporations that end up on our store shelves (like Wal-Mart).  They use their cash to buy U.S. bonds that earn interest.
  • When the federal government spends more in a year than it takes in from taxes that money stays in your and my pockets and is our income.
  •  After WWII, the federal debt to GDP ratio was 120%, much higher than it is today.  Yet, the government increased spending, the country’s economy grew, and unemployment decreased to near zero.  That war debt has never been paid off, yet our economy has grown substantially and we are all better off today than our parents were.

We must learn from our history, stop obsessing over our national deficit, and concentrate on real job creation like our leaders did in the post-WWII economy.

Medicaid expansion provides a unique opportunity for enormous sustainable growth of Montana’s economy bringing new jobs to our rural communities.  Please ask your legislators to vote to accept it.

1 comment:

  1. Good letter, Duane. From comments in the IR it appears that some of your fellow Montanans "get it."