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Mitchell
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Asking this question is like asking to be told what the future-as-a-whole will be, but... I would really like to know how the collision between (1) the Obama administration's policy agenda on health care and climate change, and (2) America's fiscal situation, is going to play out - and I would like to have a rational basis for my answer. I see, from reading blogs like this one, that there is a right-wing populist movement against public health-care (but not against Medicare!). Waxman-Markey is presently out of the limelight, but who can doubt that most of the citizen opponents of "Obamacare" are also against cap-and-trade? Now what I'm wondering is how this will interact with the new politics of finance, and ultimately with the real economic future. Matt Taibbi's famous anti-Goldman article in Rolling Stone might be an omen, in that it frames cap-and-trade as Goldman's next scam and scandal. The populist right, which mostly doesn't believe in global warming anyway, looks ready to integrate that proposition into its platform. I consider the finance blog Zero Hedge as another sign of what's to come. Its basic agenda seems to be exposing the evils of Wall Street, the Fed, and the Treasury: trading practices which bias the system against the small investor, regulatory disinterest in this bias, taxpayers' money propping up zombie banks, debasement of the currency, data massaging... and with the expectation that a great reckoning with economic reality cannot be averted forever. (When China stops buying Treasuries - that is the usual "beginning of the end" scenario.) There are two aspects to this - perception and reality. First, there is now a large body of opinion on the right which sees the US financial system as part of the problem, part of the crypto-socialist liberal state that must be overthrown. Opposition to socialized health care, to emissions trading, and to fiat currency and fractional reserve banking can all become part of the one political platform. There have always been anti-Fed economists and politicians (Ron Paul) but they have an unprecedentedly huge audience right now. Second, reality. Health-care and cap-and-trade both cost money, and that is always going to be unpopular during a recession. But furthermore, I have to think that the people who say that the large-scale American fiscal position is unsustainable are right. Eventually the debt and the deficit have to start going down, not up, and that could happen in an out-of-control way. A refusal by sovereign creditors to keep buying American debt is indeed the obvious way for that to happen, and the only thing preventing a buyers' strike may be their desire to get a return on their *existing* investment. To try to sum this all up: I mostly see two sides to the American political debate right now. The right is ideologically predisposed to be against these Obama policies, and it also argues against them economically, saying they would send the country broke, if indeed national bankruptcy doesn't come first anyway. The left is ideologically predisposed to be in favor, and is mostly concerned with the political tactics needed to make them law. For my part, I am predisposed to be in favor, but I also think the economics is pretty grim, at least for a people with the economic expectations of Americans. (Obviously another subliminally growing factor in politics and culture is that body of opinion which is radically skeptical of economic growth as such, but I haven't even tried to factor it into this analysis.) So, I'm interested to know whether the big picture I just sketched is seriously in error - whether it leaves out something important, or gets the proportions wrong - and also what comes next. Is this stuff going to become law, or not? And will it make any difference to the quality of life, or will that be dominated by larger economic factors?