Can U.S. afford health reform? Ask Argentina

In the view of Mike Leavitt, former Utah governor and health and human services secretary, the United States shouldn't attempt health-care reform without at least an eye toward the history of Argentina.

That is, the part of its history that resulted in a 5,000 percent inflation rate by 1989 and made the nation unable to pay its massive debts.

According to Leavitt, who spoke to a convention of editorial writers in Salt Lake City last week, no one in Washington seems to be taking seriously the one question that ought to be a central part of the debate — can we afford it?

He's right. The nation's debt now totals $11.8 trillion. The budget deficit is expected to be about $1.5 trillion in this fiscal year alone, which is a $900 billion increase over the previous one. Taken together, this year's deficit and total debt equal about 13 percent of the gross domestic product.

If you visit the "national debt clock" at www.brilling.com, you will see the calculation that the national debt has risen by $3.78 billion per day since Sept. 28, 2007. That's one serious credit-card addiction.

Those figures now are rising like the space shuttle because both Presidents George W. Bush and Barack Obama took a Keynesian approach to the economic crisis, pumping tons of money into the economy through bailouts and public projects — money that had to be borrowed from elsewhere, mainly China. Economist John Maynard Keynes believed the best way to emerge from an economic downturn is for the government to stimulate the economy through low interest rates and public investment.

But as Leavitt points out, there has to be a limit to how much debt a great nation can accumulate before it begins to lose the confidence of the rest of the world.

That's why he wants us to consider Argentina. A century ago, Great Britain ruled the world economically, but Argentina and the United States were two emerging nations vying for second place. Argentina fell out of that race, Leavitt said, because it made three basic errors.

First, politicians began to expand entitlements in an effort to get re-elected until by 1970 about 60 percent of the people either were on a government pension or working for the government.

Second, the nation didn't collect enough taxes to cover all these expenditures. Instead, it borrowed money.

Third, the nation ignored warnings that it needed to change course, until by the late 1980s the rest of the world was saying it no longer wanted to buy Argentinean debt because it didn't think it was a sound investment.