Government Spending

America's Debt Problem Is a Health Care Problem

And the government's "solution" is making it worse.

Veronique de Rugy | 4.23.2026 3:45 PM

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America has a spending problem. It also has a health care problem. These are not two separate crises but rather the same crisis wearing different clothes. The Cato Institute's new Handbook on Affordability is a great resource to understand the root problem and how to fix it.

Start with a recap of the fiscal picture. The federal government runs large deficits so persistently that they've become a structural threat to price stability. As Romina Boccia and Dominik Lett argue in the handbook's second chapter, when debt expands faster than the economy, investors begin pricing in one of three outcomes: higher future taxes, deeper spending cuts, or inflation that quietly erases the real value of what the government owes. When Congress fails to credibly commit to the first two, it chooses door No. 3 by default.

The inflation surge of 2021 was the consequence of an extraordinary flood of deficit-financed spending with no commitment to repaying it. As our money lost purchasing power, the Federal Reserve eventually had to raise interest rates sharply, further reducing purchasing power. Politicians have yet to meaningfully tighten the government's belt, and we continue to have unnecessarily high interest rates and prices.

What's more,........

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