EclectEcon

Econbrowser points out that

[T]he passage and signing of this bill [Part D of Medicare] increased the implicit exposure of the Federal government by $8.1 trillion, in present value terms (exceeding the liability associated with future Social Security benefits of $5.2 trillion).

For perspective, 2005 U.S. GDP is around $12.5 trillion. These figures should be kept in mind when the discussion turns to claims of Administration and Congressional fiscal restraint.

Even though present value is a stock concept and GDP is a flow, a fiscal exposure of $8.1 trillion is still a huge amount. People who are concerned about fiscal exposure due to Social Security should be even more concerned about the exposure due to Medicare part D. As more people catch on, and as the US gubmnt keeps going to the markets to raise funds to cover these obligations, watch the increased demand for lendable funds put upward pressure on interest rates.

If the Fed doesn't want interest rates to rise so rapidly or so much, it will end up monetizing the increases in debt, leading to inflationary pressures [and, if the process persists, increased inflationary expectations and, via the Fisher equation, increased nominal interest rates].