I've written since February about the problems facing the Federal Government in terms of being able to borrow enough money for the huge deficit in an environment where people and governments have less money to invest in U.S. bonds. I've even mentioned how the government could find the money if the stock market tanks. Today, President Obama revealed what could be interpreted as a new plan for the Federal Government to borrow more money.

President Obama on Saturday announced changes that the IRS plans to make to encourage workers to save more of their paychecks...

To make it easier for those owed tax refunds to save, the IRS will allow tax filers in 2010 to recoup their refund by issuing U.S. savings bonds.

In other words, if you pay too much money to the Federal Government in taxes, instead of getting that money back in cash you'll have the option of getting an IOU to pay you back in 30 years from a government that is projected to be $20 trillion in debt in just 10 years.

This would help the administration find the money to pay for its mounting deficits since it would just be automatically borrowing money from those people that paid too much in taxes, and who opt for their "refunds" in savings bonds. The government keeps the extra money and gives the taxpayer an IOU.

Sure, that could maybe help savings if you have faith that the IOU's issued today by the Federal Government will be worth something in 30 years. I for one am not buying savings bonds. I either want cash for liquidity in uncertain times or I'm betting against the value of U.S. bonds. All of this debt being sold by the U.S. Government is going to have the long-term effect of driving down bond prices.

Want to encourage savings? Just make savings tax-deductible with no limits. The only real problem with that solution is that it doesn't help Obama pay for his deficits. Of course that's only a problem if you think facilitating the deficit is a good idea.