actually, depending on your calculation and especially if you hit a double or triple promotion (miles and points) right, i'd argue you're return is often greater for flipping. keep in mind that with a statement date close near the end (but not at the end) of the month, you can essentially float 2 1/2 months (credit card and gov combined) before your payment is due, thus negating the 3 month penalty somewhat (which is only a 2 month penalty if you buy bonds at the very end of the month, regardless of your c card's closing date). your points or $$$ earned from your affinity credit card for the purchases is almost always "tax free", thereby increasing the overall APY for flipping a couple of times a year.

the gov does get screwed though. if they are in fact paying 2-3% each time, then this is 4-6%/year they're paying to the c card company BEFORE your measly interest. where the article is contradictory, however, is when it makes it sound that credit card companies are finding it necessary to scale down affinity programs for bond purchases. if i'm Citibank, and providing 1% cash back after taking in 2-3% from the gov, i'm better off than preventing you from buying them.

i also don't see this as raiding the Treasury. in theory, i think the gov would see more demand, thus causing lower bond rates and the ability to renegotiate the fees paid to credit card companies. some credit card companies refuse bond purchases as a result, and some investors find the total return not as attractive, and therefore don't buy bonds like this anymore, thus allowing the non-flipping, long-term holding, traditional buying (non-credit card) bond holders to keep buying them while eventually freezing out the flippers.