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ObamaCare's Reality Deficit

If you believe that a new entitlement saves money, you'll believe anything.

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Washington, Jan 7, 2011 | comments

Of all the claims deployed in favor of ObamaCare, and there are many, the most preposterous is that a new open-ended entitlement will somehow reduce the budget deficit. Insure 32 million more people, and save money too! The even more remarkable spectacle is that Washington seems to be taking this claim seriously in advance of the House's repeal vote next week. Some things in politics you just can't make up.

Terminating trillions of dollars in future spending will "heap mountains of debt onto our children and grandchildren" and "do very serious violence to the national debt and deficit," Nancy Pelosi said at her farewell press conference as Speaker. Health and Human Services Secretary Kathleen Sebelius chimed in that "we can't afford repeal," as if ObamaCare's full 10-year cost of $2.6 trillion once all the spending kicks in is a taxpayer bargain.

The basis for such claims, to the extent a serious one exists, is the Congressional Budget Office's analysis this week of the repeal bill, which projects it will "cost" the government $230 billion through 2021. Because CBO figures ObamaCare will reduce the deficit by the same amount, repealing it will supposedly do the opposite. The White House promptly released a statement saying repeal would "explode the deficit."

Meanwhile, other Democrats have taken up arms about House procedure. The GOP adopted a budget rule that says repeal doesn't have to be "paid for," and the press corps is treating this exemption as a scandal against Washington decency.

In a memo, the inimitable Pete Stark spied a GOP plot "to shove through a massive bill"—the repeal measure is all of two pages—while Henry Waxman and other outgoing committee chairmen shook with outrage about "an offense to good government."

Republicans ran on "transparency in government and more fiscal responsibility," they wrote recently, and now here they are bringing "major legislation to the floor without any public hearings and without paying the trillion dollar cost of repeal. . . . The contrast between the approach the Republican leadership is proposing and the open process the Democrats followed last Congress is stark."

It sure is. Ten months ago, Democrats used a partisan majority to narrowly defeat bipartisan opposition and pass a national health-care program that a majority of the public opposed and continues to oppose today. Gallup reported yesterday that Americans favor repeal, 46% to 40%. Among the worst Democratic abuses was gaming the CBO's budget conventions to make it seem as if ObamaCare "saves" money.

The accounting gimmicks are legion, but we'll pick out a few: It uses 10 years of taxes to fund six years of subsidies. Social Security and Medicare revenues are double-counted to the tune of $398 billion. A new program funding long-term care frontloads taxes but backloads spending, gradually going broke by design. The law pretends that Congress will spend less on Medicare than it really will, in particular through an automatic 25% cut to physician payments that Democrats have already voted not to allow for this year.

The CBO budget gnomes are required to "score" what's on paper in front of them, no matter how unrealistic, and that's the method its Congressional masters prefer. The political class makes believe that CBO's forecasts are carved into stone tablets through divine revelation, but all they really show is that politicians have rigged the budget rules to hide the true cost of entitlements.

Anyone in search of economic or fiscal reality will have to turn to other sources. Two particular ObamaCare heroes are Richard Foster, the chief Medicare actuary with the courage to publish more honest analyses, and Paul Ryan, the Wisconsin Republican who is the most fluent scourge of ObamaCare's book-cooking, including in a debate last year in which President Obama had no response to his critique.

We also single out the economists Doug Holtz-Eakin, a former CBO director, and Eugene Steuerle, of the Urban Institute. Both have been voices in the wilderness about the incentives ObamaCare creates for businesses to drop coverage and dump their employees into "free" coverage, which really will "explode the deficit" far more than CBO projects.

But our core appeal isn't to this technical detail or that underlying assumption. It's to common sense. Amid the repeal debate, Democrats and the media are behaving as if they have no knowledge of Congress's habits or the history of government health-care programs over the last half-century. Entitlements are always sold as modest and "paid for," then years later everyone suddenly discovers that they are "unaffordable" without digging deeper into the pockets of the middle class. How do you think Medicare and Medicaid got to their current pass?

The government can't subsidize coverage for tens of millions of new people and simultaneously reduce the deficit, as most Americans seem to intuitively understand. The real offense Republicans are committing in the eyes of Washington is exposing its illusions.

More from the Wall Street Journal here.

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