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  • New Senate Health Bill: Exacerbating Federal Fiscal Insanity

    Senator Reid seems comfortable with clandestine negotiations in order to ensure passage of any type of health reform. This course, aside from being politically dubious and whimsical, is fiscally reckless, and with its passage, will continue to add to the debt that will straddle future generations with a significant amount of fiscal stress.

    As with the previous health reform bills, the assumptions and parameters the Congressional Budget Office must use will likely score this new bill as deficit neutral. Yet, the price tag for the overall bill will not changed, and will include massive expansions of Medicare and Medicaid making the long-term fiscal outlook in the US dismal at best.

    Now, Congress wants to also raise the debt limit to finance more spending—including any type of health reform. Existing healthcare entitlement spending is already on an unsustainable course, however, and the intergenerational fiscal imbalance will only worsen, where future generations will face substantially higher net lifetime tax rates, permanently lower federal government purchases and transfers, or some combination of the two policy changes.

    Ever-rising fiscal imbalance means that future generations will continue to face higher net total payments to the government than current generations. This translates to higher life time tax rates for future generations—estimated in 1999 to be at 71.1 percent. This also means that future generations will pay a disproportionately high level of net total payments to the government. In other words, a newborn in future generations will have to pay permanently higher net total payments (significantly exceeding 100 percent) than a current newborn to restore fiscal balance. Since the debt levels in 2009 are the highest in history—significantly higher than in 1999—and there are no proposed adjustments over the short-run there will be far higher permanent lifetime net tax rates faced by future generations.

    In sum, this legislation only pushes restoring fiscal sanity into the future. As the burden of this fiscal strain is continually delayed, though, this permanent strain will be borne by future generations. This is in addition, of course, to the fact that expanding fiscally draining government programs that are in dire need of reform will never be the right solution.

    Posted in Obamacare, Ongoing Priorities [slideshow_deploy]

    One Response to New Senate Health Bill: Exacerbating Federal Fiscal Insanity

    1. Mark M says:

      Please help me. The current healthcare system is bad. Its good if you are working for a company that can afford to offer coverage. The problem is costs are rising so much that fewer and fewer companies can afford it. Manufacturing provided coverage but it become expensive, made them less competitive in the global market, and now those jobs have gone. I'm not saying the cost of healthcare was the reason but it played a part.

      I have not heard any proposal that address core issues related to the problems with healthcare from conservatives. One that has a snowballs chance of passing. Not what you would want if you started from nothing but a proposal based on where we are today and what is likely to be acceptable in the current political landscape.

      BTW, I'm a former conservative but left during the period 2002 and am looking for a reason to embrace conservative politicals again.

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