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Charging Obamacare to the Federal Credit Card

Posted By Kathryn Nix On January 28, 2010 @ 5:29 pm In Ongoing Priorities | Comments Disabled

Despite the recent focus of Congress and the White House on fiscal responsibility in federal spending, passing Democrat’s health care agenda will add significantly to, not reduce, the federal deficit. Pushing Obamacare through Congress would fly directly in the face of any rhetoric spoken in favor of reducing the deficit.

The necessity for Congress to raise the debt limit [1] has spurred a nationwide conversation on the enormity of the federal debt and the recklessness of federal spending. Several proposals have been made within Congress to create commissions [2] to suggest legislation to deal with the out-of-control budget. Even external organizations [3] have begun to take on the task of solving America’s impending fiscal crisis. The latest development is the freeze on discretionary spending [4] that President Obama proposed during his State of the Union Address.

And yet none of this means anything if spending, especially on entitlements, is not controlled. Unfortunately, adopting the Senate’s health care bill which would increase entitlement spending and add tremendously to the deficit. Though the Congressional Budget Office (CBO) initially reported the Senate health care bill would reduce the deficit, a more recent report [5]from CBO confirms that, in actuality, the bill would increase the deficit by more than $200 billion.

The reason for this discrepancy is that the bill “double-counted” savings from Medicare by claiming that they would both fund other provisions in the bill and increase the solvency of the Medicare program. Senator Jeff Sessions (R-AL) inquired of CBO to clarify. CBO responded that if the savings from Medicare are applied back to the program, the Senate health care bill would add $226 billion to the federal deficit in the next ten years.

This staggering number is in addition to the other budgetary gimmicks [6] the bill’s authors employed to make it appear fiscally sound. For example, the removal of the “doc fix” legislation from the Senate bill. This legislation would permanently repeal the cuts to physician payment rates under Medicare that Congress already suspends every year. Pretending these cuts won’t occur is pure fantasy—in reality, they will also add over $200 billion to the federal deficit between now and 2019.

Democrats also manipulated the spending and savings provisions of the bill in order to maximize revenue during the first ten year window while minimizing expenditures. New taxes and other revenue-raising provisions become effective immediately, while expenditures, like the subsidies for the lower and middle class to purchase health insurance, would not occur until years later. This creates a convenient spending cushion to hide the true costliness of the bill.

Finally, though it may seem perverse, the growing unpopularity of health care reform is causing its price tag to grow as well. First there was the Nebraska deal, where Senate Majority leaders promised Senator Ben Nelson (D-NE) a sweet Medicaid deal if he would vote for the bill. Now all the other states want it, too. According to CBO [7], this would add $35 billion to the Senate bill.

Then there was the excise tax on high-cost insurance plans, which had unions hopping mad because many union members would see their health benefits taxed under the plan. So the Senate Majority cut another deal, exempting unions from the tax [8] until 2018. This means about $55 billion of lost revenue, which would either have to be made up elsewhere or—you guessed it—added to the deficit.

Clearly, our elected officials don’t understand the meaning of “spending problem”. With the amount of United States’ debt [9] held by the public set to reach 100% of the Gross Domestic Product by 2019, it’s time for Congress to look beyond the ten-year window of CBO’s cost estimates and acknowledge the threat that deficit spending on health care has on the fiscal future of America.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/01/28/charging-obamacare-to-the-federal-credit-card/

URLs in this post:

[1] raise the debt limit: http://www.youtube.com/watch?v=7yJRci2pARk

[2] create commissions: http://www.foundry.org/2010/01/26/baucus-commission-is-no-solution-for-spending/

[3] external organizations: http://www.foundry.org/2010/01/26/the-domenicirivlin-debt-reduction-task-force/

[4] freeze on discretionary spending: http://www.foundry.org/2010/01/26/is-obamas-underwhelming-spending-freeze-a-fakeroo/

[5] more recent report : http://www.cbo.gov/ftpdocs/110xx/doc11005/01-22-HI_Fund.pdf

[6] other budgetary gimmicks: http://www.heritage.org/Research/HealthCare/wm2756.cfm

[7] CBO: http://www.cbo.gov/ftpdocs/109xx/doc10992/hr3590_RyanLtr.pdf

[8] exempting unions from the tax: http://www.foundry.org/2010/01/15/another-special-interest-gets-sweetheart-deal-in-health-care-bill/

[9] United States’ debt: http://www.heritage.org/federalbudget/debt-and-deficits

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