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  • Obamacare Does No Favors for the Nation’s Fiscal Outlook

    Last week served up another dose of reality for Obamacare supporters.

    In addition to House committee hearings that exposed the negative effects of the new law, the Congressional Budget Office (CBO) released its new 10-year baseline, which unveils the “daunting economic and budgetary challenges” facing the United States. In 2011, the federal deficit will hit $1.5 trillion. Heritage budget expert Brian Riedl writes, “Historic increases in federal spending are set to create permanent trillion-dollar deficits, eventually pushing the national debt past 100 percent of the GDP. Without change, the nation could potentially face a Greece-like economic crisis.”

    Deficits will decrease later in the decade as the economy recovers, but the CBO warns that this assumes “that tax and spending policies unfold as specified in current law. Consequently, they understate the budget deficits that would occur if many policies currently in place were continued, rather than allowed to expire as scheduled under current law.”

    One such policy is the “doc fix.” Every year, physicians are scheduled to receive severe pay cuts under Medicare, which threaten seniors’ access to care. So instead, Congress continually passes a fix to delay the cuts. Obamacare creates savings in other parts of Medicare but left in place the policy of adding the extension to the deficit. Even so, the CBO must assume in its baseline that the cuts will occur, ignoring approximately $300 billion in spending over the next decade. The CBO warns that if the cuts are prolonged indefinitely, “then deficits from 2012 through 2021 would average about 6 percent of GDP, compared with 3.6 percent in the baseline.”

    The doc fix isn’t the only problem. Federal spending on health care is on track to bankrupt the country over the coming decades. According to the CBO:

    [S]pending on the government’s major mandatory health care programs—Medicare, Medicaid, the Children’s Health Insurance Program, and health insurance subsidies to be provided through insurance exchanges—along with Social Security will increase from roughly 10 percent of GDP in 2011 to about 16 percent over the next 25 years. If revenues stay close to their average share of GDP for the past 40 years, that rise in spending will lead to rapidly growing budget deficits and surging federal debt. To prevent debt from becoming unsupportable, policymakers will have to substantially restrain the growth of spending, raise revenues significantly above their historical share of GDP, or pursue some combination of those two approaches.

    Obamacare cuts Medicare, but instead of using savings to increase the solvency of the program, it creates a new health entitlement: insurance subsidies for the middle class. Moreover, the cuts are likely to follow in the footsteps of the doc fix. If they are fully implemented, the Medicare Actuary warns that 15 percent of hospitals could stop accepting Medicare enrollees altogether. Judging by Congress’s past action, lawmakers are unlikely to allow the cuts to go into effect if they would harm seniors’ access to care.

    The United States faces severe economic consequences if skyrocketing federal spending on health care is not addressed. Rather than acknowledge this, Obamacare left in place an unsustainable policy that adds billions to the deficit each year. It creates the illusion of fiscal responsibility through its unsustainable cuts to Medicare and sets up yet another entitlement program to further burden taxpayers. The CBO’s report is a reminder of the ailing fiscal health of the country, which is made worse by Obamacare. To learn more about how Obamacare will add to federal deficit spending, click here.

    Posted in Obamacare [slideshow_deploy]

    6 Responses to Obamacare Does No Favors for the Nation’s Fiscal Outlook

    1. George Colgrove, VA says:

      "Deficits will decrease later in the decade [as the economy recovers], but the CBO warns that this assumes “that tax and spending policies unfold as specified in current law. "

      There are very sketchy indicators that MAY suggest improvement. But, these indicators have been used over the last decade with little success. This problem should be looked at as if the economy stays the same as it is now. Last month house purchases were the lowest – ever! I do not think things are or will get better. Last year household incomes in 28 states went down. We are in a cascading downward spiral. It is nice listening to optimism, but we have been conned by this optimism and now we have a $14 trillion debt. We need pragmatism.

    2. Bobbie says:

      get rid of it! too little was thought through (intentional) and too much controversy involving the whole thing. It's deceiving and It's unconstitutional.

    3. Pingback: World Spinner

    4. W.P.Koch, San LuIs O says:


      Congress and the White House should stop wasting the people’s money, “cut as detailed herein” and use savings to improve quality of basic invested entitlements. Preserve the 2010 tax schedule with no inheritance taxes. Congress should improve basic Medicare. Vote opponents to this “out”. Citizens come first.

      It is time the U.S. reduces human rites and police activities for the World by lobbying the United Nations, NATO and Interpol to “take on more”. 800 bases in 63 countries across the world should be reduced. Examples are fewer forces in, Bosnia, Germany, Philippines and Okinawa.

      Starting with Iraq, only train for self reliance. After the surge in Afghanistan repeat above and diminish corruption by requiring accounting practices for aid, substituting minerals mining and food crops for drugs.

      Cut bloated federal bureaucracy and phase in outsourcing. Combine CDC, EPA and FDA. Combine the FAA, NHTSA and Transportation Department. Combine GAO and CBO. Departments should eliminate “must spend all”. Return “unused” yearly budget to the treasury. Cut combined department budgets (other than entitlements) on an average of 10%.

      Eliminate all 32 CZARS Mr. president. Reduce your 469 member staff which makes nearly 39 million per year! Halt first lady $180,000 air force one vacation trips. Stop “$200 million per day” presidential-family foreign trips. Cancel $ 20,000,000 executive order (HB 1388) to relocate key Hamas members to U.S.

      Contribute to only one of: The World Bank or International Monetary Fund or U.S. Agency for International Development.

      Reduce foreign aid bribery. For example, no aid to oil rich -Iraq. $37 billion and increasing with $8.7 billion of development funds not accounted for. Halt $150 million aid to Palestinians. Slash $1.3 billion annually to Egypt.

      Charge bailed companies (TARP) for their huge executive bonuses at taxpayer expense. Government should sell shares to recoup for taxpayer. About $154 billion owed.

      Congress should reduce “stimulus” expenditures by halting: over budget and vote bribery “earmarks”. Example: Stop “cow burp” study. $13 billion unspent in states. Eliminate subsidies that smell “earmark”. Congress should cut their pay and do not pay student loans for their staff. Please- no renting of private or military aircraft. An example was Pelosi’s family of $2.1 million for over 2 years. Congress should set commercial travel cost standards and controls.

      Reduce medical cost by: allowing purchasing anywhere in U.S., “tort reform”, and reducing “red tape”. Optimize Medicare aid to local medical groups for expediting billing cost speed, doctor/patient verification and fraud reduction.

      Congress should enforce existing immigration laws. Complete an improved fence. Entitlements or benefits should be for only citizens. Deport criminal “illegals”. Only deportees and workers on Visa/Guest Programs qualify for needed medical benefits.

      These actions will improve funding for:” Medicare”, “Medicaid, and “Veteran’s Affairs”. Corporations should be allowed tax reduction incentives for hiring with healthcare plan options.

      Healthcare quality can be at least that for Congress or the Federal Employee Health Benefits Program (FEHBP). Additional benefits are: dental coverage, improved visual coverage, no drug “donut hole”, no pre-existing conditions, no deductibles and co-pays except for extended skilled level nursing.

      Other benefits are aid for unemployment compensation and Social Security with reinstated cost of living increases.

    5. Jim, Wisconsin says:

      Please correct me if I'm wrong, but there are several flaws in the Social Security issues currently being argued.

      1. Social Security is an entitlement program. False – Social Security was set up as a trust fund, and is funded by it's own separate payroll tax (FICA), over and above the "normal" taxes that are taken out of a paycheck. The administrators of this trust fund have violated their duty by allowing the government to "borrow" approximately 2.4 trillion dollars, and not having paid it back.

      2. Social security spending will be rising dramatically thereby necessitating cuts to maintain current levels of spending.- All data that I have seen thus far seems to indicate that outgo of Social Security funds will rise at a fairly consistent rate, matching the increase in the number of people who become eligible for this benefit.

      3. Medicare and Medicaid are true entitlement programs. They are funded by the government from the general tax funds, which are subject to the discretion of both Congress and the president.

      Finally, some of the lies that we have been told about Obamacare have come to light in just the everyday news, such as companies like McDonalds may have to drop the insurance coverage that they now have because proposed rate increases will drive the cost above what both the employer and employees can afford. Simple math shows that someone who is making minimum wage can't afford to pay 20% to 30% of their check for minimum coverage with high deductibles. Even those of us who were covered under plans that we liked or could get along with are finding that they are either no longer available or they've upped the rates so high that they are no longer affordable.

    6. W.P.Koch, San LuIs O says:

      Since I have contributed to the FICA payrol tax, I call this an invested entitlement. Citizens come first. As detailed in " What Should Happen" cutting and re-allocating elements of the U.S. budget will eventually assure funding for citizen's Healthcare.

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