Deficit commission: ObamaCare savings are a myth
posted at 10:55 am on December 2, 2010 by Ed Morrissey
AOL Opinons editor John Merline notes that the deficit commission titled its proposal “The Moment of Truth,” and perhaps rarely for a government effort, it actually delivers on its advertising. The report exposes six truths about the federal government and its spending addiction. Perhaps even more importantly, it exposes a couple of key myths about the Obama administration and its agenda:
2) Health reform’s cost savings apparently were bogus. Remember how Democrats boasted that health reform would cut the budget deficit by $170 billion over the next decade and far more after that? The deficit commission must not have gotten that memo. It says health spending projections under the new law “count on large phantom savings” and the reform law’s new long-term care program that the report calls “unsustainable.” As a result, Congress will still need to enact “a number of other reforms to reduce federal health spending and slow the growth of health care costs more broadly.” …
5) Obama is a big spender. Although President Barack Obama has talked about fiscal discipline — and set up this deficit commission — his own budget plan would spend $350 billion more on so-called discretionary programs over the next decade than if the government were just left on autopilot, according to the report.
My goodness — does this mean that Obama isn’t really a “Blue Dog Democrat“? Perhaps the media might also notice that the deficit explosion coincided with the FY2009 budget that Obama helped delay as a member of the Senate and signed as an omnibus in March 2009 as President, too. It would be nice to see the “I inherited this deficit” myth exploded as well.
The supposed cost savings in ObamaCare have been repeatedly exposed as mythical, even during the debate prior to its passage. The “doc fix” that amended the reimbursement rates settled that question, but even apart from that, the assumptions built into the plan were always based on the rosiest perfect-world scenarios. We have already seen private-sector employers act to dump retirees out of prescription coverage in far larger numbers than pre-passage estimates, which will create heavier burdens on Medicare. Employers will also eventually stop buying health insurance altogether — especially if Congress adopts the debt commission’s proposal to end the tax exemption on that compensation. Employees will demand that compensation in cash rather than taxable health subsidies in order to take advantage of the tax-financed subsidies in the health exchanges mandated by ObamaCare. Expect the system to spiral into the deep end of the red-ink pool when that happens.
Merline also notes that the recommendations from the panel are not really all that tough on anyone, which demonstrates just how easy it has been all along to achieve deficit and debt reduction. It’s actually even easier than he thinks, as Nick Gillespie explains in his PG-13 response to Fareed Zakaria’s demand to hike taxes:
It’s a simple, plain, and nearly universally unacknowledged fact that the feds haven’t been able to raise revenue much past the 19 percent of GDP bar for any period of time since World War II. Doesn’t matter the the top marginal rate is, or the bottom, or nothing. The government is going to pull in just under 19 percent maximum. Some years it might be a bit higher and some a bit lower, but it ain’t budging over the long haul (defined as the last 60 or so years). That is the limit of what we can spend if we want to have a balanced budget. Obama’s own budget projections have the feds spending more than 22 percent of GDP each year over the next decade. You do the math. …
We are in debt because we spend too much, not because we make too little as a country. Let’s say it again, this time in bold: We are in debt because we spend too much, not because we make too little as a country.
Fareed Zakaria, who surely makes well north of $250,000 a year, is welcome to give all his income to a government that has only managed a nominally balanced budget a handful of times since we beat the Axis powers.
But can he have the generosity not to include the rest of us who make far south of a quarter-mil a year in his delusion that higher taxes will mean smaller deficits?
We need a government that can operate within its means. A level of 19% of GDP is actually rather generous; that’s one dollar out of every five earned by Americans. A flat-rate tax system could guarantee that level of funding and no more, and would force Congress to do what every household must on a daily basis: prioritize and spend wisely. It would also then highlight the real problem in federal deficits, which isn’t revenue at all but runaway spending.