Sen. Sessions – ObamaCare adds $17 trillion, or 1.9% of GDP, to nation’s unfunded liabilities

posted at 4:45 pm on April 1, 2012 by Steve Eggleston

On Thursday, Sen. Jeff Sessions (R-AL), the ranking member of the Senate Budget Committee, stated on the Senate floor that not only will ObamaCare cost $2.6 trillion in its first 10 years of full implementation, but that it will add $17 trillion to the nation’s long-term unfunded liabilities.

Before I continue, I do have to explain the concept of “present value”. Except for the $2.6 trillion 10-year value, the list of figures Sen. Sessions gives are in that concept. It is one of a few common measures of long-term finances, specifically one designed to measure what is required today to avoid (excepting earned interest, which in this case appears to be assumed to be roughly 3.25%) any future draw on financing over, in the case of the federal government’s usage of the term, the next 75 years. Usually when it is invoked by the federal government, the value of legislated, but unfunded, claims on general-fund revenue, such as those contained in the Hospital Insurance “Trust Fund” and legislated mandates to fully-fund Medicare Parts B and D regardless of whether their dedicated funding sources are sufficient, are not included in that calculation. However, the Medicare Trustees include that, as well as the $2.5 trillion in Social Security “Trust Funds”, in their unfunded liability calculations from the “budget perspective”, and on the health-care side, so did Sen. Sessions.

Quoting from the video above:

President Obama told the American people that his health law would cost $900 billion over ten years and that it would not add ‘one dime’ to the debt.

But we have shown the cost for ten years of implementation is actually $2.6 trillion—almost three times as much. In addition, the offsets used to reduce the law’s official cost were enormous and phony, as I have discussed before, and will detail at another time. The more we learn about the bill, the more we discover that it’s even more unaffordable than was suspected.

So, over a period of about three months, our staff worked to estimate the new unfunded liability imposed by the health law. This is not the total cost of the bill, but the unfunded, mandatory coverage obligations incurred by the United States government on behalf of the United States people over a period of time. An unfunded obligation is basically the amount of money we have to spend on a mandatory expense that does not have a funding source—money we don’t have but that we are committed to spend. It is this kind of long-term, unfunded obligation that has placed this nation’s financial situation at such great risk. It is what has called witness after witness before the Budget Committee, where I serve as Ranking Member, to tell us that we are on an unsustainable path. That means money we will either have to print, borrow, or tax to meet the obligations we have incurred as a people as a result of the passage of this bill. For instance, Social Security has an unfunded liability of $7 trillion over the next 75 years. That’s an enormous sum. It’s double the entire amount of the United States budget today.
My staff used the models that are used by the Centers for Medicare and Medicaid Services and worked diligently to come up with a figure. That figure—based on the administration’s own optimistic assumptions and claims about the cost of the law—is an incredible $17 trillion. That is more than twice the unfunded liability of Social Security.

When you include the new health law with our existing obligations like Social Security, Medicare and Medicaid—we now have $99.4 trillion in total unfunded obligations over 75 years….

Let me briefly explain some of what now comprises this additional $17 trillion in unfunded obligations.

$12 trillion is for the health care law’s premium subsidy program. You see, the law created new regulations that drive up the price of insurance for millions of Americans. The writers of the law knew it would inflate the cost of insurance premiums, so to cover that cost they had to include new government subsidies so people could pay for their more expensive insurance.

On Medicaid, this new health care law has added another $5 trillion in unfunded liabilities. This is on top of the substantial unfunded obligations that the federal and state governments have already had to take on in order to support Medicaid, and they have vigorously protested to us, warning of these deep, additional expenditure requirements that are falling on the states.

Obviously, we cannot “pre-fund” those future liabilities as they are far greater than our ability to pay now, Indeed, as we are discovering with the Social Security and Medicare Hospital Insurance “Trust Funds”, even the fiction of “pre-funding” through the “Trust Funds” is being blown up as the federal government is and will be forced to come up with far more than the current face value of said “Funds”.

There is a second measure of future liabilities discussed by both the Medicare Trustees and Social Security Trustees, what percentage of cumulative GDP over the next 75 years is required to cover the shortfall. That is useful for estimating what it would take to fund an unfunded liability in the future. The Social Security Trustees put the “present value” of the cumulative GDP between 2011 and 2085 at $873.7 trillion. Dividing the $17 trillion (present value) in unfunded liabilities into that $873.7 trillion (again present value) means that implementing ObamaCare will cost us an additional 1.94% of the entire economy over the next 73 years and some months.

When one extends that math to the rest of the liabilities, which if one applies the broader “budget perspective” to the remainder is over $102 trillion in present value, nearly 11.7% of the entire GDP will be going to cover the unfunded obligations of the welfare state. As Sen. Sessions said, that is not the entire cost, but just the portion that won’t be covered by the revenues already dedicated to them. Considering the historical post-World War II average federal revenues are roughly 18-19% of GDP, I’ll let you guess as to whether tax increases could possibly cover this unfunded spending.

EDIT: Steve – Figures in last paragraph corrected

To put that in another perspective, the Social Security Trustees estimate that the nominal (not adjusted for inflation) cumulative GDP will be $9.603 quadrillion dollars, or if you prefer, $9,603 trillion. 11.7% of that, the unfunded liability discussed above, is $1.124 quadrillion (or $1,124 trillion). That, if the mother of all tax increases is not imposed, will be a part of the public debt. By comparision, the nominal value of GDP in 2085 will be only $435 trillion. Even before any of the other deficit spending, or the current debt, is considered, that means publicly-held debt would be 258% of GDP by 2085 exclusively because of the unfunded liabilities.


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On Thursday, Sen. Jeff Sessions (R-AL), the ranking member of the Senate Budget Committee, stated on the Senate floor that not only will ObamaCare cost $2.6 trillion in its first 10 years of full implementation, but that it will add $17 trillion to the nation’s long-term unfunded liabilities.

The support for OCare is by those who disregard the costs/debt involved to others, and the depreciation of medical care that they along with others are soon to experience, if not already. The simple fact that they may be “insured” but they won’t be receiving any CARE is beyond their radar, just as the costs involved for what they and others aren’t receiving yet are to pay for.

Lourdes on April 1, 2012 at 4:47 PM

Oh, BISHOP!

Lourdes on April 1, 2012 at 4:47 PM

cool that we have some new writers. this guy and some other posts have been names other than AP, ed, and tina. are we going to have drinks somewhere so people can introduce themselves? maybe AP is trying to bring some non-believers in on his side…

Steven McGregor on April 1, 2012 at 4:51 PM

Don’t call it ObamaCare.

He doesn’t care, at all.

Call it The Affordable Care Act.

Then, mock the affordable and the care parts, unitl it dies.

Schadenfreude on April 1, 2012 at 4:55 PM

even the fiction of “pre-funding” through the “Trust Funds” is being blown up

Yeah, funny how the government always UNDERESTIMATES future payments. The 1999 Medicare cost estimate (made in 1965) was only off by 400%!

GarandFan on April 1, 2012 at 4:55 PM

Not one dime!

Paging crr6, crr6 to the white courtesy phone.

D-fusit on April 1, 2012 at 4:56 PM

cumulative GDP will be $9.603 quadrillion dollars, or if you prefer, $9,603 billion.

Umm, 9.603 quad would be 9,603,000 billion.

James Moriarty on April 1, 2012 at 4:57 PM

Not one dime!

Paging crr6, crr6 to the white courtesy phone.

D-fusit on April 1, 2012 at 4:56 PM

Racist.

turfmann on April 1, 2012 at 5:02 PM

turfmann on April 1, 2012 at 5:02 PM

luv it.

D-fusit on April 1, 2012 at 5:04 PM

“We have to pass the bill to find out what is in it.”

bw222 on April 1, 2012 at 5:07 PM

Unexpectedly.

(Unless, of course, you read the bill)

talkingpoints on April 1, 2012 at 5:07 PM

$1.124 quadrillion (or $1,124 billion).

Or maybe even $1,124 trillion.

1,000 x 1,000 = 1,000,000 = 1 million
1,000 x 1,000,000 = 1,000,000,000 = 1 billion
1,000 x 1,000,000,000 = 1,000,000,000,000 = 1 trillion
1,000 x 1,000,000,000,000 = 1,000,000,000,000,000 = 1 quadrillion

mr.blacksheep on April 1, 2012 at 5:08 PM

I always wondered how the government was going to fund all those retiring baby boomers. Now I know. They’re not.

HiJack on April 1, 2012 at 5:12 PM

Thank you President Obama!

CW on April 1, 2012 at 5:14 PM

Math is hard, and that’s the GOP’s fault.

- Obama Administration

Good Lt on April 1, 2012 at 5:15 PM

Too much math… Just keep hammering away at OBAMAcare… against EVERY DIMOCRAT that voted for it…

Khun Joe on April 1, 2012 at 5:16 PM

Don’t be so gullible.

It’s massive tax hikes AND a massive debt increase.

There is NO way our government isn’t going to spend every single dime on bullsh+t instead of where it was intended to go.

That’s the progressive way, dem or repub, doesn’t matter.

Wolfmoon on April 1, 2012 at 5:20 PM

Sadly, NOT an April Fools joke…

Wolftech on April 1, 2012 at 5:22 PM

There’s something badly wrong with the headline. Assuming an average GDP of $15T per year, that means the $17T cost of Obamacare over 10 years is, at a minimum, about 10% of GDP — not 1.9%.

Am I missing something here?

unclesmrgol on April 1, 2012 at 5:22 PM

I linked a post from the Daily Caller on Fri with this same info to a lib who used to be a political columnist. His response–demonize Tucker Carlson. When his drivel stopped, I asked “What evidence do you have that Sen. Sessions info is incorrect?”

You guessed it, I have yet to get a reply. Once again, challenge them to the facts and they scatter.

hillsoftx on April 1, 2012 at 5:25 PM

Thank you President Obama!

CW on April 1, 2012 at 5:14 PM

Your forgetting some other honorable mentions.

bazil9 on April 1, 2012 at 5:25 PM

The cost (absurdly high) is secondary to the freedom they can take away from us with this legal marxist pit-bull.

Money can grow, jobs can grow, debt can be paid down-but freedom, in the crushing hands of these anti-freedom Marxists will never return.

Don L on April 1, 2012 at 5:25 PM

Don’t call it ObamaCare.

He doesn’t care, at all.

Call it The Affordable Care Act.

Then, mock the affordable and the care parts, unitl it dies.

Schadenfreude on April 1, 2012 at 4:55 PM

Good one. I still say Omamacare so everyone remember who owns this pile of dung.

bazil9 on April 1, 2012 at 5:27 PM

cool that we have some new writers. this guy and some other posts have been names other than AP, ed, and tina. are we going to have drinks somewhere so people can introduce themselves? maybe AP is trying to bring some non-believers in on his side…

Steven McGregor on April 1, 2012 at 4:51 PM

Thanks. While Ed’s on vacation, the crew brought in 4 people, including me, to fill in.

I’m game for a get-together, at least as long as it’s driving distance from Milwaukee, and not on a Sunday morning.

Steve Eggleston on April 1, 2012 at 5:28 PM

Notice how the trolls don’t defend this.

Schadenfreude on April 1, 2012 at 5:28 PM

Maybe he’s making a good point, but man that guy is just painful to listen to.

lowandslow on April 1, 2012 at 5:30 PM

A trillion here, a trillion there……oh nevermind. Who the hell cares any more?

bgibbs1000 on April 1, 2012 at 5:31 PM

paging lib4life, DBear…come out and play.

bazil9 on April 1, 2012 at 5:33 PM

That figure—based on the administration’s own optimistic assumptions and claims about the cost of the law—is an incredible $17 trillion.

So, the real number is what? $35, 40 trillion?

imasoulman on April 1, 2012 at 5:36 PM

Of course the foreigners willing to hold this debt, which clearly will never be paid, will not exist. Other countries appalled by what America is doing are moving to limit their exposure now. Should Obama be re-elected, there’ll be a big flight to safer investments.

In other words, what can’t continue won’t continue.

David Blue on April 1, 2012 at 5:37 PM

Am I missing something here?

unclesmrgol on April 1, 2012 at 5:22 PM

I tried to make that part of the math clear. Let me try again. First, the full 10-year cost of ObamaCare, as stated above is $2.6 trillion in nominal (i.e. each year’s value, fully-affected by inflation) dollars.

The $17 trillion represents the present value of the 75-year shortfall in ObamaCare, and a small part of the $103 trillion of the present value of the overall unfunded obligations of the welfare state. The Social Security trustees say that the present value of the 75-year cumulative GDP is $873.7 trillion. $873.7 trillion divided by $17 trillion is 1.94% of GDP over the next 75 years.

Steve Eggleston on April 1, 2012 at 5:38 PM

That’s the progressive way, dem or repub, doesn’t matter.

Wolfmoon on April 1, 2012 at 5:20 PM

Exactly. They all own this. They’ve betrayed the trust of the American people.

Is there anyone out there who has the will to do what is right?

davidk on April 1, 2012 at 5:40 PM

I live the way Democrats are still so supportive of this!

Oh, wait…

Roy Rogers on April 1, 2012 at 5:40 PM

Thank you President Obama!

CW on April 1, 2012 at 5:14 PM

Don’t forget the other “Cavalcade of Stars” that helped make it possible…

…In short the entire Democratic Leadership of 2008-2010…and the “moderates” that helped put these turkeys into office.

Hope n Change, my tush…:spit:

BlaxPac on April 1, 2012 at 5:45 PM

there’ll be a big flight to safer investments.

David Blue on April 1, 2012 at 5:37 PM

There is about $3 trillion dollars right now held in abeyance because the holders of that money are waiting to see how the elections go and if, should the repubs gain total control, a more stable and business friendly environment develops.

Companies, banks, and off-shore accounts hold about a third each.

davidk on April 1, 2012 at 5:46 PM

Real America says “we told you so”.

Chuck Schick on April 1, 2012 at 5:46 PM

mr.blacksheep on April 1, 2012 at 5:08 PM

D’OH. Correction should be up shortly.

This is why we have eagle-eyed readers as copy editors.

Steve Eggleston on April 1, 2012 at 5:46 PM

Notice how the trolls don’t defend this.

Schadenfreude on April 1, 2012 at 5:28 PM

SOP. Either denial or embarrassment. Or, could just be cowardice.

a capella on April 1, 2012 at 5:47 PM

My head’s about to explode. How about a simple analogy for us simpletons.
Bottomline: WE’RE F*$@KED!

racquetballer on April 1, 2012 at 5:50 PM

The cost (absurdly high) is secondary to the freedom they can take away from us with this legal marxist pit-bull.

Money can grow, jobs can grow, debt can be paid down-but freedom, in the crushing hands of these anti-freedom Marxists will never return.

Don L on April 1, 2012 at 5:25 PM

Well-noted, though not even this much money can grow. There have been 5 times since the end of World War II that the federal tax take approached or exceeded 20% of GDP. Each time, the economy went into a recession until that percentage dropped back below the long-term 18%.

Steve Eggleston on April 1, 2012 at 5:51 PM

I just dont understand why Obama and his Marxist cohorts get to lie, plot and deceive to destroy the USA with impunity just because he “won” an election? So he’s not POTUS he’s KOTUS?

And after seeing the left in action these last two week and realizing all the drama has been an attempt to start a race war between blacks and hispanics to which everyone else will get dragged into…I say…Give me Liberty or Give me death…

CCRWM on April 1, 2012 at 5:52 PM

CCRWM on April 1, 2012 at 5:52 PM

The media has been quite helpful in the items you listed. And sooooo many more.

bazil9 on April 1, 2012 at 5:56 PM

My head’s about to explode. How about a simple analogy for us simpletons.
Bottomline: WE’RE F*$@KED!

racquetballer on April 1, 2012 at 5:50 PM

I’d say you got it.

Steve Eggleston on April 1, 2012 at 5:56 PM

OT, but coming to America, as soon as leftie get a hold of the idea.

Schadenfreude on April 1, 2012 at 5:59 PM

:Sigh:

I say we cut our loses and sell California to China in exchange to forgive our debt…

Besides, we’ll have 56 States left to tax the ever-loving shyte out of!

BlaxPac on April 1, 2012 at 6:00 PM

Exactly. They all own this. They’ve betrayed the trust of the American people.

Is there anyone out there who has the will to do what is right?

davidk on April 1, 2012 at 5:40 PM

The democratics never will, because a significant portion of them accept and even welcome the end. They see it as an opportunity to completely redesign the American politics and economic system from the ground up.

The conservative Republicans can fix the system today, but they will be blocked by the RINOs and all the democratics. The day will come however when even they will not be able to make the fix, because the solution will be so painful, and so drastic, that they won’t do it. The reaction in the population would be as extreme as letting it fail. So they will let it fail too.

The democratics’ mission is to hold off Republicans until they reach that point. Then they make the offer, -our way or chaos, choose one.

slickwillie2001 on April 1, 2012 at 6:02 PM

James Moriarty on April 1, 2012 at 4:57 PM

Corrected now. I hate it when I set up a post late-night, like I did last night, and fail to proof-read fully.

Steve Eggleston on April 1, 2012 at 6:05 PM

Thanks, ORomney. You showed the way…

SDN on April 1, 2012 at 6:15 PM

The democratics never will, because a significant portion of them accept and even welcome the end. They see it as an opportunity to completely redesign the American politics and economic system from the ground up.

The conservative Republicans can fix the system today, but they will be blocked by the RINOs and all the democratics. The day will come however when even they will not be able to make the fix, because the solution will be so painful, and so drastic, that they won’t do it. The reaction in the population would be as extreme as letting it fail. So they will let it fail too.

The democratics’ mission is to hold off Republicans until they reach that point. Then they make the offer, -our way or chaos, choose one.

slickwillie2001 on April 1, 2012 at 6:02 PM

If by “fix”, you mean “orderly winddown”, you’re correct. We simply can’t afford a welfare state, even a “small” one.

As for the Dems’ vision, it’s not quite a “our way or chaos” choice; as we’re seeing in Europe, chaos is part and parcel of either branch of that path.

Steve Eggleston on April 1, 2012 at 6:45 PM

Like many others I’m hardly surprised at all at the amount of catastrophic debt Obamacare would lead to – IMO this was Obama’s intent. The idea is to bring down this capitalistic country as the only way to eventually build on its ruins a Marxist-socialist state, and it seems a lot of people are willing to go along. This is why he and his ilk don’t really seem to care about US debt or future inflation.

Chessplayer on April 1, 2012 at 7:05 PM

And our solution to this is to accept the nomination of the GRANDFATHER of this monstrosity??? Not sure what plant that works on, but it ain’t this one!

michaelo on April 1, 2012 at 7:34 PM

It had the same effect in Massachusetts. Who’d have thunk it?
Yay Mittens!

james23 on April 1, 2012 at 7:41 PM

Can anyone suggest a reason why Sen. Sessions should not be running this country?

BobMbx on April 1, 2012 at 7:42 PM

Rumor has it that Obama was really good at SimCity, and is having difficulty making the change to “Survivor: The Presidency”.

Unnamed sources say he’s constantly frustrated that he can’t reload a saved game.

BobMbx on April 1, 2012 at 7:50 PM

And our solution to this is to accept the nomination of the GRANDFATHER of this monstrosity??? Not sure what plant that works on, but it ain’t this one!

michaelo on April 1, 2012 at 7:34 PM

Assuming you meant “planet” (BTW, don’t sweat the typos; at least you didn’t have them in an actual post), maybe Earth-616 is where that plan would work.

As for “plants”, I think the Hillary Audience Plants (2008 vintage) respond well to that.

Steve Eggleston on April 1, 2012 at 7:58 PM

Just in case SCOTUS needs another reason to invalidate all of Obamacare…

Ukiah on April 1, 2012 at 8:21 PM

xRumor has it that Obama was really good at SimCity, and is having difficulty making the change to “Survivor: The Presidency”.

Unnamed sources say he’s constantly frustrated that he can’t reload a saved game.

BobMbx on April 1, 2012 at 7:50 PM

Naah. Checkers is his game, and I hear Valerie beats his butt every day.

slickwillie2001 on April 1, 2012 at 8:29 PM

It’s just money!

KOOLAID2 on April 1, 2012 at 9:46 PM

To explain it to one’s simpleton friends (read:liberal), its like saying :

Imagine you owe $15,600 on your credit card. Your spouse comes home with a purchase for another $17,000 on the same card. Neither one of you is earning any more money. You can’t afford the original $15,600. In fact, for every $1 you earn, your spouse spends $1.90

Check my math. Am I right?

kurtzz3 on April 1, 2012 at 10:02 PM

(actually, the last part is not right, but the first part is)

kurtzz3 on April 1, 2012 at 10:05 PM

Sounds like a boatload of money to me.

Kissmygrits on April 2, 2012 at 10:05 AM