budget deficit

ObamaCare’s Enormous Cost Is Hidden by Dishonest Gimmicks, Says New York Times Columnist Who Supported Obama in 2008

by Hans Bader on March 14, 2010 · 6 comments

in Health and Illness, Healthcare, Insurance, Politics as Usual, Precaution & Risk, Regulation, Sanctimony

New York Times columnist David Brooks, like other columnists at that staunchly liberal newspaper, supported Obama in the 2008 election. But even he can now see that Obama’s health care plan is full of dishonest gimmicks that hide its enormous cost and the fact that it will drive up the deficit and health-care costs:

They’ve stuffed the legislation with gimmicks and dodges designed to get a good score from the Congressional Budget Office but don’t genuinely control runaway spending.

There is the doc fix dodge. The legislation pretends that Congress is about to cut Medicare reimbursements by 21 percent. Everyone knows that will never happen, so over the next decade actual spending will be $300 billion higher than paper projections.

There is the long-term care dodge. The bill creates a $72 billion trust fund to pay for a new long-term care program. The sponsors count that money as cost-saving, even though it will eventually be paid back out when the program comes on line.

There is the subsidy dodge. Workers making $60,000 and in the health exchanges would receive $4,500 more in subsidies in 2016 than workers making $60,000 and not in the exchanges. There is no way future Congresses will allow that disparity to persist. Soon, everybody will get the subsidy.

There is the excise tax dodge. The primary cost-control mechanism and long-term revenue source for the program is the tax on high-cost plans. But Democrats aren’t willing to levy this tax for eight years. The fiscal sustainability of the whole bill rests on the naïve hope that a future Congress will have the guts to accept a trillion-dollar tax when the current Congress wouldn’t accept an increase of a few billion.

There is the 10-6 dodge. One of the reasons the bill appears deficit-neutral in the first decade is that it begins collecting revenue right away but doesn’t have to pay for most benefits until 2014. That’s 10 years of revenues to pay for 6 years of benefits, something unlikely to happen again unless the country agrees to go without health care for four years every decade.

There is the Social Security dodge. The bill uses $52 billion in higher Social Security taxes to pay for health care expansion. But if Social Security taxes pay for health care, what pays for Social Security?

Earlier, health care cost expert James C. Capretta explained how “Obamacare Is A Budgetary Disaster” that will cost at least $1.4 trillion more than promised.

The Congressional Budget Office, which refused to question Obama’s gimmicks to lowball the cost of his health care plan, nevertheless admits that “President Obama’s policies would add more than $9.7 trillion to the national debt over the next decade.”

There are $3,000,000,000,000 in tax increases in Obama’s budget.  But he’s spending money at such a furious pace that the deficit will skyrocket anyway: “The president’s budget would borrow 42 cents for each dollar spent in 2010,” and “double the national debt over the next decade.”

Obama’s healthcare plan will further increase deficits, as even Democrats have admitted.   ObamaCare would reduce medical innovation, raise taxes, drive up insurance premiums, break campaign promises, and increase state deficits.  It  would cut the quality of  care, while imposing restrictions that failed when tried at the state level.  It ignores advice from experts about how to cut costs.

Obama recently ran up the largest budget deficit in history, by a huge margin.

$3,000,000,000,000 in Tax Increases in President Obama’s Budget

by Hans Bader on March 13, 2010 · 1 comment

in Deregulate to Stimulate, Economy, Employment, Health and Illness, Healthcare, Insurance, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

The president’s proposed budget raises taxes by three trillion dollars over the next ten years, notes Washington fiscal analyst Brian Riedl in the Wall Street Journal.  Yet, in spite of that, “The president’s budget would borrow 42 cents for each dollar spent in 2010,” and “double the national debt over the next decade.”

The Obama administration recently ran up the largest budget deficit in history — so big that the monthly deficit was much bigger than George Bush’s entire annual deficit in 2007.

The president wants a new $267 billion stimulus package, on top of the $800 billion one that passed earlier.  Obama claimed the stimulus package was needed to avert “irreversible decline.” But the Congressional Budget Office concluded that the stimulus package will actually cut the size of the economy in the long run.

Unemployment has skyrocketed past European levels, as big-spending countries have fared worse than thrifty ones.  As the Examiner notes, “If his stimulus program was approved, Obama promised, unemployment would not go above 8 percent this year. The reality is that it passed 10.3 percent.”

The stimulus package destroyed thousands of real world jobs in America’s export sector.  Meanwhile, the administration claimed credit for creating thousands of imaginary jobs in non-existent congressional districts.  The stimulus is full of wasteful spending.

“President Obama’s policies would add more than $9.7 trillion to the national debt,” the Congressional Budget Office said.   That’s roughly fifteen times the cost of the Iraq and Afghanistan Wars combined.

The president’s health care proposals will add still more to the national debt, through budget gimmicks.  Even Democrats have expressed alarm about their unaffordable cost.   Their true cost, experts say, is at least $2.3 trillion, dramatically increasing the budget deficit.   ObamaCare would reduce medical innovation, raise taxes, drive up insurance premiums, break campaign promises, and increase state deficits.  It  would cut the quality of  care, while imposing restrictions that failed when tried at the state level.  It ignores advice from experts about how to cut costs.

In the 2008 campaign, Obama promised a “net spending cut,” but as soon as he was elected, he proposed massive spending increases.

Obama Runs Up Largest Budget Deficit in American History; Monthly Deficit Alone Exceeds Entire Annual Deficit for 2007 Under Bush

by Hans Bader on March 11, 2010

in Bailout Watch, Economy, Health and Illness, Healthcare, Insurance, Politics as Usual, Precaution & Risk, Regulation, Sanctimony

“The Obama Administration has run up the largest budget deficit in American history in February of 2010, a whopping total of $220.9 Billion in just one month.   February 2010’s unprecedented total is more than most year-long budget deficits in American history,  including 2007’s year-long total of $161 Billion.”

“President Obama’s policies would add more than $9.7 trillion to the national debt,” the Congressional Budget Office said.   That’s roughly fifteen times the cost of the Iraq and Afghanistan Wars combined.

The president’s healthcare proposals will add still more to the national debt, which he is attempting to conceal through budget gimmicks.  Even Democrats have expressed alarm about their unaffordable cost.   The true cost of his healthcare plan, experts say, is at least $2.3 trillion, dramatically increasing the budget deficit.   ObamaCare would reduce medical innovation, raise taxes, drive up insurance premiums, break campaign promises, and increase state deficits.  It  would cut the quality of  care, while imposing restrictions that failed when tried at the state level.  It ignores advice from experts about how to cut costs.

In the 2008 campaign, Obama promised a “net spending cut,” but as soon as he was elected, he proposed massive spending increases.

Economists and real estate experts say that a mortgage bailout program the Obama administration spent $75 billion on has backfired and harmed the real estate market.

The Washington Post today reports that the administration has no plans to reform Fannie Mae and Freddie Mac.  Those mortgage giants are receiving huge bailouts (more than $125 billion and rapidly rising) to enable them to carry out Obama’s policy of giving billions of dollars in handouts to deadbeat mortgage borrowers, some of whom have high incomes, and lived beyond their means.

Regulation of the Day 118: Unlicensed Dogs

by Ryan Young on February 24, 2010

in Regulation, Regulation of the Day

In Los Angeles, it is illegal to own a dog without a license. The city government employees eight people whose full-time job is to make sure that people are complying. But they aren’t doing a very good job of it; roughly two thirds of Los Angeles’ dog population is unlicensed.

This epidemic of unlicensed dogs is easily the most pressing issue facing America’s second-largest city. Packs of wild, unlicensed dogs roam the streets at night. People are scared to go out after dark. An entire city huddles in fear.

Or not. Maybe unlicensed dogs don’t really matter. Most places do just fine without dog licensing regulations. So why is the city government clamping down on enforcement all of a sudden?

The answer is simple: money. LA is looking at a $400 million budget deficit this year. At $15 per license, the city estimates it will make $3.6 million from full compliance. Hopefully it will spend somewhat less than that getting there.

Los Angeles is hardly the only city having revenue troubles. One wonders what other obscure regulations are being used for money grabs across the country.

Against a Value Added Tax

by Ryan Young on November 17, 2009

in Deregulate to Stimulate, Economy

Over at Investor’s Business Daily, Wayne Crews and I make the case against a Value Added Tax. Policy makers have been flirting with the idea as a way to reduce the $1,400,000,000,000 budget deficit.

We argue that a VAT is:

-Complex; it would require roughly doubling the size of the IRS.

-Untransparent; most VATs don’t show up on receipts the way sales taxes do. Taxpayers are clueless as to how much tax they actually pay.

-Vulnerable to special-interest tinkering; politically incorrect goods are routinely penalized with higher rates. Politically favored goods are granted exemptions.

-Prone to increases; 20 out of 29 OECD countries with a VAT have increased their rates since implementing a VAT.

A point we didn’t make is that VATs affect industrial organization. VATs are applied at each stage of the production process. That gives companies an incentive to reduce the number of taxable steps. That means more vertical integration than would otherwise occur. This can decrease the efficiency of the manufacturing process. Which means higher prices and fewer goods. Plus the tax.

Obama One Year Later — A Legacy of Lies and Broken Promises

by Hans Bader on November 3, 2009

in Agriculture, Economy, Energy, Environment, Ethanol, Global Warming, Healthcare, Insurance, International, Legal, Natural Resources, Personal Liberty, Politics as Usual, Precaution & Risk, Sanctimony, Stimulus to Nowhere, Trade

It’s been a year since the president was elected, and he’s already piled up an impressive list of lies and broken promises.

The broken promises include his pledge to enact a “net spending cut,” his promise not to raise taxes on anyone making less than $250,000 a year, and his promise not to sign bills without first giving the public five days of notice.

The Congressional Budget Office says that Obama’s proposed budgets will explode the national debt through massive spending increases, increasing the already large deficits left behind by the Bush administration from $4.4 trillion to $9.3 trillion. His record-setting budgets flagrantly violate his promise to propose a “net spending cut.”

Obama broke his campaign promise not to raise taxes on anyone making less than $250,000 a year by signing into law a regressive excise tax increase to expand the SCHIP program, and by proposing a cap-and-trade energy tax that could charge up to $2 trillion, a massive cost that Obama himself has said will be passed “on to consumers,” as well as homeowners and motorists. (In 2008, Obama privately admitted to the San Francisco Chronicle that if he was elected, electricity bills would “skyrocket” under his administration, but it didn’t report that.)

He also broke his promise not to raise taxes by backing health-care bills that would impose a laundry list of new taxes on the middle class, including a tax on uninsured people.  Americans for Tax Reform earlier summarized the tax increases in ObamaCare: an individual mandate tax of $900 per individual or $3800 per family (if you don’t have health insurance); an employer mandate tax of $400 per employee if health coverage is not offered; an “excise tax on high-cost health plans”; a “medicine cabinet tax”; capping Flexible-Spending Accounts (FSA’s); abolishing most HSAs; and increasing tax penalties for HSAs.

The costly cap-and-trade energy bill supported by Obama would lead to big tax increases, administration officials privately have conceded, even though they publicly claim otherwise.  “Officials at the Treasury Department think cap-and-trade legislation would cost taxpayers hundreds of billion in taxes, according to internal documents circulated within the agency and provided to The Washington Times” by CEI.  It could raise household taxes by $1761 per year, equivalent to a 15 percent tax increase.   It would also result in “loss of steel, paper, aluminum, chemical, and cement manufacturing jobs.”  (Obama earlier admitted that “under my plan of a cap and trade system, electricity rates would necessarily skyrocket.”)

Although cap-and-trade backers claim it will cut greenhouse gas emissions, it may perversely increase them and also result in dirtier air, as well as harming forests and water supplies.   It would enrich politically-connected corporations, and result in massive destruction of the world’s forests.   By expanding ethanol subsidies and mandates, it would cause enormous “damage to water supplies, soil health and air quality.” Ethanol subsidies have already resulted in forests being destroyed in the Third World, and by diverting cropland to fuel production away from food production, they have already caused famines that have killed countless people in the world’s poorest countries.

Over and over again, Obama has broken his campaign promise to give the public five days of notice before signing bills into law, including his very first law, the trial-lawyer backed Lilly Ledbetter Fair Pay Act. Obama also repeatedly made false claims about the Supreme Court decision that the Ledbetter law overruled, misstating the facts of that case and how long it gives employees to sue over pay discrimination (the Court did NOT say that employees have to sue even before discovering discrimination).

Obama broke seven campaign promises dealing with transparency and clean government in signing the $800 billion stimulus package, much of whose contents were secret until shortly before Congress voted on it, and whose 1400 pages went unread by most Congressmen who voted on it.  (It repealed welfare reform and contained loads of welfare, pork, and waste, while wiping out jobs in the export sector.)

Obama’s broken promises are part of a larger pattern of dishonesty. Obama claimed his $800 billion stimulus package was needed to avert “irreversible decline.” But the Congressional Budget Office concluded before and after its passage that the stimulus package will actually cut the size of the economy in the long run. Obama’s budgets don’t add up, either, piling up $9.3 trillion in red ink, according to the Congressional Budget Office, a staggering $2.3 trillion more than Obama claimed.

“Public Option” Is a Gimmick That Won’t Improve Healthcare

by Hans Bader on October 26, 2009 · 1 comment

in Deregulate to Stimulate, Economy, Health and Illness, Healthcare, Insurance, Politics as Usual, Precaution & Risk, Sanctimony

In the Washington Post, Robert J. Samuelson explains in the “Public Plan Mirage” how the so-called “public option” contained in congressional health-care reform bills is just a gimmick: “It pretends to control costs and improve access to quality care when it doesn’t.” Steve Chapman wrote earlier about the “‘Public Option’ Health Care Scam.”

In other news, a study by PriceWaterhouseCoopers found that the provisions in the Senate health care “reform” bill sponsored by Sen. Max Baucus (D-Mont.) would add $1,700 a year to the cost of family coverage in 2013 and $600 for a single person. By 2019, family premiums could be $4,000 higher and individual premiums could be $1,500 higher.

CEI’s Greg Conko calls the Baucus bill “worse than the disease.”  In a recently-released paper, “A Cure Worse than the Disease: Obama Care Won’t Cut Costs, But May Cut Quality,” Conko notes that most of the alleged cost-cutting measures in the Baucus bill merely shift costs from the federal government onto the states or private payers, without reducing long-term health care inflation.  The only measures that could conceivably reduce the annual rate of growth in health care costs would erect government barriers between patients and their doctors, while jeopardizing long-term medical innovation.

A new study by the Oliver Wyman consultancy found that provisions contained in the health-care reform bills, like guaranteed issue and community rating mandates, would drive up premiums by 50 percent for individual policies and 19 percent for small group plans.

A study from the Independence Institute says that ObamaCare would drive up inflation and medical-care costs, while shrinking the economy.

As CEI’s Conko notes, many states have highly concentrated markets.  In Hawaii, Rhode Island, and Alaska, for example, 95 percent or more of the health insurance market is served by just two insurers.  But Obama and congressional Democrats oppose letting insurers compete across state lines, blocking competition that could make health insurance cheaper.  Other countries with cheaper health insurance permit insurers to compete nationally.

ObamaCare would raise taxes.  It would also explode state and federal budget deficits, and would actually cost $2 trillion — far more than its promised $800 billion price tag.  It also ignores needed reforms that would actually reduce the costs of health care, like steps to reduce the cost of defensive medicine, which wastes $200 billion annually.  And it contains special-interest pork, like racial preferences.

New ObamaCare Version Claims Not to Increase Federal Deficit, But It Explodes State Deficits, and Relies on Mythical Savings and Unlikely Medicare Cuts

by Hans Bader on October 8, 2009 · 1 comment

in Healthcare, Nanny State, Personal Liberty, Politics as Usual

Democrats are cheering a Congressional Budget Office decision to “score” the Senate Finance Committee’s version of ObamaCare as not increasing the federal budget deficit. But it pays for some of ObamaCare’s massive cost by expanding state Medicaid programs, shifting its cost to the states. That will radically increase state budget deficits. Moreover, this version of ObamaCare, while cheaper than the four other versions, still relies on mythical cost savings and massive cuts to Medicare that are likely to be canceled after ObamaCare is enacted, to avoid enraging seniors and doctors. Rather than keeping costs down, ObamaCare outsources them to state governments and people with insurance.

This version of ObamaCare “proposes to spend more than $800 billion in the midst of an explosion of federal spending and debt to create a new entitlement program, the cost of which CBO says will grow at more than 8 percent a year (faster than health care costs grow now), and to raise taxes by almost $200 billion in the midst of a recession. It then proposes to make up the difference by massive cuts in Medicare which, as CBO notes, are unlikely to actually materialize.”

The Congressional Budget Office “scored” the bill as not increasing the deficit, but in doing so, it admitted that the bill does not even exist except as a concept, and that its details have yet to be fleshed out. Senate leaders intend to have the Finance Committee vote on the bill before its text is even available, and to have the Senate vote on the bill with virtually no advance notice, after major changes are made to the broad outline of the bill approved by the Committee (to add a potentially-costly “public option”).

ObamaCare would pay to cover some currently uninsured people by expanding state Medicaid programs.  Tennessee Governor Phil Bredesen (D) is criticizing Obama’s health-care plan as “the mother of all unfunded mandates,” saying it will force states to spend so much that they will have to either massively raise taxes, or run large budget deficits that violate state constitutions.

Some people who currently have employer-provided insurance or individual insurance policies will lose that insurance under ObamaCare.  In states that adopted major provisions of ObamaCare, the number of privately-insured people fell, as the cost of their insurance skyrocketed.   “The Congressional Budget Office analyzed” ObamaCare “and said that by 2016 some 3 million people who now have employer-based care would lose it because their employers would decide to stop offering it.”  Some of these people will wind up on Medicaid, which ObamaCare will expand to cover some people who are not poor enough to be covered now.

While the CBO has scored this version of ObamaCare as not increasing the federal budget deficit (unlike the 4 other versions of ObamaCare pending in Congress, which the CBO admits would explode the deficit), some of Obama’s own advisers are more skeptical.  Earlier, adviser Martin Feldstein said that Obama’s health-care plan would explode the federal budget deficit and lead to “crippling deficits,” as well as “higher taxes, debt payments, and interest rates” that would cut America’s standard of living.  Feldstein also noted that Obama’s health-care plan would harm people with insurance, and predicted that it would lead to massive tax increases.  Other analysts have predicted that it will drive up medical costs and inflation.

Obama is relying on $2 trillion in imaginary savings to pay for his health care plan.   He is also relying on tax increases, which breaks Obama’s campaign promise not to raise taxes on the middle class.

Fact-checkers say Obama is lying about health-care. CNN Money says ObamaCare would take away 5 freedoms.

CBO report: new taxes will balance Baucus health care bill

by Fran Smith on October 8, 2009 · 1 comment

in Economy, Health and Illness, Healthcare, Politics as Usual

Those pushing the Senate health care bill were ecstatic when the Congressional Budget Office reported that the bill “would result in a net reduction in federal budget deficits of $81 billion over the 2010-2019 period.” But it’s more budgetary legerdemain, as Cato’s Michael Tanner pointed out today.  Tanner notes that new health care taxes are the revenue-raising tools:

The bill imposes a 40 percent excise tax on health-insurance plans that offer benefits in excess of $8,000 for an individual plan and $21,000 for a family plan. Insurers would almost certainly pass this tax on to consumers via higher premiums. As inflation pushes insurance premiums higher in coming years, more and more middle-class families would find themselves caught up in the tax.

In fact, overall, the tax increases in the bill are more than double the amount of deficit reduction. This isn’t a health care efficiency bill or a cost containment bill. It is a tax and spend bill, pure and simple.

The CBO report clearly states that the “savings” come from new taxes:

. . . net revenues from the excise tax on high premium insurance plans, totaling $201 billion; penalty payments by uninsured individuals, which would amount to $4 billion; penalty payments by employers whose workers received subsidies via the exchanges, which would total $23 billion; and other budgetary effects, mostly on tax revenues, associated with the expansion of federally subsidized insurance, which would reduce deficits by $83 billion.

It’s not surprising that policymakers and pundits ignored that statement. After all, everyone knows that spending more billions will save billions.

Deficit Rises $880 Billion to Record $1.3 Trillion, Due to Massive, Unprecedented Government Spending

by Hans Bader on August 8, 2009 · 9 comments

in Economy, Employment, Healthcare, Politics as Usual, Sanctimony, Stimulus to Nowhere, Trade

The federal budget deficit has already risen by $880 billion to an unprecedented $1.3 trillion. Most of the increase is attributable to recent increases in federal spending, including Obama’s $800 billion stimulus package, which the Congressional Budget Office says will actually shrink the economy in “the long run,” and which ended welfare reform, destroyed thousands of jobs in the export sector, and substituted welfare for productive investments.

Ironically, Obama had campaigned on a promise, since broken, to make a “net spending cut” in federal spending.

The increase in the deficit is driven largely by reckless federal spending, even though federal tax revenue fell at the fastest rate since 1932 thanks to the recession.

The Obama Administration wants to pile on even more federal spending, including a health-care “reform” proposal predicted to cost at least $1,000,000,000,000 ($1 trillion). In reality, Obamacare will likely cost far more than predicted, the way past health-care expansions always have.

One of Obama’s own advisers says the Obama Administration’s health-care plan will harm people with insurance while raising their taxes. CNN says Obamacare will take away 5 freedoms. It will also destroy many affordable health-care plans while breaking Obama’s campaign promises.

ObamaCare also contains affirmative action and subsidies for left-wing community organizers, and preferences for illegal aliens, who are exempt from its taxes and penalties, but may be able to access its benefits due to lack of meaningful eligibility verification safeguards.

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