Post by jgaffney on Jan 29, 2011 1:14:10 GMT -5
Before you let your progressive friends hang their hat on the report from the CBO about the deficit reducing impacts of Obamacare, consider this:
Here’s why the headlines understate the gravity of our situation. CBO is required to use current law as the basis for its estimates—to assume, for example, that all the Bush tax cuts will expire at the end of 2012, that Medicare payments to physicians will be cut sharply, and that the alternative minimum tax will be allowed to affect millions more Americans. Using these assumptions, taxes as a share of GDP would by allowed to increase by five percentage points by 2014 and would keep on rising thereafter, we’d have a cumulative deficit of about $7 trillion dollars over the next decade, and debt held by the public would increase from 62 percent to 77 percent of GDP. Using more politically realistic assumptions, the cumulative deficit would be about $12 trillion, and debt held by the public would reach 97 percent of GDP, the highest level since 1946 (when it was headed down, not up).
The part about cuts to Medicare payments to physicians is particularly galling because it was listed in the funding for Obamacare as contributing $500 billion to the bill. Then, not two months after the bill was passed by a partisan majority, Congress took up the "doc fix" and gave it a pass. In other words, the first chance the Democrats had to show that they were serious about funding Obamacare at the expense of the Medicare providers, they didn't follow through.
The Democrats never intended for Obamacare to be self-funding. The bill was structured to only provide 4 years of benefits, but impose 10 years of taxes. That's the only way they could bring it in for "only" $700 billion. In the following 10 years, the cost will be more like $1.5 trillion. But, what the hey, we're running a defict at least as big now, right? What's the big deal?
Here’s why the headlines understate the gravity of our situation. CBO is required to use current law as the basis for its estimates—to assume, for example, that all the Bush tax cuts will expire at the end of 2012, that Medicare payments to physicians will be cut sharply, and that the alternative minimum tax will be allowed to affect millions more Americans. Using these assumptions, taxes as a share of GDP would by allowed to increase by five percentage points by 2014 and would keep on rising thereafter, we’d have a cumulative deficit of about $7 trillion dollars over the next decade, and debt held by the public would increase from 62 percent to 77 percent of GDP. Using more politically realistic assumptions, the cumulative deficit would be about $12 trillion, and debt held by the public would reach 97 percent of GDP, the highest level since 1946 (when it was headed down, not up).
The part about cuts to Medicare payments to physicians is particularly galling because it was listed in the funding for Obamacare as contributing $500 billion to the bill. Then, not two months after the bill was passed by a partisan majority, Congress took up the "doc fix" and gave it a pass. In other words, the first chance the Democrats had to show that they were serious about funding Obamacare at the expense of the Medicare providers, they didn't follow through.
The Democrats never intended for Obamacare to be self-funding. The bill was structured to only provide 4 years of benefits, but impose 10 years of taxes. That's the only way they could bring it in for "only" $700 billion. In the following 10 years, the cost will be more like $1.5 trillion. But, what the hey, we're running a defict at least as big now, right? What's the big deal?