Krauthammer Speaks

Krauthammer Dismembers Obamacare's Promised Deficit 'Reduction'

Sunday, January 23, 2011 07:39 PM

One of the frequent Democratic defenses against the GOP-led effort at repealing the massive healthcare law is that it actually would increase the deficit, not reduce it.



It is an argument that has been backed by the Congressional Budget Office and parroted by the mainstream media with surprisingly little detailed analysis: that President Barack Obama’s signature legislative effort manages to cut the deficit while providing healthcare for everyone. Who could argue with that?

But on Sunday, conservative columnist Charles Krauthammer took a good look at the numbers and found them laughable.

In a column in The Washington Post, Krauthammer asked, “Suppose someone — say, the president of United States — proposed the following: We are drowning in debt. More than $14 trillion right now. I've got a great idea for deficit reduction. It will yield a savings of $230 billion over the next 10 years: We increase spending by $540 billion while we increase taxes by $770 billion.

“He'd be laughed out of town. And yet, this is precisely what the Democrats are claiming as a virtue of Obamacare. During the debate over Republican attempts to repeal it, one of the Democrats' major talking points has been that Obamacare reduces the deficit — and therefore repeal raises it — by $230 billion. Why, the Congressional Budget Office says exactly that.”

As Krauthammer points out, this boils down to a radical increase in spending, topped by an even more radical increase in taxes. Using that logic, Democrats trumpet a net deficit reduction.

Like other examples of smoke-and-mirrors spending projections, the Obamacare bill was “gamed to produce a favorable CBO number.”

How? The entitlement it creates — government-subsidized health insurance for 32 million Americans — doesn't kick in until 2014. That means that any projection for this decade would cover only six years of expenditures but capture 10 years of revenue. “With 10 years of money inflow vs. six years of outflow, the result is a positive — i.e., deficit-reducing — number. Surprise,” Krauthammer points out.

Krauthammer also notes that Obamacare actually creates two new entitlements that will cost Americans for decades to come if the law isn’t repealed. It creates long-term care insurance that, with an aging population, “promises to be the biggest budget buster in the history of the welfare state.”

But how could such a costly program actually reduce the deficit over the next 10 years, as the CBO maintains?

The answer is that by collecting premiums now, and paying out no benefits for the first 10 years, you end up with a savings. A surplus.

Krauthammer quotes former CBO director Douglas Holtz-Eakin and scholars Joseph Antos and James Capretta: "Only in Washington could the creation of a reckless entitlement program be used as 'offset' to grease the way for another entitlement."

“That a health-care reform law of such enormous size and consequence, revolutionizing one-sixth of the U.S. economy, could be sold on such flimflammery is astonishing, even by Washington standards. What should Republicans do?

“Make the case. Explain the phony numbers, boring as the exercise may be. Better still, hold hearings and let the CBO director, whose integrity is beyond reproach, explain the numbers himself.”

But he adds, “This does not absolve the Republicans from producing a health-care replacement. They will and should be judged by how well their alternative addresses the needs of the uninsured and the anxieties of the currently insured. But amending an insanely complicated, contradictory, incoherent and arbitrary 2,000-page bill that will generate tens of thousands of pages of regulations is a complete non-starter. Everything begins with repeal.”



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