History will remember how often and adamantly President Barack Obama insisted that the socialized medicine law he signed last week would reduce the federal deficit. It will be his defining lie.
“This legislation will also lower costs for families and for businesses and for the federal government, reducing our deficit by over $1 trillion in the next two decades,” Obama said when he signed the bill on March 23. “It is paid for; it is fiscally responsible.”
Two days later, he repeated the claim at the University of Iowa. “Costs will come down for families and businesses and the federal government, reducing our deficit by more than $1 trillion over the next two decades,” he said.
Americans wisely do not believe him. A Gallup poll released on Tuesday asked people whether the federal budget deficit would “get better, not change or get worse” as a result of Obamacare. Sixty-one percent said it would get worse, and 14% said it would not change.
An honest look at the Congressional Budget Office analysis of the total healthcare package backs the commonsense conclusion of the average American.
On March 19, two days before the House voted to enact the Senate healthcare bill and a companion reconciliation bill to make alterations in the Senate bill, the CBO sent a letter to Rep. Paul Ryan of Wisconsin, the ranking Republican on the House Budget Committee, responding to his question about the combined budgetary impact of these two bills plus an associated bill to adjust the Medicare payment rates for doctors that House Speaker Nancy Pelosi has vowed to enact.
The bill to adjust the Medicare payment rates for doctors is needed because, under current law, those rates are set to suddenly plunge by 21% in April. After that, they are set to decline by about 2% per year for the next decade.
These dramatic cuts are the result of a gimmick members of Congress wrote into earlier budgets: They mandated that doctors’ fees suddenly drop by one-fifth as a way of making the deficit spending they were voting for seem less than it was. They always knew they would repeal the dramatic fee cuts before they actually hit. Like Obama’s claim that the healthcare bill will reduce the deficit by $1 trillion, these phantom fee cuts were a lie.
So, what is the impact on the deficit when the Senate healthcare bill, the reconciliation bill to fix the Senate healthcare bill and the bill to fix the phantom reductions in doctors’ fees are all considered together?
“You asked about the total budgetary impact of enacting the reconciliation proposal (the amendment to H.R. 4872), the Senate-passed health bill (H.R. 3590) and the Medicare Physicians Payment Reform Act of 2009 (H.R. 3961),” CBO said in its letter to Ryan. “CBO estimates that enacting all three pieces of legislation would add $59 billion to budget deficits over the 2010-2019 period.”
Rather than cut the deficit by $1 trillion over two decades as Obama claims, the full healthcare package increases the deficit by $59 billion over one decade. The CBO only does budget estimates for 10-year periods.
There are other factors buried in the CBO’s analysis that further debunk the President’s claim that his plan will reduce the deficit. For example, the CBO discovered that the bill authorizes new discretionary spending that Congress will need to approve in future years to make sure the bureaucracies are in place to carry out the new plan. CBO estimates this will lead to “at least $50 billion” in new spending over 10 years that was not included in the healthcare bill itself.
By contrast, the CBO did include in its analysis of the healthcare bill $53 billion in new Social Security tax revenues it believed would come to the government when employers drop expensive healthcare plans that will be subject to a new federal tax and use some of the money saved on premiums to pay their employees higher salaries that will be subject to higher payroll taxes.
The problem with counting this $53 billion in Social Security tax revenue against expenditures in Obama’s healthcare plan is that Social Security is already in deficit and faces a multitrillion dollar long-term shortfall.
Nor should Obama’s socialized-medicine plan be viewed in isolation from the rest of his budget. CBO says his fiscal 2011 budget proposal will increase the national debt by $9.8 trillion over the next 10 years. He is running a record $1.5 trillion deficit this year, and the smallest deficit he will ever run is $724 billion in 2014—the year his unconstitutional individual insurance mandate kicks in.
After that, the deficit starts an unbroken climb, surpassing $1 trillion again in 2018 and heading ever higher.
Just as Obama’s claim that his socialized medicine plan will reduce the deficit by $1 trillion will be his defining lie, his legacy will be this: He bankrupted America.