WASHINGTON — 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.
Very true. And very convincing. Until you realize where that number comes from. Explains CBO Director Douglas Elmendorf in his “preliminary analysis of H.R. 2” (the Republican health care repeal): “CBO anticipates that enacting H.R. 2 would probably yield, for the 2012-2021 period, a reduction in revenues in the neighborhood of $770 billion and a reduction in outlays in the vicinity of $540 billion.”
As National Affairs editor Yuval Levin pointed out when mining this remarkable nugget, this is a hell of a way to do deficit reduction: a radical increase in spending, topped by an even more radical increase in new taxes.
Of course, the very numbers that yield this $230 billion “deficit reduction” are phony to begin with. The CBO is required to accept every assumption, promise (of future spending cuts, for example) and chronological gimmick that Congress gives it. All the CBO then does is perform the calculation and spit out the result.
In fact, the whole Obamacare bill was gamed to produce a favorable CBO number. Most glaringly, the new entitlement it creates — government-subsidized health insurance for 32 million Americans — doesn’t kick in until 2014. That was deliberately designed so any projection for this decade would only cover six years of expenditures — while that same 10-year projection would capture 10 years of revenues. With 10 years of money inflow versus six years of outflow, the result is a positive — i.e., deficit-reducing — number. Surprise.
If you think that’s audacious, consider this: Obamacare does not create just one new entitlement (health insurance for everyone); it actually creates a second — long-term care insurance. With an aging population, and with long-term care becoming extraordinarily expensive, this promises to be the biggest budget buster in the history of the welfare state.
And yet, in the CBO calculation, this new entitlement to long-term care reduces the deficit over the next 10 years. By $70 billion, no less. How is this possible? By collecting premiums now, and paying out no benefits for the first 10 years. Presto: a (temporary) surplus. As former CBO Director Douglas Holtz-Eakin and scholars Joseph Antos and James Capretta note, “Only in Washington could the creation of a reckless entitlement program be used as ‘offset’ to grease the way for another entitlement.” I would note additionally that only in Washington could such a neat little swindle be titled the “CLASS Act” (for the Community Living Assistance Services and Supports Act).
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.
To be sure, the effect on the deficit is not the only criterion by which to judge Obamacare. But the tossing around of such clearly misleading bumper-sticker numbers calls into question the trustworthiness of other happy claims about Obamacare. Such as the repeated promise that everyone who likes his current health insurance will be able to keep it. Sure, but only if your employer continues to offer it. In fact, millions of workers will find themselves adrift because their employers will have every incentive to dump them onto the public rolls.
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 nonstarter. Everything begins with repeal.
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