Obamacare Increases the Deficit

Ezra Klein, a writer for the Washington Post, made a headline when he said this contradictory statement, "Republicans are already having to break their rules to pursue the repeal of health-care reform without paying for it -- a procedural offense in favor of a symbolic vote that, in addition to increasing the deficit, won't exactly usher in a new era of respect and esteem between the two parties."

It seems to me that the esteemed Mr. Klein at the Washington Post has been given misinformation about the effect of Obamacare on Federal spending. "But wait," you say, "The CBO just came out with a report showing that repealing Obamacare will cost a hundred billion dollars!" True, they did come out with that report. Problem is, that report is based on the flawed assumptions given to them by then-Speaker Pelosi, and double counts a huge amount of "savings." Cuts to Medicare, for example, are counted twice.

If I told my wife that we had saved a couple hundred dollars, using fancy math and logic, but could only give her one fifty-dollar bill, I'd sleep on the couch for a week!

But a more basic concept than double counting is the concept of baseline budgeting. It's a process we're all familiar with and use, especially when grocery shopping. When we see a sale, for which we did not budget nor make a plan to buy, we automatically think of how much we would have spent to purchase the items on sale, and congratulate ourselves for having saved the difference of what we could have spent for what we actually spent. Except that we're now out more money.

Obamacare adds one trillion new dollars to the Federal budget. (I'm not sure why it was so important for that number to be one trillion or less, but let's keep moving). And yes, we could have "spent" upwards of two trillion dollars, so we can congratulate ourselves on our trillion dollar savings. But those are one trillion dollars that, pre-Obamacare, we wouldn't have spent.

Taking the deficit into account as well, we've got another problem. The deficit, simply put, is us (the government) spending more than we collect in taxes. I'm pretty sure that even if the economy wasn't in recession we wouldn't be adding another trillion dollars in taxes in the next ten years. And with a recession?

Whoops. We just spent an additional one trillion dollars that we didn't (and still don't) have.

Can you say dog house?

If we repeal Obamacare, and the attendant trillion dollars it spends, we will, at best, lower future deficits. Not that we'll actually be cutting any spending by doing that, our budget will be what it was pre-Obamacare (give or take a little). But at least future spending will go in the right direction.