Obamacare and Imaginary Budget Deficits
April 11, 2012
As the Supreme Court debates the fate of President Barack Obama’s heatlh care plan, George Mason University economist Charles Blahous predicts the plan will increase already gargantuan federal budget deficits. Blahous serves as Republican trustee of Medicare and Social Security, presenting the most bleak scenario. Most economists expect government subsidies for Obama’s “Affordable Care Act” to cost the government hefty sums while the country ramps up medical care for some 30 million uninsured citizens. Obama promised not to finance his program with today’s sizable federal budget deficits, now expected in fiscal 2012 of around $1 trillion. Estimates for Obamacare have ranged about $1 trillion over 10 years, about the same price as the Iraq War. Blahous’ analysis is probably correct if you overlook several glaring material facts not included in his analysis.
If the White House uses more discretion when it comes to the Bush-Cheney doctrine of “preemptive war,” money can be saved. Venturing into Iraq in search of weapons of mass destruction cost the nation nearly a trillion dollars, based on what Cheney called “faulty intelligence.” History shows that the former vice president, who received a heart transplant March 24, did not receive faulty intel but cherrypicked data from fellow Neocons at the Pentagon’s Office of Special plans, headed by Douglas J. Feith Jr. and Richard Perle. Feith, who was called on the carpet by Congress for supplying intel to the VP, insisted he only analyzed intel, not supplied it. In any case, going to war in Iraq cost the nation about the same estimated costs as the 10-year lifecycle of the “Affordable Care Act." Blahous warns about the cost to the federal budget deficits but doesn’t talk about new budgetary priorities.
When the Supreme Court gives a green light to Obamacare sometime in June, it’s a costly national commitment comparable to Social Security in 1934 and Medicare in 1964. When the U.S. jumped into WW II in the Pacific in 1941 and evenutally in Europe in 1944, no one complained about growing federal budget deficits. Wars that directly affect U.S. national security are regarded as “wars of necessity.” Despite the horrific events of Sept. 11, no one—except a few ambitious propagandists in the Bush administration—believed Iraq was responsible for Sept. 11. By the time Bush was reelecrted in 2004, about 60% of the U.S. population thought Saddam Hussein caused Sept. 11. Continued Iraq war funding was reponsible, according to Nobel Prize-winning Columbia University economist Joseph I. Stiglitz, for massive deficits and plunging the nation into recession.
Choosing health care over war, the U.S. joins the rest of the civilized world that funds health care as a basic national priority. Constitutional objections to Obamacare stem from a misinterpretation of the Commerce Clause, where the Constitution forbids the government from forcing citizens to buy goods and services across state lines. When the Supreme Court held oral arguments March 26 on Obamacare, Justice Antonin Scalia asked Obama’s Solictor General David Verrilli whether Obamacare was like forcing citizens to buy broccoli. While Verrilli was dumbfounded, there’s plenty of precedent on the Commerce Clause with Social Security and Medicare. Verrilli knew the federal government forces every working citizen to pay for Social Security and Medicare, whether they ever derive benefits. Comparing the government’s health care mandate to buying broccoli was insulting.
No economist familiar with government entitlements believes that the Affordable Care Act costs nothing. When former President George W. Bush signed Dec. 8, 2003 the Medicare Prescription Drug Act [Medicare Part D], the government underestimated the annual costs of over $50 billion a year or around $700 billion by 2018. Obama’s Affordable Care Act, insuring some 30 million currently uninsured Americans, will cost at least $100 billion a year, maybe more. “The new math fits the old pattern of mischaracterizations about the Affordable Care Act when offical estimates show the health care law reduces the deficit,” said Jeanne Lambrew, deputy assistant to Obama on health care policy. Lambrew cites earlier reports by the White House Office of Management and Budget and Congressional Budget Office that indicates federal deficits are projected to drop with Obamacare.
No sane person can believe the Affordable Care Act, insuring 30 million citizens, will not cost taxpayers hefty sums of money. Yet gratuitous foreign wars also cost the Treasury trillions in unnecessary spending. With Obamacare, the nation makes a commitment to national budget priorities for the foreseeable future, just as Social Security and Medicare did so for earlier generations. Blahous estimates that the Affordable Care Act boosts federal spending by $1.15 trillion, adding between $340 billion to $500 billion for federal deficits between 2012-21. What Blahous doesn’t say is that with diminished war spending, today’s improved employment situation and the millions of new health care jobs created in the economy, expected tax revenues should more than pay for the program’s costs. Committing more tax dollars to health care should make presidents think twice about unnecessary foreign wars.
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