An Opening for Republicans? Obama’s “Deficit Neutral” Health Care Reform Will Cost Twice As Much, Just As We Figured It Would

Back in 2009, when President Obama took advantage of Democrat control of the House and Senate and pushed through so-called healthcare reform, he assured the American people that the plan would be paid for and wouldn’t add to future deficits.  There were many people, especially those like myself who are familiar with health care costs and how health insurance works, were quite skeptical.  The plan did nothing to address rising healthcare costs.  Instead, it was nothing more than the opportunity Democrats had been waiting for get health insurers to change their rules for coverage and to get government-subsidized health insurance in the hands of Americans.  But to quote a popular line from “Thomas and Friends,” one of my toddler’s favorite shows, “then there was trouble.”

First, the administration can’t even get their act together regarding the mandate in the plan.  The White House said it isn’t a tax, but someone from within the administration testified on Capital Hill that it is.  Then, the CLASS act, which was a plan to tackle long term care, came under fire.  And for good reason–one of the accounting gimmicks used to make CLASS work was to make people pay premiums for the plan for years before the plan actually came into play.  Congress voted to remove it from Obamacare.

But the ultimate slight-of-hand used in getting the bill passed was to convince people the reform act would not add to future deficits, and in turn, to the national debt.  President Obama assured us that the plan would cost about $900 billion, and that the cost would be offset by money taken from Medicare savings and from revenue grabbed from insurers, medical device makers, etc.  Like Theo Huxtable in the episode of “The Cosby Show” when Bill tried to tell him it’s expensive to live on his own, President Obama deflected criticism by saying “noooo problem!”  What wasn’t apparent to average americans is that the cost projection used included years during which the plan would barely be implemented.

Now, the CBO has released projections on how much Obamacare will actually cost over the next 10 years, when fully in place.  The cost?  $1.76 trillion over the next decade.  And that number is expected to increase to $2 trillion next year.

On the one hand, the CBO also predicts that the government will increase revenue from taxes and penalties over those years so that *may* offset the additional costs.  But most people realize that while cost estimates typically run lower than actual, revenue estimates also tend to run lower, because as new taxes kick in, people tend to change their habits, which leads to lower revenues taken in by the government.  People will find ways to avoid paying additional taxes.

What we have here is another government implented program that is going to run over budget and need bailing out at some point in the future.  Maybe around that time people will finally realize that government can’t be trusted to be good stewards of our money.

Related link:
Obamacare to cost $1.76 trillion over 10 years

President Obama says “Hey! You Don’t Need That Money!”

Yesterday amongst my online pals, I was lamenting a new law that pushes for light bulbs to be more efficient, but in effect ends up pushing the masses to use more efficient but also more expensive and more hazardous CFC bulbs.  The focus of my complain was a statement from Energy Secretary Steven Chu, who said: “We are taking away a choice that continues to let people waste their own money.”  Yes, we the masses would be lost if we didn’t have the government guiding our way.

Now, we have President Obama, who is currently trying to get a deal done to raise the debt limit.  During a press conference, he stated:

I don’t want a deal in which I am able to keep hundreds of thousands of dollars that I don’t need, while a parent struggling to send her kid to college finds they have a couple thousand dollars less in grants and student loans.

For now, let’s move past the second part of the statement, where he invokes the time honored tradition of scare tactics. Let’s talk about the “need.”

On the surface, Mr. Obama is talking about himself not needing a tax break, and not needing money he considers to be extra money.  It’s quite humorous that he states this, since as President, he has everything taken care of.  But let’s go below the surface.  Obviously, his statement implicitly implies that the higher income earners should be happy to pay more in taxes because they don’t “need” the extra money they have in the bank.  Once again, here is the government to our rescue, to guide us!

Hey!  You’ve earned enough money!  It doesn’t matter what your plans are for you money, we the government have decided FOR you that you have more than you need!  Ignore that we are notorious for overspending!  Its your patriotic duty to pay up anytime we feel we need more money!

Oh, and let’s do revisit the second part of the statement, regarding grants and loans. We are in a dire financial situation.  Isn’t it a natural assumption that folks are going to feel the pain? And even if taxes go up, wouldn’t that money go to pay down the debt?  Evidently, even in a situation where cuts should be the priority, and paying down deficit and debt right behind that, the administration will find ways to either increase spending somewhere or attempt to keep things status quo.  Hello!  McFly!  Is that what Joe Public does when he needs to cut spending in his own household?

Just remember:  the government knows what’s best!

Clark Howard Nails It: The Country is “Sailing Up Denial” About Taxing Our Way Out of Debt

I happened to hear Clark Howard on the radio while driving back to the office from a business event.  For those that don’t know, Clark Howard (like Dave Ramsey) is a consumer guru known for giving out advice and tips to the masses via his radio and TV programs.  During his program today, he mentioned that the country as a whole was “sailing up denial” when it comes to solutions to fix the country’s long-term debt issues.  While I will still be more of a fan of the saying “denial is a river in Egypt,” Howard definitely nailed the thought process that currently occupies the minds of many Americans–that increasing taxes on the top earners, without making cuts to Social Security, Medicare, and Medicaid, is a viable option for debt reduction over the long term.

The fact that a poll was taken on this subject is quite humorous.  There are a couple of ideas that rule the hearts and minds of many Americans.  The first is that they wouldn’t support the reduction of government benefit programs, knowing they would be affected by the reductions.  Seems to be the simple law of self preservation to me.  The second is that people feel if a person is rich (or seems that way) then regardless of whether or not they actually paid into a benefit, they have money and can do without the government entitlements.  These thoughts reflect, as Howard also stated, that in America, we don’t have a notion of shared sacrifice on the issue.  “Don’t change MY stuff, just make the rich fund it.”  Tricky thing is, as Howard explained, you could tax the upper 1%-2% of income earners all the way to destitution, and the debt problem still wouldn’t be solved.  Further–and I thought this was spot on–if the solution used was more taxes with no benefits cuts, eventually there wouldn’t be enough money coming into the government to pay for benefits.  Before long, individuals would find themselves solely responsible for their own welfare and wellbeing, just like in the old days.  One can only imagine the outcry THAT would produce.

Here’s to hoping that Congress gets it right for a change and puts the sacrifice on everyone, not just a few people.

Debt reduction–when cutting spending isn’t really cutting spending

Upon further review of the Debt Commission report that got shot down last week, I found something interesting that most of us don’t even realize.

Budgets in Washington tend to factor in an automatic annual increase in spending.  In other words, every year the amount spent on a given program goes up regardless of necessity–and trust me, we all know that an organization will find a way to spend the money in order to avoid a budget cut.  Anyway, when the debt commission spoke of spending “cuts,” there was outrage from both sides (depending on the program to get the cut).  But it turns out there were smoke and mirrors involved.  The commission did not recommend actual cuts.  What they did recommend was a reduction of the annual budget increases.  In other words, they said “instead of programs x, y, and z getting automatic annual increases of 3%, lets just allow them to increase 2%.”

What??

Translation:  they couldn’t find actual spending cuts to be made!  No reductions in spending.  No freezes in spending.  Just a slowdown in growth.  Just wow.

I wish I could operate my home budget the way these folks run Washington!