So much for a reform that pays for itself. Economist Martin
Feldstein takes a hard look at "the exploding path of fiscal
deficits," which would be made far worse by Obamacare.
He writes:
For starters, $1 trillion of extra debt-financed spending would
cause the government to pay about $300 billion of extra
interest in the next decade. Moreover, the CBO's method of
estimating the cost of such a program doesn't recognize the
incentives it creates for households and firms to change their
behavior.
The House health-care bill gives a large subsidy to millions of
families with incomes up to three times the poverty level
(i.e., up to $66,000 now for a family of four) if they buy
their insurance through one of the newly created "insurance
exchanges," but not if they get their insurance from their
employer. The CBO's cost estimate understates the number who
would receive the subsidy because it ignores the incentive for
many firms to drop employer-provided coverage. It also ignores
the strong incentive that individuals would have to reduce
reportable cash incomes to qualify for higher subsidy rates.
The total cost of ObamaCare over the next decade likely would
be closer to $2 trillion than to $1 trillion.
Workers had better have gotten a good rest yesterday. They
are going to be laboring into their next life to pay off all the
federal debt.
About the Author
Doug Bandow is a Senior Fellow at the Cato Institute and the Senior Fellow in International Religious Persecution at the Institute on Religion and Public Policy. A former Special Assistant to President Ronald Reagan, he is author of Beyond Good Intentions: A Biblical View of Politics (Crossway).
