Published for www.nationalreview.com, April 10, 2012
Over the past two years, Obamacare’s champions have often claimed that the new law would actually save the government money and reduce the deficit. Early on, they argued that it would do this in part by reducing health-care costs, but no one really makes that case anymore. Rather, they argue that Obamacare offers a version of today’s preferred liberal approach to deficit reduction: it increases taxes by even more than the immense amount by which it increases spending. That’s not exactly a recipe for fiscal responsibility or a means of addressing the underlying problem of costs, but on the face of it perhaps it should allow them to claim that Obamacare reduces the deficit.
Except that it doesn’t. From the very beginning, critics of Obamacare have pointed out that, even if you accept all of the implausible claims of cost savings in the law, the CBO score of the legislation double-counted the effects of the enormous Medicare cuts scheduled to occur in the next few years. Even if those cuts were to actually happen—a very big “if” given that they are supposed to be undertaken without any actual reform of the system, just using more of the price controls that have failed for decades—the amount of the cuts can’t be counted as both improving the fiscal sustainability of the Medicare trust funds and reducing the deficit at the same time.