Obama's spending illness

During an interview with Stephen Moore at the Wall Street JournalHouse Speaker John Boehner (R-Ohio) said something interesting, if not downright stunning, about the way President Barack Obama views the national debt:

The president’s insistence that Washington doesn’t have a spending problem, Mr. Boehner says, is predicated on the belief that massive federal deficits stem from what Mr. Obama called “a health-care problem.” Mr. Boehner says that after he recovered from his astonishment???”They blame all of the fiscal woes on our health-care system”???he replied: “Clearly we have a health-care problem, which is about to get worse with ObamaCare. But, Mr. President, we have a very serious spending problem.” He repeated this message so often, he says, that toward the end of the negotiations, the president became irritated and said: “I’m getting tired of hearing you say that.”

(Emphasis mine.)  Let us stipulate that we’re looking at one person’s account of a conversation, and perhaps Obama would recall it differently.  But if Boehner’s account is accurate, Obama’s view of health care as the cause of federal deficits is utterly bizarre and disingenuous, if not completely insane.  It’s sobering to think that much of America’s financial future is being decided by negotiations with someone who can harbor such fictions, or delusions.

Obviously, there is no way to point at the gigantic federal debt – now approaching $17 trillion – and make the case that most of it stems from health-related spending.  When the government is spending over three and a half trillion dollars, while collecting less than two and a half in revenue, declaring which of those dollars is “the deficit” can be more of an art than a science.  Was this billion dollars spent on military equipment composed of deficit bucks… or was it this billion spent on food stamps?

Still, there is no way to chop up the last four, ten, or twenty years of deficit spending and make the bulk of it come out as spending related to health care – or, as Mr. Obama would likely have it, money the government had to borrow because it had not taken control of the health insurance industry yet.  If it helps to focus everyone’s mind on the problem, as of last year, just about all federal revenue is now dedicated to “mandatory spending” such as entitlement programs and the interest on the national debt… so, from this point forward, everything else is now deficit spending.

As for President Obama’s putative solution to this health-created deficit problem, ObamaCare, it is no longer possible for anyone to pretend it will somehow reduce the federal deficit.  The most wildly optimistic projections currently portray it as approximately revenue-neutral over the next 10 years, and even that requires some accounting trickery, combined with a good deal of squinting through rose-colored glasses.  The accounting tricks include a general refusal to count spending on the state-level health care exchanges as part of the ObamaCare budget forecast – and, if you’ve been following the exchange saga, you know that most states have now refused to set up their own exchanges, often citing a reluctance to carry ObamaCare budget burdens for Washington.

The rose-colored glasses are necessary to view ObamaCare’s revenue stream, which is heavily predicated on two massive tax increases: the infamous “individual mandate” for non-compliance – a tax which falls disproportionately upon the Sainted Middle Class – and the tax on “Cadillac” health care plans, whose benefits exceed what the commissars of ObamaCare feel is necessary.  As ObamaCare critic Avik Roy explained in Forbes last summer, “Because the [Congressional Budget Office] assumes that the cost of health premiums will continue to rise at a much faster rate than inflation, the Cadillac tax affects more and more individuals over time.  The long-term deficit neutrality of Obamacare hinges on this trend continuing for a long time… Removing the Cadillac tax from Obamacare wipes out the CBO???s estimates of the law???s impact on the deficit.”

In other words, if ObamaCare actually lived up to its designers’ promises and started “bending the cost curve down” for health insurance, a vital income stream for ObamaCare’s claims of deficit neutrality would be compromised, and the federal deficit would be increased.

And if Obama’s belief in health care as the cause of federal deficits has anything to do with Medicare… well, ObamaCare grabs $800 billion away from Medicare.  Even the most fervent ObamaCare apologist would have a hard time making the case that the overall fiscal health of the government is much improved by the current combination of ObamaCare and Medicare.  It should also be noted that ObamaCare’s fiscal health has deteriorated every time the Congressional Budget Office scores it, in part because the bill was packed with gimmicks to front-load revenue and make the first decade of the program look less expensive for taxpayers.  Furthermore, several of ObamaCare’s financial feeding tubes, such as the 1099 tax “reform” and the CLASS Act, have already been disconnected.

But perhaps the President’s belief in health care as the driving factor behind federal insolvency is meant in the context of the nation’s actual health, not just health insurance.  From that perspective, it could more easily be said that our excessively good health is bankrupting us – long lifespans and the Baby Boom population surge are overloading programs such as Social Security and Medicare, increasing the ratio of government dependents to current taxpayers.  (And yes, a Social Security recipient is a “government dependent,” as they will shortly be reminded, when the retirement age is increased again.)

As far as the cost of health care, as opposed to health insurance, is concerned, ObamaCare’s negative impact on the supply of doctors is the driving factor to watch, accompanied by the increasing reluctance of doctors to accept Medicare patients.  Throw in the enormous number of jobs lost due to ObamaCare, and the ongoing shift of the American workforce to part-time labor in an effort to escape ObamaCare mandates, and you have a dwindling taxpayer base, which is expected to fund increasing government services – including benefits for the long-term unemployed.

If President Obama’s belief that health care somehow causes deficit spending were to be taken seriously, it would lead to one of the most damning indictments of his presidency, because there are few less flattering lights in which to view his “achievements.”

Update: A pertinent example of ObamaCare’s fiscal sickness is the now-infamous medical device tax.  This tax is such a direct and unambiguous job-killer that even Democrats who voted for ObamaCare are nervous about its implementation.  If it gets repealed, there goes $40 billion in revenue… but if the tax is kept in place, how much government revenue will be lost (and welfare benefit spending be required) due to all those vaporized jobs?  The Obama presidency appears dedicated to making health care into a primary cause of federal deficit spending.