Why ObamaCare will fail ...

Krauthammer on how the ballooning deficit will affect Obama’s agenda:

I think Obama is misreading the mood of the country.

Look, he was a genius last year at reading the mood of the country. That's how he got elected—hope and change and newness and novelty, and all that. And he understood that the American people are willing to spend trillions as a way to undo a recession or to get out of unemployment.

But they are not willing to risk the budget and future high interest rates and perhaps a collapse of the currency on radical social experiments like health care or cap-and-trade and energy.

So he got it [deficit spending] on stimulus. He got everything he wanted on stimulus. He got almost $1 trillion dollars, and the problem is it has had no results.

So it has hurt him in two ways: (a) it has increased the deficit to the point where he would be adding on to it with health care and cap-and-trade. And secondly, it proves he is not infallible, which, to a lot of Democrats, has come as a shock. And they are now in quiet recovery.

And I think that's really going to hurt him. It's going to make the health care agenda and the energy agenda extremely hard to pass.

Paying for Health Care by Destroying the Economy [Veronique de Rugy]

That' pretty much the plan laid out by House Democratic leaders. In order to pay for the $1 trillion health-care plan, they won't be cutting spending (it's probably too 1990s for today's lawmakers) but they will be imposing new taxes — surtaxes in fact — and fees and penalties. Finally, America will become like its European counterparts, a place where it's painful to work hard and be rewarded for it.

Read this New York Times article about how the plan will be paid for and cry. A sample:
Starting in 2011, a family making $500,000 would have to pay $1,500 in additional income tax to help subsidize coverage for the uninsured. A family making $1 million would have to pay $9,000.

Employers who do not provide health insurance to workers would generally have to pay a fee or penalty to the government. The fee would be equal to 8 percent of wages for an employer with an annual payroll of more than $400,000.

Mais bien sur! In a high-unemployment environment, let's raise the cost of employing people.

And:

The surtax would apply to any adjusted gross income exceeding $280,000 a year for an individual and $350,000 for a couple filing a joint return. The tax rates would range from 1 percent to 5.4 percent.

Who wants to bet that the number of people filing a joint return will collapse? Moi! (I have to practice my French, since that's where we are heading.)

The Deep Dishonesty of ObamaCare [Anthony Dick]

Lurking just beneath the surface of the Democrats’ rosy health-care-reform talk is the question of cost. Obama campaigned on the (disingenuous) line that he could deliver an enormous expansion of government services without significantly raising taxes, and his party continues to push the fantasy that the bill for their enormous spending projects will never come due.

But the simple truth is that ObamaCare, like the Democratic fiscal agenda in general, will require significant and painful tax hikes across a broad base of the American population. The question is how long Democrats can get away with pretending this isn’t so.

There is evidence that people are starting to catch on, as in this Washington Post editorial today (pointed out to me by a press release from Heritage):

[T]here is no case to be made for the House Democratic majority’s proposal to fund health-care legislation through an ad hoc income tax surcharge for top-earning households. . . . There is simply no way to close the gap by taxing a handful of high earners. . . . Pretending that “the rich” alone can fund government, let alone the kind of activist government that the president and Congress envision, is bad policy any way you look at it.

How Much Are You Willing to Pay for Health-Care Reform? [Veronique de Rugy]

Well, it does really matter. The real question is: How much will you have to pay in taxes, whether you want it or not? The House of Representatives' health-care bill includes an income surtax that would range from 1% to 5.4% on incomes over $350,000. The Heritage Foundation's Brian Riedl and Curtis Duey did the math for us:

As calculated by the Tax Foundation, when factoring in the expiration of the 2001 and 2003 tax cuts, average state and local income taxes, Medicare taxes, and the new surtax, the average top marginal income tax rate in the U.S. would be 52 percent!

The top rate in the U.S. would then be higher than countries like France, Canada, Italy, Spain and Germany. Only 3 countries in the 30-member OECD, an association of the most economically developed countries in the world, would have a higher rate. Taxpayers in the 6 highest taxed U.S. states would pay higher rates than every country in the OECD except Denmark. Taxpayers in every state, even the 9 that do not levy a state income tax, would face a higher top marginal rate than taxpayers in 21 out of the 30 OECD countries.

Hold on to your wallet, everyone. It is, of course, a myth that only the rich will be taxed. Besides, as Cato Instistitute Dan Mitchell reminds us here, when the government takes aims at the rich, it's often the middle class that gets hit in the crossfire.


House Members Being Hammered Over Waxman-Markey [Iain Murray]

I'm hearing that the popular reaction to the passage of the Waxman-Markey electricity tax bill in the House has blown House members away. The public outrage is really hurting those who voted for it, and that's why the bill has been "parked" (as the Blair government used to say) in the Senate. Very good sign. We need that sort of public pressure to defeat this monstrosity, and similarly for the health-care plans. If these two overreaches go down, Obama's political capital will be spent. How often has a president become a lame duck by his own actions within a year of taking office?

The President’s Reckless and False Health-Care Claim [James C. Capretta]

It’s now a clear pattern. When the president senses his position is vulnerable to a factual criticism, he asserts emphatically that the opposite is true — without ever providing evidence to back up his claim.

Here’s the latest example. According to Politico, President Obama told skeptical Blue Dog Democrats last evening that they should support the health-care bill emerging in the House because it would produce savings beyond the ten-year budget window.

Oh really. Says who?

The context here is crucial. It’s already abundantly clear that the federal government cannot afford its existing health-care commitments. The Congressional Budget Office (CBO) recently projected that Medicare and Medicaid costs will nearly double in twenty-five years, from 5.3 percent of GDP today to 10.0 percent in 2035 (this assumes continuation of current policy with regard to physician fee updates). The Medicare Trustees projected in May that the program’s 75-year unfunded liability has reached $36 trillion.

Moreover, the federal government is projected to run massive budget deficits for the foreseeable future. In 2009, the government has already run up a deficit of $1 trillion through June, and it could reach $2 trillion before it’s over at the end of September. CBO expects the Obama budget plan would increase the government’s debt by $11 trillion from the end of 2008 to the end of 2019. Running up government debt at that kind of pace would put the nation’s economy at considerable risk, to put it mildly. At some point, lenders would demand higher returns for their lending, pushing interest rates up and choking off growth, or the Fed would partially monetize the debt with even easier money and rapid inflation.

It is in this context that Democratic leaders in the House and Senate are trying to rush health-care bills to their respective floors for consideration before the August congressional break.

The centerpieces of the bills are the creation of a new, massive entitlement to health insurance subsidization and a large expansion in Medicaid eligibility. The House bill, unveiled today and available here, would add $1.2 trillion in federal costs over a decade with just these two expansions, according to CBO. And the trend is even more alarming. Between 2018 and 2019, federal costs for the new entitlement and the enlargement of Medicaid would increase by a combined 8.9 percent.

That shouldn’t be surprising though, because that’s basically the rate at which Medicare and Medicaid have been growing for more than four decades. And there’s nothing in the House or Senate health-care bills which would lead one to assume a new health entitlement program will grow at a more moderate pace in the future than the ones already on the books have done in the past. CBO has said repeatedly that slowing the pace of rising costs will require a fundamental restructuring of financial incentives, for consumers and suppliers of medical services. Nothing currently on the table in Congress comes close to meeting that test.

That was essentially the message CBO delivered to members of the Senate Health, Education, Labor, and Pension committee last week. In response to a question from Sen. Judd Gregg, CBO Director Doug Elmendorf said a bill which simply expanded coverage without fundamental reform “puts an additional long-term burden on top of an already unsustainable path” (Elmendorf’s testimony can be seen here, with his response to Senator Gregg at the 1 hour, 38 minute mark).

Moreover, it seems that President Obama’s own budget director agrees with CBO. Last week, Peter Orszag delivered a letter to House leaders saying their bill doesn’t go nearly far enough to slow the pace of rising costs. But even that didn’t stop the president from saying otherwise in his desperate attempt to round up votes.

The federal government’s budget is already knee-deep in debt, largely because politicians have promised that better days ahead will make all budgetary problems go away. They haven’t, and the current president is making the situation much worse. The last thing any member of Congress should do is simply take the president’s word for it that the health-care bills under consideration will ultimately “bend the cost-curve.” If he really believes that — because no one else really does — he should provide some hard evidence to back up his claim. And that’s not a theoretical possibility. He could ask his independent projection experts — not his political appointees — to provide directly to Congress and the public, without review by anyone else, their best estimates of what these bills would do to the long-term (25- or 50-year) budget outlook. Those estimates would be taken much more seriously than unsubstantiated assertions which run against commonsense and all evidence.

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