The Baucus Bill: Obamacare's Budget Bomb - by John Ellis

The healthcare "reform" package sets out to break the bank.


When the Congressional Budget Office estimated that the Baucus bill’s $829 billion in new spending would be more than offset by large cuts in Medicare and new taxes, many observers were skeptical: how likely were those cuts and new taxes to materialize given the considerable political difficulties that enacting them would encounter? But while that skepticism was entirely justified, it missed a much more fundamental argument against the CBO’s scoring of Baucus, as well as the scoring it will likely do for the Reid and Pelosi bills.

The context within which all of this takes place is that Medicare is headed for insolvency, and that the nation is running a ruinously large deficit. Cuts in Medicare were always going to be needed to deal with that program’s looming bankruptcy, and the political difficulty of making them guaranteed that they could never be large enough to solve the problem. As to the deficit, a search for new sources of revenue was always on the cards, and there too the political difficulty of enacting tax increases would also rule out anything large enough to solve that problem. And so in a context of impending Medicare insolvency and a massive deficit, whatever Medicare cuts and new taxes might turn out to be politically feasible, they were already spoken for.

The Medicare funding crisis and the deficit have a prior claim on them, and for that reason they can’t be thought of as offsets to the Baucus bill’s spending at all. Baucus claimed them for his bill’s balance sheet, but the mere fact that he put them there doesn’t make it right to do so.

Think of it this way: imagine that your household is living beyond its means and has run up a very large debt. You think up some ways of cutting your household expenses and earning some more money so that you can accumulate cash to pay off your debt and begin to live within your budget.

But now your spouse sees that new pile of cash and wants to go out and buy a fancy new car with it. What Max Baucus is doing is exactly that: he’s blowing the cash we need to make Medicare solvent and pay down the deficit on even more entitlement spending. The bill that Nancy Pelosi unveiled today (November 29) does the same thing, and the CBO will probably score that one in the same misleading way too.

All that matters here is that the Baucus bill wants to spend nearly a trillion dollars more on a new entitlement while we can’t pay for the ones we have already on the books, and that it wants to add a very large sum (all $827 billion of it, and much more if, as always in the past, these estimates turn out to be too low) to a deficit that is already frightening. The Pelosi bill does much the same thing, as will Harry Reid’s bill. When we understand them in this way, all these bills are the height of fiscal irresponsibility, and if President Obama signs anything like them, his pledge not to increase the deficit by one dime will turn out to have been his biggest deception of the American people to date.