Obama's Health Care Plan Leaves Americans in Multi-Trillion Dollar Debt

September 1, 2009 - 1:16 PM
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Senator Sam Brownback (R-Kans.)

The Obama administration and Democratic members of Congress have been claiming that the huge price tag of their health care reform proposal will require no new taxes on the middle class, and that it can be paid for in full with a new surtax on the top 1 percent of earners.

According to projections based on data from the Congressional Budget Office (CBO), that claim is virtually impossible to support. With these top earners as the only source of funding, the health plan budget deficit would grow to over $1 trillion by 2048 and to over $20 trillion by 2084.Remarkably, that may understate the enormous debt burden taxpayers will be saddled with under the proposed plan.

In the last 50 years, health care reform proposals have invariably cost much more than the highest cost estimates published while the legislation was being debated. In the case of Medicare, the long-term cost was ten times what was originally projected by proponents. Health care appears to be an area with great room for overly optimistic assumptions regarding future costs.

Whatever the cause, it seems there is a kind of Murphy’s Law of health care legislation: “If it can cost more than the highest available official estimate, it probably will.”
 
But even granting the accuracy of projected cost-estimates of the current reforms under debate, it is virtually impossible to countenance Democratic claims that a surtax on the “very rich” (a category that includes more than one million small businesses) will be sufficient to cover the astronomic costs.

According to CBO projections, the upper-income tax base to which the surtaxes apply will grow at a considerably slower rate than growth in health care spending. Inevitably, the Federal government deficit will grow ever larger through time.
 
Under the growth rates assumed by CBO, the addition to the nation’s deficit will be $186 billion in the year 2029 alone. While unfathomably large, this amount pales in comparison to the longer-range effect on the nation’s budget if we extend the timeline further.

If new health care spending were to continue to grow beyond 2029 at the projected 8 percent rate while revenues grow at the projected 5 percent rate the plan’s cumulative deficit over the next 75 years amounts to a staggering $261 trillion.
 
The only way this projection would change without taxing the middle class would be if incomes greater than $1 million grow faster than health care costs. That would result in a dramatic increase in income inequality.

In other words, to work, the wealthy would have to receive an ever increasing share of the nation’s income.
 
That kind of extreme growth in income inequality is something no serious economist is projecting or thinks desirable. Moreover, it goes directly against the Obama administration’s explicit goal of reducing income inequality. For this reason alone, it is unlikely that the president’s people are actually relying on such dramatic growth of incomes in the highest brackets to fund their health care scheme.
 
Much more likely is the political guess that the cost projections of the program 20 years out and beyond—as the fiscal unsustainability of the Obama administration’s proposals becomes more and more apparent—will be lost in the shuffle.

But those of us in Congress worried about out-of-control government spending and a spiraling national debt would be utterly irresponsible if we did not demand an answer to the fundamental question: How will this scheme be paid for?
 
The last thing our nation needs is to add another massive unfunded entitlement program to the balance sheet of the federal government. Already, we face the serious crisis of the approaching insolvency of the Social Security and Medicare programs. It would be the height of irresponsibility to dig this hole of government debt even deeper, saddling future generations with a problem that we lack the courage to solve.
We need to heed the old adage that when you’re in a hole, you need to stop digging.
 
This is why any responsible plan for reform of our health system must be fully paid for not just within a five or ten-year budget window, but over the long-term. Unfortunately, the plans now before the Congress do not fit that description.
 
Sam Brownback is a U.S. senator from Kansas and the ranking Republican on the Joint Economic Committee.