Will Spending Under ObamaCare Trigger The Next Financial Crisis?
By DOUGLAS HOLTZ-EAKIN AND PAUL HOWARDPosted 06:16 PM ET
This week President Obama signed the final piece of the ObamaCare legislative agenda and put Democrats on record favoring a future downgrading of the United States' triple-A credit rating, setting up a financial market crisis that will make 2009's burst mortgage bubble look like a tempest in a teacup by comparison.
America's sovereign credit rating works much like a consumer's credit score. If creditors trust that you can afford your debts and make payments on time, they offer low interest rates and easy terms.
But if you keep spending beyond your means — and don't look like you can afford to make future payments — eventually they'll charge higher interest rates or limit your access to new credit.
Even before ObamaCare passed, the U.S. was spending far beyond its means.
President Obama's current budget sees deficits of at least $700 billion a year for the next 10 years and $1 trillion a year after that.
With government now on the hook for trillions more in health care spending, the question isn't whether creditors will lose patience with the U.S. but when. The consequences of such a move for the U.S. economy, in the form of much higher taxes or spending cuts, would be catastrophic.
Democrats, of course, vehemently reject the idea that ObamaCare isn't paid for.
They believe they voted for a new health care program that will not only expand coverage to millions of uninsured Americans, but will lower the deficit by $138 billion in the next 10 years, and by $1 trillion the decade after, according to the nonpartisan Congressional Budget Office.
Sadly, they're wrong. ObamaCare is riddled with budget gimmicks and flawed political assumptions that create yet another entitlement program we can't afford.
This is in part because the CBO became a pawn in Washington's political games, with Democrats brandishing the bill's price tag as if it was handed down as a footnote to the Ten Commandments.
"Those aren't my numbers," the president has said repeatedly. "They are the savings determined by the Congressional Budget Office, which is the nonpartisan, independent referee of Congress for what things cost."
The president conveniently ignored the fact that CBO estimates always come with significant caveats.
The first is that there is no surefire way to make long-term predictions about the economy, federal revenues or program costs.
The second is that Congress routinely writes legislation that looks fiscally sound and generates a good CBO score, but then votes later to overrule or water down key legislative provisions that make the original score irrelevant. |
