For the past few weeks, Democrats have been arguing against the repeal of Obamacare on the grounds that the program is a debt-reduction measure. The argument is hard to take seriously, so I haven't addressed it, though I've provided links to some who have. But the Dems have been so persistent with this claim that perhaps it's time to analyze it.
I see three problems with defending Obamacare as a debt-reducer. First, as I understand it, the claim is based on a ten year window. I don't think even the Democrats are claiming that it will be revenue positive over a longer horizon. Certainly the Congressional Budget Office, on which the Dems rely, doesn't make that claim. And, of course, Obamacare will kick in only gradually over the first five years.
Second, claims that Obamacare is a net revenue enhancer are based on CBO estimates which, in turn, are based on highly suspect assumptions presented to the CBO by the Dems. According to Yuval Levin, "if you read the CBO reports from around the time the bill was being debated last March you'd find the agency sending every possible signal it can to alert members to just how implausible some of the 'cost cutting' measures in the bill really were." In reality, as Levin says, "it is very likely that if Obamacare is implemented it will cost far, far more than the CBO was allowed to estimate."
Finally, as Levin also notes, Obamacare doesn't cut health care costs. If it turns out to be revenue neutral or positive for any period of time, this will be because its enormous tax increases offset its enormous new expenditures.
But suppose Congress had declared war on Saddam Hussein's Iraq and then immediately enacted new taxes in an amount greater than the estimated cost of the war. Would anyone defend that war as a debt-reduction measure? I doubt it.
The above hypothetical, unlike Obamacare, involves two separate acts of Congress. But what if Congress, in one act, authorized an expensive new missile defense system along with tax hikes in excess of the system's estimated cost? Again, I wouldn't expect anyone to defend that legislation on grounds of debt-reduction.
Similarly, Obamacare should not be defended on these grounds. It is properly viewed as "tax and spend," not debt-reduction, legislation.
CORRECTION: Although the CBO letter I referred to doesn't analyze the period beyond the first decade, it does state that repealing Obamacare would increase budget deficits "in subsequent years."
In an earlier letter, CBO told Congress that, while it generally doesn't do cost estimates beyond ten years, it has performed a rough outlook for the following ten years due to requests by members of Congress. CBO then claims that Obamacare would reduce the deficit during this period, but emphasizes the imprecision of the estimate, calling it even more uncertain than its projections for the first decade.
