Will Obamacare Be Deficit-Neutral?

October 21, 2009

By Mario Rizzo  

If anyone doubts that this Administration and the Democrats in Congress live in bizarre fantasy world he should take a look at what is happening with the funding of Medicare.  

Premiums are scheduled to “rise” by 15%. Most people will not have to pay because their increases are limited by their Social Security raises which are zero this year (aside from the $250 lump-sum political payment to the elderly that Obama is contemplating). 

The “wealthy” would have to pay and Medicaid will pay on behalf of its beneficiaries. Under the reasoning that the federal government does not want to increases expenses for state programs (the cost of Medicaid is shared by state and federal governments) they are proposing canceling the largely notional increase altogether. 

Those who would have had to pay out-of-pocket are the wealthy on Medicare.  

The significance of all this is the Obama Administration cannot bring itself to finance Medicare in the way the law currently specifies. And we are to believe that they will adequately finance the new healthcare scheme.  So much for deficit neutrality?

I confess that I have been naïve over the years in thinking that the stupidities I have seen the media and the general public accept from the U.S. government could not get any greater than they have been. But I fear I was wrong. There seems to be no upper limit.

3 Responses to “Will Obamacare Be Deficit-Neutral?”

  1. Clark Thornton Says:

    I would be surprised at this, but nothing I find out about our downward spiral surprises me anymore. I have been avidly reading financial/econ blogs since early ’08 and have a M.A. in economics and a J.D. But it’s hard to keep up with and make sense of it all (the impending heatlhcare disaster, the still-crashing economy, and the fact that capture of the government has crossed over into outright theft, lying, and corruption.) If I didn’t have a day job and could do nothing but read every waking hour, I still don’t know how much more I’d understand. Part of this is that the data sources from the government/media are corrupted, and it is hard to filter through the lies and the noise. It is not surprising that the media are useless & the public is clueless, but more of the public who pay some attention know that something is seriously wrong. At least I hope I’m right about that. If it weren’t for this site and others (e.g., Naked Capitalism, Credit Writedowns, Calculated Risk, Mike (Mish) Shedlock, and many others) — and that this is my “hobby,” such as it is, I’d probably be just as clueless as J6P.
    At any rate, thanks for the post.


  2. Well, there’s a sense in which this lunacy makes sense, I think.

    Medicare premiums rise, so costs being covered. That’s “fiscally responsible,” and good, isn’t it? (Certainly they can claim so.)

    But since people can’t afford this, the government is stepping in in various ways to help them avoid the burden. That too is “fiscally responsible” and good, no?

    And since government can’t afford it either, the Feds are cancelling this increase. That’s fiscally responsible (or at least necessary).

    So how is this being paid for, since expenditures are still increasing?

    The federal government continues to borrow from People’s Bank of China… which means the poor Chinese citizen is ultimately financing the whole crackpot scheme.

    No matter hard hard I try, I can’t figure a way to pretend the Chinese’ behavior is fiscally responsible…except that they’ve grabbed the tar baby and now can’t let go (they can’t cut the U.S. off and watch their dollar assets plummet).

    Hence, so long as Congress can finance its irresponsibility by borrowing from People’s Bank, etc al. why would we expect it to change?


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