Under the Assumption that ObamaCare Will Reduce the Deficit, It's Safe to Assume that ObamaCare Will Reduce the Deficit


President Obama didn't have much to say about his health care overhaul during his State of the Union this year, but his new budget plan makes sure to remind readers how fiscally responsible the trillion-dollar plan is and take credit for its alleged deficit reduction. Here's what the introduction to the new budget proposal has to say about the health law's budgetary impact: 

We took many steps to re-establish fiscal responsibility, from instituting a statutory pay-as-you-go rule for spending to going line by line through the budget looking for outdated, ineffective, or duplicative programs to cut or reform.  And, most importantly, we enacted the Affordable Care  Act. Along with giving Americans more affordable choices and freedom from insurance company abuses, reform of our health care system will, according to the latest analysis by the non-partisan Congressional Budget Office, reduce our budget deficits by more than $200 billion in its first decade and more than $1 trillion over the second

This is true…or at least it's true provided you make the right set of assumptions. For example…

  • if you assume that the law will successfully raise roughly $500 billion in taxes
  • and if you assume that it will reduce Medicare payments and other expenditures by another $500 billion
  • and if you expect that the law's alleged delivery system reforms will keep producing savings year after year
  • and if the Independent Payment Advisory Board (IPAB) it sets up works exactly as planned and isn't repealed
  • and if you ignore the cost of the doc fix, which Obama's new budget plan does. 

But relying on this set of assumptions may not be the best way to project the law's actual budgetary effects, especially given that we now know for sure that President Obama signed off on the use of health care budget gimmicks right before the law passed. For example, the Medicare cuts may be difficult to sustain, and the delivery system reforms may not pay off. Members of both parties are already looking to repeal IPAB. And while the budget proposal is right to note that the CBO officially scores the law as a net deficit reducer, the CBO has also implicitly cautioned that the assumptions used to produce the deficit reduction projection might not be pan out, and that, in later years, ObamaCare may not be able to hold down Medicare spending.  

NEXT: Is This the Sort of Chip Manufacturer Obama Has in Mind?

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  1. Meanwhile, Romney attacks the Obama budget from the left:

    This week, President Obama will release a budget that won’t take any meaningful steps toward solving our entitlement crisis. The President has failed to offer a single serious idea to save Social Security and is the only president in modern history to cut Medicare benefits for seniors?

    1. and yet, Romney is right. Entitlements are where the money is and where the greatest increase in demand will come as the Boomers retire. Paul Ryan came up with a plan, Obama’s own deficit panel had a plan; the former led to accusations of killing grandma and the latter was basically ignored.

      Nero, meanwhile, comes up with another trillion in deficit spending with more stimulus disguised as job training plus a sop to the newest entitlement class, veterans. Because someone who voluntarily leaves the service should always jump ahead of a person who was downsized, right? It’s not like the armed forces don’t already have programs for the transitioning.

      1. Boehner just caved on offsets for the payroll tax cut extension.


        No courage. Romney/McConnell/Boehner – are you jazzed up yet?

        1. I find Romney/McConnell/Boehner to be a nanometer less depressing than Obama/Reid/Pelosi. But that’s because I’m racist and misogynist.

        2. no courage on either side of the DC establishment; the only difference is on spending priorities. Boehner/McConnell is the flip side of Pelosi/Reid.

          Actually, Romney might be the right guy at this time since he at least has some business sense and gets that “money out > money in” is not a viable strategy. This also assumes the gimme portion of the electorate does not act like Greece when some toys are taken away.

          1. I predict that Romney will do marginally a less awesome job reining in spending than Arnold Schwarzenegger did in CA.

            After all, Romney sure kept the civil service and the porkulent legislature in check here in MA. There’s every reason to believe he’ll be even more successful at the federal level. ;@

            1. tarran, both Romney and Schwarzenegger had to deal with Democrat legislatures.

              1. Of course!

                That’s why budgets don’t explode when the Republicans control the legislature and Romney is sure to do almost as good a job as Schwarzenegger.

                1. doubtful that Repubs have EVER controlled the CA Legislature; in Congress, you would have a point. But…with Obama, more of the same is a given; you could likely say ditto with Santorum.

                  Romney reduced some taxes in MA; some fees did go up as well. A budget turned into a surplus, and he did okay with the Salt Lake Games and Bain. No one claims he’s the second coming but Santorum has never lead anything and Obama’s record is clear.

                  1. Obama spending 2013 budget = $3.8 trillion.

                    Final year of Bush = $3.5 trillion. (CBO)

                    That is not bad compared to 2001-09.

                    1. It’s so sweet how Shrike “contributes” despite his inability to differentiate between the Congress and the President.

                      Would you like a cookie, shrike? Because I think you earned one…

                    2. A shit-stained cookie.

                    3. Sign me up for more gridlock then. I have no problem with more of it.

                    4. Final year of Bush = $3.5 trillion. (CBO)

                      Including, of course, the trillion that Obama spent over and above the budget Bush submitted.

                      So dishonest. This has been pointed out before, so its more like, so determined to be dishonest.

                    5. Completely untrue. CBO forecast $3.5 trillion in spending for 2009 while Bush was still president.

                    6. Page 16 Table 5 $3.543 trillion


                      CBO Jan 08, 2009

                      This should end it.

                    7. I see the CBO projections for 2009 at 3.5T.

                      And I see the amounts actually spent on Obama’s stimulus in 2009 (call it $240BB by the end of FY 2009).


                      And I see the amount actually spent by the Feds in FY 2009 ($3.5TT).

                      And I think: this doesn’t add up. Looks to me like the CBO overestimated.

                      Of course, we know that Obama’s budget is pure fiction, anyway. We’re looking at another year of continuing resolutions, with a price tag of around $3.8TT.

                      Obama is proposing, basically, that federal spending continue to grow at a rate of 5.5% per year, indefinitely.

                      That’s fiscal malpractice, is what that is. Defend him all you want, blame Bush all you want, but it doesn’t change the facts:

                      Obama’s spending plans are fiscal suicide.

          2. And Obama is doing his best to expand the gimme portion of the electorate as fast as he can.

    2. So… he’s got your vote?

    3. Valentine’s day is around the corner.why not to find a sexy babe to hook up?Bi-curious? =====Datebi.c/O’M===is designed for bisexual and bi-curious individuals to meet in a friendly and comfortable environment. It hopes that all members can make new friends and establish romantic relationships.

  2. my assumption is that the strengthening economy will generate moar taxes…which will float all govt boats.

    1. my assumption is that the strengthening economy will generate moar taxes…which will float all govt boats.

      Unless you think we’re going to get an economy that grows faster than government spending (5.5% YoY after next year), it won’t float any boats.

  3. The geography of prejudice.



    1. Those are awesome. I’m sending the Europe according to Turks map to my dad.

    2. Italy: “Tanned men with Gray Hair”

      1. Turks: handsome homophobes. It’s even funnier because it *is* true. 😀

        1. I remember these maps that were posted around here some time before. But what never gets old: France is the Twinkreich.

  4. Along with giving Americans more affordable choices and freedom from insurance company abuses, reform of our health care system will, […]

    Hi, there. I want to talk to you about ducts. Do your ducts seem old-fashioned? Out-of-date? Central Services’ new duct designs are now available in hundreds of different colors to suit your individual taste.

    *jingle: Central services! We do the work, you do the pleasure!*

    1. Now we just need Harry Tuttle to zipline in and save us.

      1. An armed, unlicenced heating repair technician. Harry Tuttle was a dirtbag libertarian– an enemy of the state.

        1. I always think of Captain Tuttle from M*A*S*H when I hear that name (I know it’s from Brazil).

        2. “Why? I came into this game for the action, the excitement. Go anywhere, travel light, get in, get out, wherever there’s trouble, a man alone. Now they got the whole country sectioned off, you can’t make a move without a form.”

  5. Budgetary effects in the out years? Hell, the only thing that matters to Team O is re-election this year.

    1. President Biden’s first term

      Need to give up dude.

      Obama is going to lose come November no matter who runs against him.

      The only thing that can save him at this point is if alien technology boosts the US economy to astronomical levels or if North Korea starts nuking Japan.

      1. Noted. So I’ve currently got you and Pro L in the “No” column for another Obama presidency.

        1. That’s right. Send me money when it happens.

          1. I will happily send you money. If there is one bet on this planet I’d love to lose (and hate to win) it’s this one. But I fear that you underestimate the self-delusional capabilities of Democrats.

            Plus we’ve still got months of gaffe opportunities for Mittens.

            Also, now that the GOP primary field is settling and liberals are focussing in on who to hate…

          2. You are way, way too optimistic. As Paul says, never underestimate the capacity for TEAM BLUE morons to vote for their guy at the end of the day. It’s what they do.

            1. I’m almost certain the choice will be Romney or Obama. What’s a disheartened libertarian to do?

              1. Write in none of the above on the races and vote to reduce taxes/repeal laws on all the referenda.

            2. Greenwald’s last column was a pretty good indictment of TEAM! bullshit.

            3. Optimistic would be saying that Paul or Johnson will win. I’m just saying that the economy and the general ineptitude of this administration are both so bad that many won’t vote for him. Or maybe vote at all.

              1. Like nearly all of my friends, I proudly jumped on the Obama bandwagon in the leadup to the 2008 election. And, like most of my friends, I’ve been disappointed that President Obama has governed like a technocrat, not the inspirational leader we all hoped he could be. But,[…]

                Everyone’s got a big but… what’s your big but:

                […]unlike many of my liberal friends, I’m sticking with Obama in 2012, and here are the three reasons why:

                First, Obama has accomplished a whole lot more than we liberals give him credit for. Democrats and progressives tend to have a glass-half-empty mentality, in which we dwell on the disappointments rather than celebrate the accomplishments. We thus tend to forget that facing some of the most adverse circumstances imaginable (two wars and a near Great Depression), President Obama has accomplished an incredible amount.

                And on it goes.


      2. I disagree.

        The GOP stole the 2004 Democratic playbook.

        Anybody but Bush didnt work and neither will Anybody but Obama. You need to run a candidate who people want to vote for to defeat an incumbent.

        1. In 2004, the economy was revving up to its peak in the cycle. If voters still feel the economy is shit, Obama might just lose in 2012.

          1. If voters don’t feel that, voters are stupid.

            Unfortunately, voters often are stupid.

            1. If we trust eighteen year-olds to vote, why don’t we let them drink?

              1. I’d prefer that they got drunk before they voted.

                1. Vote while they’re drunk?

                  1. They are already fat and stupid, why not go for the tri-fecta.

                  2. When you consider the number that voted to have themselves put into eternal debt you must conclude that they did indeed vote while drunk.

                    1. Voters should have a voting credit card. If your vote proves to be a smart one, then you get a voting credit. If it’s a dumb one, then you get a voting debit. It’s is a really stupid one, you lose your card for seven years.

              2. so they can fully appreciate the power they have been given, which will then lead them to drink. Ingenious, don’t you think?

              3. If we trust eighteen year-olds to vote, why don’t we let them drink?

                Because we’ve seen what they do with their votes. Now you want to trust them with alcohol?

      3. Obama is going to lose come November no matter who runs against him.

        A couple of months ago I started claiming that pet rock could beat Obama, and I still think it’s true.

        But…I worried that the republicans will find someone who can do worse that a pet rock. It’s clear that they didn’t learn Thing One from 2008.

        1. Pet Rocks are in this year.

  6. and if you expect that the law’s alleged delivery system reforms will keep producing savings year after year

    All they have to do is keep the whole thing from collapsing through President Biden’s first term, and after that, it’s someone else’s fault the program doesn’t work.

  7. And who are you? Comrade Questions?

    1. im not sure if jihadists refer to themselves as comrades

    2. Do you want ants? ‘Cause that’s how you get ants!

  8. Dear Bleeding hearts, stop posting the 1 vs. 1 million picture of Whitney on facebook.

    Smart people.

    1. You get what you deserve for having a Facebook account

  9. Glad to see some survived Sunday’s abysmal thread.

  10. Boehner just caved on offsets for the payroll tax cut extension.

    Forgive me for not pretending to be surprised.

  11. For his next act, Obama will destroy the municipal bond market:


    1. Just doing what comes naturally. Can you blame a guy?

    2. The economy: It’s what’s for dinner.

      1. Only if it is locally-sourced and low calorie. Wouldn’t want you to be too fat to fight. And now I’m off to Bali for a few weeks . . .

        1. I’m off to Bali for a few weeks

          a few weeks of exercise might help those flabby arms.

          oh, Bali, not Bally’s. my bad.

        2. That’s the problem… our economy is locally-sourced and low calorie.

    3. This is so retarded it’s brilliant.

      A whole bunch of cities/user-fee funded infrastructure will be unable to borrow money.

      They’ll go whining to the Fedgov, and the government will give them some of the money they would have gotten but were diverted into Federal coffers.

      Bang! Nothing happens without the Godfather President giving his blessing.

      It’s almost as brilliant as George Bush’s attempts to nationalize equity markets via “social security privatization”.

      1. Even better – if you kill off the muni-bond market, then the rich can’t hide from income tax via that shelter.

      2. I thought that, too, but the real explanation is probably far simpler: Obama simply can’t stand the notion of a rich dude getting a tax-free 2% yield. It’s that evil “investment income” thing. So he has to tax it on principle, just like he wants to raise cap gains taxes even if it reduces revenue. The muni bond market may melt down, but it’s all in service of the larger goal, i.e., “at some point you’ve made enough money and I’ll decide when that is.”

        The message is also loud and clear: whatever you now regard as tax free (hello 401(k)!) may not be so at the whim of greedy democrats.

        1. 401(k)’s are not tax-free!!!

          They are tax-deferred

          You will be paying income taxes on them when you are retired…. And guess what? If tax rates are higher in the future, or you’re going to be in a higher tax bracket in the future, that could very well be a bad deal…

          1. Sorry, you touched on one of my biggest pet peeves as an advisor.

            1. Yeah, I so wish there was a tax-free retirement plan.

              1. Wait till those poor deluded Roth IRA holders find out what we have in store for them. They’ll again be given the “opportunity” to “help” society.

              2. Point taken tarran, you are of course correct.

            2. But isnt a Roth-401k tax free?

              1. You pay now as opposed to later.

                1. I no, my point was saying “401k” is generic (although I guess 401k without the Roth is assumed to be a regular 401k) and may or may not be “tax free”.

              2. Somewhat. Its complicated.

                And, of course, that’s just for now. Wait until the fed’s desperation for money cranks up another notch.

                1. Oh yeah. Roths will get hit before regular iras/401ks.

                  My paranoia over that is part of the reason I dont have a Roth.

            3. So, do you recommend that one mixes tax-now and tax-deferred investments?

              1. /Hastily looking around in case the FINRA secret police are listneing. I recommend nothing! Speak to your financial advisor about your current situation and consider all your options! 😉

    4. Totally foreseeable.

      The feds are so desperate for revenue that they are cannibalizing their competitors – the municipalities.

  12. The cheapest, moneysaving form of medical care is on a dead patient and Obamacare can provide that without a second opinion or a copay.

  13. Sounds like a plan to me dude. Wow.


  14. As I have told my kids, the tough decisions have not left Washington, but the tough decision-makers have. What I want to know is, who are the 5% that actually APPROVE of the job Congress is doing? They need to be institutionalized.

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