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Health Care, the Deficit and Shadow Transparency

March 18th, 2010


03.18.2010 original publish date.
05.17.2011 updated links and new information.
03.14.2012 repaired moved or removed gov doc links with PDF files.
04.03.2012 repaired moved or removed links with PDF files.
09.17.2013 Added [bracket numbers] for easy referencing. Minor editing.

Health Care, the Deficit and Shadow Transparency

original article written by Net Advisor

[1] The Deficit
Many people have asked me whether the U.S. is or will go bankrupt? Technically the U.S. can’t go bankrupt as long as there is someone still working, the government will just raise taxes higher and higher.

They can do this under Article 1 Section 7 of the U.S. Constitution.

Congress can just pass more laws to increase the deficit, and devalue the U.S. Dollar. This has been happening since 1913 (US Dollar chart).

If the question is will the skyrocketing increase in the U.S. deficit be a greater burden on current and all future tax payers that will result in a lower standard of living? The answer is a unfortunate yes.

The funny part is that Massachusetts, arguably the most liberal state in the USA, elected a Republican as Senator (Scott Brown) for the first time in some 47 years because they want to block ObamaCare – a liberal social program.

“Brown’s victory made real the once unthinkable prospect of a Republican filling the seat held by Kennedy, known as the liberal lion, for almost 47 years.”

— Source: CNN

Massachusetts own Treasurer, a Democrat also took issue with Obamacare with concerns about increasing massive fiscal deficits and record tax increases.

“Tim Cahill (MA-D) slams Barack Obama, Dems on health care”

— Source: Boston Herald (PDF), 03-17-2010

What does that tell us when a liberal state, dominated by left Democrats elects a Republican, and their own leaders are against their own party’s goals?

There was a reason why we left England over 200 years ago. If we recall our history, it had something to do with unfair taxes, and no political representation.

In March 2009, PBS.org released a program everyone should watch, because all of us under 65, and not currently receiving Social Security, will be paying for these huge future deficits in part by more spending and new government ran healthcare.

[Watch FREE On-Line Program (PBS.org): "Ten Trillion and Counting"]

Note: The PBS program above hammers both Bush and Obama Administrations for fiscal mismanagement. However, based on the government’s own current numbers, Obama deficit spending will make Bush look like a Saint. Watch the program free on-line and see for yourself.

[2] Is Obama Health Care Going to Really Save Tax Payers Money?
The Democrats are so desperate to save their egos, they are now saying ObamaCare will ‘reduce the deficit by $118 Billion in 10 years, then $1 Trillion after that.’ What they don’t tell you is that we will face over $1 Trillion in NEW tax increases.

“Obama’s Budget: Almost $1 Trillion in New Taxes Over Next 10 yrs, Starting 2011.”
— Source: ABC News (updated at page bottom)

Despite higher taxes, according to Obama’s own budget numbers, the National Debt will still more than double  in 10 years (Source: White House Budget PDF, P171).

Higher taxes don’t impact just the “wealthy” and businesses. Higher taxes on business mean that costs of items at the retail levels will go up. To offset these higher costs, businesses may not be able to afford to keep as many people employed. Thus, high unemployment could be a continued risk for years to come.

Higher taxes on the “wealthy” means they are less likely to spend. Given that the U.S. is a consumer driven economy and most people are cash strapped due to mortgage, job and general economic issues, squeezing more money out of the people who can afford to spend, does not create more jobs. If they spend less, that means companies sell less. If companies sell less, they will in turn produce less. If they produce less, that means they will hire less, or lay off more. Unfortunately, government does not look at it like this, however this is how the business world works.

image: House Speaker Nancy Pelosi (D-CA)

image: House Speaker Nancy Pelosi (D-CA)

[3] Obama Claims “The Wealthiest Americans” Will Pay for National Health Care
For those who think that new taxes only affect the “wealthy” guess again. Look what is in the Obama Health Care bill.

“Buried in Nancy Pelosi’s health-care bill is a provision that will partially repeal tax indexing for inflation, meaning that as their earnings rise over a lifetime these youngsters can look forward to paying higher rates even if their income gains aren’t real.”

— Source: Wall Street Journal PDF, 11-06-2009

The Obama Administration has made Health Care aka “ObamaCare” more important than jobs and the economy. If we had more jobs and a better economy we could better afford to pay for healthcare. So forget about jobs and forget about economy, all we need is ObamaCare, and that will solve everything?

“Obama laid out an economic stimulus plan that positions health care as a cornerstone of financial growth and recovery.”

— Source: Washington Post

[4] No Transparency
If health care is so important right now, (again, jobs, housing, inflation, deficits, not at the top of the list apparently), and since Obama and Company have promised to have a more open “transparent” government, then how come the biggest social agenda since the Great Depression is being hammered out away from the public eye; away from all the media cameras, away from every single elected Republican Member of the House AND Senate; away from anyone who could find out what is really being discussed, let alone written in the 2,309 page House Health Care Bill? (2,309 page PDF) (share link.)

“The House and Senate plan to put together the final health care reform bill behind closed doors according to an agreement by top Democrats,” House Speaker Nanci Pelosi said today at the White House.

— Source: CBS News

[5] Democrat Controlled House Will BLOCK U.S. Senate From Voting on The ObamaCare Law
Since the Senate is no longer controlled by the Democrats after Massachusetts elected Scott Brown (R) to the Senate, the Democrats only control the House of Representatives (The House).

The House of Representatives has decided to use some ethically and controversial laws block the U.S. Senate to make Amendments to the House Health Care Bill, and thus, Democrats in the House seek to then pass a Trillion Dollar Health Care Bill without a single vote in the U.S. Senate.

— Source: Washington Post (PDF), 03-16-2010

Further House Speaker Nancy Pelosi is expected to try and pass the Health Care Bill in the House exclusively, again, without the need of the U.S. Senate, and Pelosi seeks to pass ObamaCare without having a single Democrat go on their official voting record, and use an obscure law to consider the bill passed anyway. After that, then ready the bill for President Obama to sign into law with no objection by anyone, including the U.S. Senate (Source: CNN).

House Minority Leader John Boehner, (R-OH), said (this is) “the ultimate in Washington power grabs, a legislative ploy that lets Democrats defy the will of the American people while attempting to eliminate any trace of actually doing so.”

— Source: CNN

[6] Still No Transparency from Obama Administration
President Obama promised transparency and an open and a cooperative government. The reality has been anything but transparent, open or cooperative.

“My Administration is committed to creating an unprecedented level of openness in Government. We will work together to ensure the public trust and establish a system of transparency, public participation, and collaboration. Openness will strengthen our democracy and promote efficiency and effectiveness in Government.”

— Source: Barack Obama, WhiteHouse.gov

[7] Will Passage of Obama Health Care Reduce The Deficit?
On Thursday, 03-18-2010, The Congressional Budget Office (CBO) created a fancy letter (PDF) to appease House Speaker Nancy Pelosi in order to try and make the Health Care Bill LOOK like it is a savings to the deficit, when in fact it will make the deficit soar.

The so called “deficit reduction” in the Obama Health Care bill means the House of Representatives PROJECTS that they will SPEND about $118 Billion less from 2010-2019 than the $10 Trillion of NEW projected debt they will add [Source: CBO Letter, Page 2 Parr 2 (CBO letter removed) See local PDF].

So basically what this means is that government will deficit spend another $10 Trillion+ over the next 10 years minus $118 Billion. Somehow healthcare costs won’t go up? Let’s see, you plan on spending $10 Trillion. Then you decided to spend $118 Billion less. Did you save money? Of course not, you still spend over $9.8 Trillion more then you had. This is Obama Math on deficit reduction.

“The White House projected a cumulative $9 trillion deficit between 2010 and 2019, while the CBO pegged the total at $7.1 trillion because it assumed higher revenues as tax cuts expire. The spending blitz could push the national debt, now more than $11 trillion, to close to $20 trillion.”

— Source: Reuters

Other data suggests the deficit will be bigger than President Obama and the CBO projects.

chart image source: The Heritage Foundation

Source: Image/Data: Heritage.org

As we know, now the U.S. government is using an accounting trick to make the so called projected “deficit savings” look better in the Health Care bill than it really is. And here is how they do it:

The U.S. government is not factoring the cost of Social Security or the potential costs of running the U.S. Postal Service in the so called “deficit reduction” (CBO Letter Page 2, Parr 1 PDF). Social Security is a HUGE government expense and will only get bigger with retiring Baby Boomers. The USPS also is a considerable expense, and postage rates have NEVER decreased.

Both Social Security and the USPS are called “off budget” items, meaning that no matter what these costs are, the government does not count them in the budget forecasts.

— Source: Congressional Budget Office (CBO)(PDF)

The government still has to make Social Security payments and still runs the post office, and both are not exactly free to operate. On top of this, the projected deficit does not include any new costs of Obamacare. Still looking for some “transparency” in this Administration.

Chart A: Quick Look at Social Security, Medicare & Obama’s Budget Projections

[8] A Quick Look at Social Security, Medicare & Obama’s Budget Projections

“By this measure, the OASI Trust Fund (Old Age Survivors Insurance Trust Fund) is financially adequate throughout the 2009-18 period, but the DI Trust Fund (Disability Trust Fund) fails the short-range test because its trust fund ratio falls below 100 percent by the beginning of 2014.

The HI (Federal Hospital) Trust Fund also does not meet the short-range test of financial adequacy. Its trust fund ratio is expected to fall below 100 percent in 2011 and assets are expected to be exhausted in 2017, two years earlier than reported last year (2008).

Chart A (above) shows the trust fund ratios through 2025 under the intermediate assumptions.” Together these are the Social Security and Medicare Programs.

— Source: 2009 Trustees Report on Social Security & Medicare, Projected Costs and Funding

So what does all this mean?

By 2011, the Federal Hospital Trust Fund beings to run into financial problems. The solution in part may just be the new tax increases that coincidentally begin in 2011.

The funding for these programs seems to be OK according to government numbers, which may or may not be accurate, as these numbers are based on “projections,” and which in my analysis of the data have been grossly underestimated, and or exaggerated for political gain. The lack of funding however begins to take on bigger issued by 2019. President Obama’s and the CBO’s budget only goes out to 2019, when financial constraints on social security, Medicare, and other entitlement programs run into critical condition.

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Additional Update: As a result of the November 2010 mid-term elections, Democrats lost control of the House of Representatives. By December 2010, Republicans (temporarily) blocked the planned $1 Trillion in new tax increases. This was the expiration of the “Bush tax cuts,” now chanted by some in the media as the “Obama tax cut deal.” The extension of the “Bush Tax Cuts” by some media and politicians make people incorrectly think that only the wealthy benefit. This is completely false.

“…the average American will pay about $2,000 less in taxes per year for the next two years.”

— Source: ABC News (PDF)

This saves the average American $166 (one-hundred-and-sixty-six-dollars) a month for the next two years when these “tax cuts” will expire in 2012. Those who are against the “Bush” tax cuts, are always free to send in their $166 a month or more, if they feel they are not being taxed enough.

The funny part is the Obama Administration called what would have been a tax increase, a “tax cut,” but in reality no one cut our taxes. Tax rates have stayed the same since 2003. Read more under: What Tax Cut?

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