A Peculiar Path to Deficit Reduction

by Yuval Levin

Chris Van Hollen, the ranking Democrat on the House Budget Committee (and, alas, my congressman) has been getting before every camera he can find over the past few days to insist that Obamacare is a deficit reduction plan and so repealing it would increase the deficit, and that this is what the Congressional Budget Office says too.


Several folks around here, and many elsewhere of course, have noted that the CBO was forced to accept some very implausible assumptions in making its calculations—and indeed 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. It is very likely that if Obamacare is implemented it will cost far far more than the CBO was allowed to estimate.


But let’s put that aside for a moment and accept for the sake of argument all of the assumptions that the authors of Obamacare want us to accept, and compelled the CBO to accept. Let’s look at the actual CBO report that Van Hollen and others are waving around—the one that assesses the effects of the Republicans’ repeal bill. What does it really say? Does it say that Obamacare will cut health-care costs? No. Does it say that it will reduce costs in some other way, and so cut federal spending to reduce the deficit? No. It says that the enormous tax increases in the law are even greater than the enormous spending increases in the law. It says Obamacare would increase taxes by about $770 billion over the next ten years, and increase spending by about $540 billion. That’s a very peculiar path to deficit reduction.


Put another way, that CBO assessment of the Republican repeal bill that Van Hollen and others are waving around says that the repeal to be voted on this coming week would, over the next ten years, reduce taxes by $770 billion and cut spending by $540 billion. It says it quite plainly: “CBO anticipates that enacting H.R. 2 [the repeal bill] would probably yield, for the 2012-2021 period, a reduction in revenues in the neighborhood of $770 billion and a reduction in outlays in the vicinity of $540 billion, plus or minus the effects of forthcoming technical and economic changes to CBO’s and JCT’s projections.”


Obviously it would be best to reduce spending by an even greater amount than we reduce taxes over the next decade—and of course the Republican House is proposing to do just that through its cuts in discretionary spending, and hopefully will also do so through entitlement reform.  But the notion that a massive tax increase and a massive spending increase are the way to reduce the deficit hardly seems like the message the Democrats should want to be pushing just now. If they want to spend their time informing Americans that the Republican repeal bill is a huge tax cut and a huge spending cut, it seems to me Republicans ought to welcome that.

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