During the yearlong debate over Obamacare, the law’s apologists returned over and over again to the supposed fiscal benefits flowing from its provisions as a top selling point. Pass Obamacare, they said, and we’ll have health insurance for everyone, painless cost-cutting to slow rising premiums, and deficit reduction to boot. Its win, win, win!
No one believed them, of course. The claim of deficit reduction may have provided a fig leaf to allow some wavering congressional Democrats to vote yes, but it didn’t convince a skeptical electorate. Most Americans have too much common sense to buy the argument that what the nation needs to get its fiscal house in order is a new trillion-dollar-plus entitlement program, piled on top of the unaffordable ones already on the books.
Sure, on paper the Democrats might be able assemble “offsets” to make it look like the program was “paid for.” But even a casual review of the legislation and associated analyses reveals what most people intuitively know to be the case: that Obamacare combines dead-certain entitlement expansion (for at least 30 million people, and probably many millions more) with budgetary sleight of hand and “pay fors” that are either phony or altogether implausible.
Nonetheless, as the House readies a repeal vote for this week, Obamacare enthusiasts are back at it again, claiming once again that Obamacare supporters are practitioners of fiscal discipline, while those who want to undo the largest expansion of government in nearly half a century are the budget busters.
To be sure, it’s a tough sell, but Paul Krugman of the New York Times is eager to give it a try nonetheless. He claimed in his Sunday column that the Republican contention that Obamacare is a budgetary disaster amounts to a “war on logic.”
But Krugman’s attack is itself illogical, and inaccurate too. He focuses most of his attention on the so-called “doc fix,” which is the periodic legislation passed by Congress to prevent deep and unrealistic cuts in what Medicare pays for physician services. Republicans have argued, accurately, that the accounting for Obamacare omits the “doc fix” spending, and that if it were included, the supposed deficit reduction from Obamacare would vanish altogether, even before the other gimmicks and implausible assumptions were exposed and removed.
Krugman contends that this Republican argument is illogical because, in effect, the real “baseline” of federal spending already includes higher physician fees. With or without Obamacare, Congress is going to spend more on physicians, Krugman suggests, therefore Obamacare shouldn’t get charged for it.
But that’s not what’s really going on here. If Krugman’s analysis were accurate, why does Congress go through the annual agony of a “doc fix” at all? Why haven’t they just passed a permanent solution already and gotten it over with?
The answer is that, while Congress doesn’t want to cut physician fees, it hasn’t wanted to pile the costs onto the national debt either. What has held back a permanent solution is the inability to find $200–$300 billion in acceptable “offsets” to make sure a permanent fix doesn’t add to the deficit.
When President Obama assumed office, he wanted his health bill and a permanent “doc fix” too, but he didn’t have enough flimsy offsets to grease the way for them both. So he came up with a new “solution”: use the offsets to pave the way for Obamacare’s spending, and exempt the “doc fix” from the need for offsets at all. This would create the perception of “deficit reduction” from Obamacare even as an unfinanced “doc fix” ran up the deficit by an even larger amount.
At the end of the day, even some Senate Democrats balked at this shameless sleight of hand and blocked the effort to pass an unfinanced and permanent “doc fix.” But the issue remains very much unresolved, and the administration has yet to disavow their push from last year to pay higher physician fees with borrowed money.
Krugman also seems completely unaware that the Medicare cuts that are supposed to pay for Obamacare’s entitlement spending are of the same type as the physician-fee cuts he now wants to assume away. They are arbitrary and unrealistic too, so much so that the chief actuary for Medicare considers them entirely implausible. He projects that if Obamacare’s Medicare cuts were allowed to remain in effect for long, Medicare’s payment rates would fall below those of Medicaid, which are so low that Medicaid patients often have trouble accessing care. And yet Obamacare’s apologists want us to believe we can safely erect a massive new entitlement based on the assumption of future savings from these cuts.
In truth, the Krugman critique doesn’t lay a glove on the Republican argument. He doesn’t even try to defend the CLASS Act, another new entitlement for long-term care. As a start-up program, CLASS collects $70 billion in front-loaded premiums during its first decade. Krugman and others want to count this money toward Obamacare, even though every analysis available shows CLASS will itself need a bailout when its costs balloon beyond ten years. And then there’s the so-called “Cadillac” tax that starts in 2018. The tax is so unpopular with Democratic constituencies that President Obama was never willing to collect it himself (if reelected, he will leave office no later than January 2017). But Obamacare’s defenders argue this tax can be counted on to produce trillions in new revenue beyond 2020.
If liberals and Democrats want to make the fight over Obamacare about taxes, spending, and the budget deficit, Republicans should allow them to do so. The public has already taken sides in this fight. Taxpaying Americans are never going to be convinced that the government has found a way to give away new benefits to millions of people, with no cost to them or anyone else.
Does any serious academician take Paul Krugman seriously anymore? He can't possibly have any credibility among real scholars, can he? His column on Sunday read like a reject for the high school newspaper, an extended riff on the relationship between going out to dinner with his wife and making a mortgage payment. Just once it would be encouraging if he would merely argue from facts and assumptions to a logical conclusion. I guess Professor Krugman would consider such an effort to be a "war" on logic as well.
Reply to this commentLinkReport AbuseAhh, krugman is getting desperate. Everything he believes in and stands for is collapsing around his feet. The policies and ideals he's been spouting about have all but wiped out the economies of half of Europe, The American people have rejected those same, idiotic policies, practically no one is listening to him or lends credence to what he says and the nyt has lost so much credibility and subscribers he can't hide under her skirt either.
Reply to this commentLinkReport AbuseHe'll always have the reactionary, entitlement seeking liberal to adore him though, so he's got that going for him along with his unwarranted arrogance.
Waana bet this goes nowhere? Republican's paid lip service to repeal, but have no intention of following through. After all, they are politicians like their liberal friends on the other side.
Reply to this commentLinkReport AbuseKrugman's academic work bears no resemblance to his NYT "two Americas" drivel.
If there is a war on logic, as James notes, its the notion that the Fed Gov't will add a massive entitlement and that this will somehow reduce the deficit.
Hey Paul, remember when FDR created the REA to string power lines across America? The RUS (successor to REA) budget was 17 Billion last year. That's a lot of farmers with no electricity until last year, huh?
I've got an idea, let's cover the entire western hemisphere and we'll wipe out the budget entirely.
Reply to this commentLinkReport AbuseKrugman always argues well from assumptions. It is facts he seems to have difficulty dealing with.
Reply to this commentLinkReport AbuseMr. Capretta, thanks for the article...good work. You wrote..."Taxpaying Americans are never going to be convinced that the government has found a way to give away new benefits to millions of people, with no cost to them or anyone else." Forgive the sketicism, but how do you think BHO got elected in the first place...he will do and say anything to get re-elected. As a result, the same "Taxpaying Americans" will be fooled once again, BHO will be re-elected and free to complete his 6 year project...the transformation of America!!!
Reply to this commentLinkReport AbuseLet's try this lesson again...
It's not what socialists like Krugman say; it's what they do.
If you want to win the verbal war, Capretta, fine. Build yourself an Olympic podium; give yourself the little medal, and sing whatever anthem you like, as your political adversary consoles himself with actually following through with legislation that matters more than verbal jousting.
Unless conservatives such as yourself actually start doing something than verbal jousting with socialists, then you're basically doing nothing to stop their policies.
Funny thing the things Hayek wrote about conservatives, eh, Capretta?
It's too bad they're true.
Reply to this commentLinkReport AbusePursuant to Krugman's logic, one may disassociate from ObamaCare any costs that push the program into the red so long as an argument can be made that they are baseline or legacy costs. But this is logically problematic for several reasons.
First, one can't employ Krugman's logic and also argue that ObamaCare was a "reform" because the disassociated legacy costs were obviously not reformed. Therefore, ObamaCare must be a new entitlement heaped on top of financially stressed legacy entitlements. This new arrangement has a different form, but not in the sense of "reform".
Second, one can't sweep the unreformed legacy costs under the rug because they will continue to drain the federal fisc until they are repealed. Moreover, one can't account for them as if they were repealed until they are repealed. To the extent that ObamaCare scoring does one or the other or both, it is ridiculously unreliable such that only charlatans would assert it as evidence.
In view of the foregoing, "Krugman" is synonymous with "sophistry". Out of deep conviction he channels the irrational banalities comprising the nexus of contemporary left wing thought with such focus and precision that all artifice is stripped away, and it's boring. Compare Slick Willy, whose artifices were brilliant and entertaining. Now there was a guy who you could both loathe and respect.
Reply to this commentLinkReport AbuseKrugman is brilliant! Don't you rubes realize he has won the Nobel prize?? In fact, he has successfully predicted 8 out of the last 3 recessions!
Thanks for the well timed and well reasoned refutation.
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Fire Paul Krugman Petition, please distribute
Reply to this commentLinkReport AbuseIt seems to me the "problem" is this: there are two "Obamacares"
1. the Obamacare that was going to fix the entire healthcare system once it was passed, and
2. the Obamacare that was expressly limited to the words in the specific bill that was passed.
Which Obamacare is used depends on which one is convenient at the moment to the person in question.
The Republicans were looking at Obamacare 1, the effect of the whole mess on the whole system.
That was "inconvenient" turf for Krugman to fight on, so he "analyzed" and attacked using Obamacare 2.
Reply to this commentLinkReport Abuse"Unless conservatives such as yourself actually start doing something than verbal jousting with socialists, then you're basically doing nothing to stop their policies."
Funny that the American public has already and will continue to see these socialist policies as threats to our Democracy and the continued pursute of such policies will lead to the demise of the democratic party.
When will the parties learn that America lives in the middle. He who wins the middle wins the election. If Democrats want to stay in power then they should abandon these socialist policies and embrace "some" of what conservatives have campaigned on and "some" of what they middle-left liberals have campaigned on.
The problem is that neither party can embrace the middle because there is no way for a Republican to win a primary as a moderate (look at McCain's extreme conservative rhetoric during the primaries). There is also no way for a Democrat to win the primary on a moderate narrative. If this continued polorization continues in America over the next decade we will see the rise of a third party to fill that gap. American Labor Party?
Reply to this commentLinkReport AbuseAs a physician with Medicare patients, I wish they would abandon the "doc fix" tomorrow. Time to face facts, the Ponzi scheme is maturing. The sooner fiscal reality is met the sooner we can start discussing free market medicine--http://freemarketmedicine.blogspot.com
Reply to this commentLinkReport AbuseKrugman is a shell of his former shell.
Reply to this commentLinkReport AbuseIs it true Ricky Gervais will host the 2011 Nobel Prize Award ceremony?
Reply to this commentLinkReport AbuseKrugman, the once respected economist, Nobel laureate, clear thinker, has sadly devolved into a partisan political hack. A dancing bear in a freak show, flailing about without reason or any pretence to logical or factual rigor. Congratulations. The left has claimed another soul.
Reply to this commentLinkReport AbuseI understood Krugman's point to be that the doc fix is unrelated to the Affordable Care Act, aka Obamacare.
We needed to find the money for the doc fix before health reform passed. We need to find it after Health reform passed. If health reform is repealed, we still need to find the money for the doc fix. That seems to me to prove that the dox fix is unrelated to health care reform.
The cost cutting measures in health care reform could, however, have been used to implement a doc fix instead of expanding coverage. That is the only relationship between the two.
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