While I had been hoping for an assist from the Supreme Court, my opinion about Obamacare today is the same as on the day it was passed: Don’t sweat it. We are going to see the law replaced with something more sensible, and we are going to get major entitlement reform in the deal to boot. That is going to happen regardless of who wins in November, or the Novembers after that.
If Obamacare were left in place (and even if we set aside our well-grounded suspicions about its real fiscal impact) and the other major entitlements remained unreformed, federal spending on these programs would in a few short decades hit 19 percent of GDP, meaning that we would be spending each year on a handful of entitlement programs about what the federal government spent in total in the average year in the decade leading up to President Obama’s election. Since we will presumably still have an army, the FBI, federal courts, etc., and since much of the rest of the federal budget is still going to be there, it seems to me unlikely that this spending will in fact be possible. CBO estimates of federal spending in 2050 run to 30 or 40 percent of GDP, with debt levels exceeding 200 percent of GDP. It seems to me implausible that the federal government is going to be able to sustain spending levels that are double the recent norm, especially considering that the rising ratio of debt to GDP is going to make deficit financing more difficult and expensive, forcing Congress to rely more heavily upon taxes.
We aren’t going to spend X trillion dollars on Obamacare, because we do not have X trillion dollars to spend. The trick is for voters to get that through Washington’s thick skull before the bond market does.
The Court may not have been on our side today, but the math still is.