The flurry of budget deals struck by congressional Republicans with President Obama in the final months of 2015 will increase the federal debt by hundreds of billions of dollars in the coming decade. They also make it clear that the true state of U.S. fiscal policy is far worse than shown in official projections — which are based on policies that are not going to survive over the long run.
James C. Capretta of the Ethics and Public Policy Center explains how the budget deals will affect the implementation of ObamaCare and ultimately the U.S. economy.
Last week, the U.S. Senate approved legislation that would repeal the majority of ObamaCare. The bill will almost certainly pass the House. From there, it will go to the president’s desk, where it faces an even more certain veto. Even so, we are witnessing a historic moment. The House and Senate have held dozens of votes to repeal ObamaCare in whole or in part. Congressional Republicans have even worked with President Obama to repeal or curtail portions of the law. But while full-repeal legislation has passed the House, nothing like the bill that just passed the Senate has come anywhere near the president’s desk.
The Obama administration was able to push the Affordable Care Act — Obamacare — through Congress in part because the Congressional Budget Office said it would modestly reduce future federal budget deficits. The claim of deficit reduction rests on a shaky foundation. It depends entirely on the uninterrupted implementation of four carefully constructed “indexing” provisions. These provisions, which make annual adjustments to key spending and tax parameters of the law (or specify that such adjustments will not be made), were written with the clear intention of making the ACA look better financially as time passed. Our new study, published by the Mercatus Center at George Mason University, shows that these budgetary manipulations are no more likely to survive mounting political pressure than did income-tax “bracket creep” in the 1970s or across-the-board cuts in Medicare physician fees over the past 15 years.