Economist Looks at Obamacare

The massive costs and the Presidents nonsense about saving trillions has already been pointed out, now the Economist takes a look at what will happen with his Health Care plans.

Moreover, the real test for Mr Obama is health care, and there momentum appears to be on his side. This week health-care-industry officials promised, at his urging, to cut cost-inflation by 1.5 percentage points a year, or $2 trillion over ten years. The promise was largely meaningless: if $2 trillion in savings was lying around, a profit-maximising industry would have found them. And it remains dead-set against Mr Obama’s wish for a public insurance plan that competes with private ones. But the event had symbolic importance. Jim Horney, of the liberal Centre on Budget and Policy Priorities, says it shows the industry will not try to kill this health reform as it killed Bill Clinton’s attempt in 1994.

If Mr Obama’s health-care ambitions fail, cost will probably be the reason. Mr Obama insists that his reform should be paid for rather than add to the budget deficit, so his budget earmarks $634 billion in cuts to existing health programmes and various tax increases. But that is unlikely to be enough to pay for a plan that would cover most uninsured Americans.

Passing the tax increases necessary to pay for expanded health care will be hard if the economy remains weak, and the more so because that will also mean a bigger deficit. Mr Orszag has already raised his budget-deficit estimates by $200 billion over the next three years, largely because the economy is generating less tax revenue per dollar of output than previously thought. The deficits would be even bigger if he used a more pessimistic, and therefore realistic, economic forecast.

They will just print more money.