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Looking to stake some ground just weeks before the mid-term election, President Barack Obama, in a speech last week at Northwestern University, dismissed concerns about budget deficits, claiming that ObamaCare is keeping down healthcare costs.
"I want everybody to listen carefully here, because when we were debating the Affordable Care Act there was a lot of complaining about how we couldn’t afford this. The independent, nonpartisan Congressional Budget Office recently reported that in 2020, Medicare and Medicaid will cost us $188 billion less than projected just four years ago," President Obama boasted. "And here’s what that means in layman’s terms: Healthcare has long been the single biggest driver of America’s future deficits. It’s been the single biggest driver of our debt. Healthcare is now the single biggest factor driving down those deficits."
"There’s a reason fewer Republicans are preaching doom on deficits -- it’s because the deficits have come down at almost a record pace, and they’re now manageable," he added.
While it's true that the Congressional Budget Office (CBO) recently indicated that Medicare's finances look a little better than the previous year, President Obama seems to be paying attention to only the short-term budget projections, ignoring the ominous long-term fiscal problems which face the United States.
The decrease in overall healthcare spending, which President Obama credited to his signature legislative accomplishment, can mostly be attributed to the economy, one that, more than six years after the end of the Great Recession, has struggled to show consistent robust growth. Put simply, President Obama is misleading Americans. Surprise!
President Obama likes to focus on the short-term budgetary picture, ignoring the long-term issues the CBO brought up in its most recent fiscal outlook. In fact, he seems to be complete denial that these problems exist at all.
Barring substantial changes to entitlement programs, including Medicare, the CBO anticipates that federal spending will climb to nearly 26 percent of the economy by 2039. What's more, the share of the national debt held by the public -- currently at 74 percent -- would hit 106 percent by the end of the 25 year extended baseline.
Here's the budgetary reality, according to the CBO, that is lost on President Obama:
The CBO issued a very stark warning to Congress if this sort of can-kicking continues. "At some point, investors would begin to doubt the government’s willingness or ability to pay its debt obligations, which would require the government to pay much higher interest costs to borrow money," the report stated. "Even before that point was reached, the high and rising amount of federal debt that CBO projects under the extended baseline would have significant negative consequences for both the economy and the federal budget," among which is a crowding out of private investment due to a "large amount of federal borrowing." Americans could also see a mixture of higher taxes and a reduction of benefits and services.
The line espoused by President Obama about Medicare was addressed by the program's trustees in their annual report. "Upon the release of last year’s Trustees Report, and in the months afterward, questions arose as to whether a recent slowdown in national health expenditure growth may indicate less urgency in legislating Medicare financing corrections than suggested by our intermediate projections. Unfortunately, this is not the case," the program's trustees explained. "[E]ven with the assumption of decelerating spending growth Medicare’s financing shortfall...remains a reality warranting legislative corrections."
Medicare Chief Actuary Paul Spitalnic also warned that the purported Medicare cost-savings, such as reduced payouts to medical providers, brought by ObamaCare's budgetary gimmicks are unsustainable. "The Affordable Care Act is making important changes to the Medicare program that are designed, in part, to substantially improve its financial outlook," Spitalnic explained. "While the ACA has been successful in reducing many Medicare expenditures to date, there is a strong possibility that certain of these changes will not be viable in the long range."
The CBO and Medicare trustees are all saying the same thing, that kicking the can down the road isn't an option. Unfortunately, President Obama is so desperate to claim "mission accomplished" on ObamaCare that he's ignoring these very serious long-term realities and their ominous consequences.