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This morning, I walked through the rain to work. After arriving at the office, I proceeded to make myself a cup of coffee and log on to my computer. The first thing I did was visit the Drudge Report to find out the big headline news today. What I found nearly made me throw my coffee at the computer screen.
The Daily Caller reported earlier today that CGI Federal, the company contracted to create the Obamacare exchange website, was paid $634,320,919 to build the site. A drop in the bucket compared to the total federal debt and deficit, sure, but is this the best our federal government can do for a law they’ve so heavily promoted? $634 million and the federal government can’t even get a website to function properly? Outrageous.
Clearly we need to re-evaluate the total cost of the Patient Protection and Affordable Care Act, since the grand opening of Obamacare is inspiring so much confidence in how the federal government manages our tax dollars.
Charles Blahous, a senior research fellow at the Mercatus Center at George Mason University, has started the conversation in a commentary he wrote yesterday. He made some disturbing observations, revealing how many of the revenue mechanisms in the Affordable Care Act have “started to unravel, while pressure mounted to expand its spending programs.” Remember now, the Obama administration repeatedly promised that the ACA would cut the deficit.
Blahous points out that “One of the first provisions to bite the dust was the CLASS long-term care program, suspended in 2011 due to its financial unsoundness.” It was supposed to be a source of $70 billion of revenue in the first ten years to finance Obamacare. Also, the employer mandate, which the Obama Administration delayed with questionable legality, was allegedly scheduled to deliver $140 billion in revenues over the next decade. The delay will no doubt shift that projection downward. Furthermore, Blahous indicates that “The ACA's finances further depend on a new tax on medical device manufacturers, estimated to raise $29 billion from 2013-'22.” Members of both political parties have indicated that they view a repeal of the tax as a compromise that can end the government shutdown, removing that $29 billion revenue source.
Those are just three examples Blahous has highlighted and they show that Obamacare is already scheduled to lose $196 billion in revenue. In a previous research paper, Blahous noted that “between now and 2021, the ACA is expected to add as much as $530 billion to federal deficits while increasing spending by more than $1.15 trillion.” I fail to see how gutting revenue mechanisms from a law that already increases deficit spending will cut deficit spending.
So, let’s put Obamacare, which constitutes a massive increase in federal spending, in the context of the government shutdown and debt ceiling debate. The shutdown occurred after Democrats refused to accept a Republican compromise to delay the implementation of Obamacare for one year. The CBO estimates that such a delay would save $36 billion over the next ten years. Delaying the law would also give Congress more time to repeal or revise the law to make it fiscally sustainable, but the Democrats have unconditionally refused to stall the implementation of Obamacare, even in spite of the demonstrated problems with Obamacare’s launch.
Now the raging debate in Congress has shifted over the last few days to raising the debt ceiling and whether or not the federal government will default on its debt obligations to creditors. The debt ceiling is currently $16.699 trillion. As I write this sentence, the U.S. A.’s total debt is $16.970 trillion. The United States is predicted to hit the debt limit on Thursday, next week, the 17th of October. Dean Clancy, vice-president of public policy at FreedomWorks, has already explained why the government will not default. He’s even made a good case for eliminating the debt ceiling entirely.
But, given that we’re having this debate, and that the consequences of defaulting on our creditors are reported to be so drastic, is it really a good idea to add another $1.15 trillion (at bare minimum) to federal spending? And can we trust the federal government to manage all that money when they can’t even run a website?
UPDATE: Only 51,000 were able to sign up for the Obamacare exchanges after an entire week. Clearly our tax dollars were well spent on that website.