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Saturday, April 10, 2010

Obamacare’s Consequence

Obamacare’s Consequence
A tarnished presidency
BY Matthew Continetti
The Weekly Standard

April 5 - April 12, 2010, Vol. 15, No. 28
The liberal line is that President Obama has secured his place in history by signing into law the Patient Protection and Affordable Care Act of 2010. And secured it he has. Henceforth Obama will be remembered as the man who accelerated America’s mad dash toward bankruptcy. He will be remembered as the leader who promoted a culture of dependency. He will be remembered as the figure who sacrificed a dream of national unity upon the altar of big government liberalism. It’s true: Obama is now a president of consequence. And almost all of those consequences are bad.

The fiscal picture was bleak before Obama made it worse. Government debt is 60 percent of the gross domestic product and climbing. The deficit is projected to remain above 4 percent of GDP for the next decade. The week before the president signed his health care reform into law, Moody’s warned that America’s AAA bond rating may be downgraded. The day before the signing ceremony, the nation learned that Warren Buffett is a safer investment than U.S. treasuries. One needn’t look across the Atlantic, where a penniless Greece is a supplicant to the IMF, to see our future. Look to California, where the economy is crippled by high taxes, high spending, and burdensome debt.

President Obama is an intelligent man. He knew there was no way a massive entitlement could get through Congress when spending, deficit, and debt are major issues. So he claimed that health care reform would help ameliorate America’s fiscal problem, not exacerbate it. And for support he had the Congressional Budget Office (CBO), which found that, under a certain set of conditions—spending cuts, Medicare cuts, new taxes—health care reform would not only pay for itself but would reduce the deficit.

But what happens under real world conditions? What happens when the Medicare cuts and the excise tax disappear and the subsidies are more generous than expected? When Representative Paul Ryan of Wisconsin asked the CBO these questions, he was told the deficit would increase by a considerable margin. Which outcome is more likely: a Congress that cuts services, imposes taxes on favored constituencies, and refrains from spending? Or a Congress that goes instead on a fact-finding mission to Djibouti while making promises it cannot keep?

But balancing the books was never Obama’s primary goal. Equality was. For decades, liberals have decried America’s patchwork system of health insurance and have sought to provide coverage for all. But rather than deregulate health markets and provide consumers with the tools they need to spur competition, reduce prices, and promote innovation, liberals chose another path. They chose to increase regulation and make government the intermediary between taxpayer dollars and the insurance companies. Through the individual mandate, the Democrats have ordered every adult American to purchase a consumer product. And if an American cannot afford that product, government will subsidize him, thereby directing public money to private profit.

How long before the Democrats figure out that it would be cheaper for government to eliminate the middleman and become the insurer of first resort? Perhaps sooner than you think. (Some already have.) A portent is the student loan industry. Last week Congress, after years of subsidizing loans originating in private banks, decreed that all loans would now originate directly from the federal government. A narrow partisan majority effected the drastic policy change. This is the process by which markets shrink, choice is curtailed, and government dependency grows. It’s become commonplace.

What is most striking is the impact of health care on Obama’s presidency. Liberals are already touting his legislative victory as the catalyst for a domestic and foreign policy rebound. To the contrary: Obama is enfeebled. Health care reform has helped turn large swaths of independents against him. It has nullified the chance for bipartisan cooperation in this Congress. It has exposed him as weak: Despite 39 speeches on the topic, despite a huge investment of political capital, the health bill passed by a margin of five votes. Thirty-two Democrats defected. The public opposed this law.

Gone is the charismatic young man who told the 2004 Democratic National Convention in Boston that there was no Blue America and no Red America, only the United States of America. All that remains is a partisan liberal Democrat whose health care policy bulldozed public opinion, enraged the electorate, poisoned the Congress, and set into motion a sequence of events the outcome of which cannot be foreseen.

This tarnished White House complains incessantly about the crises it inherited from its predecessor. Crises? You ain’t seen nothing yet.

—Matthew Continetti

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