Remember when Obamacare was going to reduce federal deficits? Good times, good times.
Of course, those good times were predicated on plainly laughable budgeting gimmicks, but at least Democrats were able to point to an artificial deficit-reduction thanks to those gimmicks. Now, it is becoming clear even the gimmicks can’t mask the law’s negative effect on the federal fisc.
Earlier this year, the Congressional Budget Office issued new estimates about how Obamacare would affect labor markets. In short, the budget-crunchers found Obamacare would probably reduce hours worked by 1.5 percent to 2 percent between 2017 and 2024, leading the total compensation of American workers to fall by 1 percent during those years. What CBO didn’t do, however, was break out how this 1 percent reduction in pay would affect tax revenues.
GOP staff at the Senate Budget Committee, however, did look at the tax implications of people working less and getting paid less. And they found that, if taxable income also falls by 1 percent, tax revenues are likely to fall by $280 billion. Taken together with updated cost estimates — even though some of those cost estimates are lower — the implication for the decade starting with the just-begun 2015 budget year is that Obamacare will add $131 billion to deficits over 10 years, not subtract $180 billion.
That’s a swing of $311 billion over 10 years from the most recent CBO estimate — or, as the Weekly Standard’s Jeffrey Anderson notes, “a $255 billion swing from what we were told when Obamacare was passed” –pushing the law out of the black and into the red.
Many of us warned years ago this is how the law would turn out. Once again, it’s clear that when President Obama said he wouldn’t “sign a plan that adds one dime to our deficits, either now or in the future … period,” he left open the possibility of signing a plan that added a trillion dimes to our deficits.