September 15, 2009
Yet Another Washington Flop in the Making
Obamacare will be one of many federal failures.
By Deroy Murdock at NRO
As the health-care reform debate roars on, Uncle Sam resembles a restless college senior who is flunking economics, finance, and management. Despite a report card full of Fs, he suddenly announces: “I want to go to medical school!”
Similarly, Pres. Barack Obama stood before a joint session of Congress Wednesday night and re-embraced a government option for health insurance. As he explained, “Sometimes government has to step in to help deliver” on the promise that “hard work and responsibility should be rewarded by some measure of security and fair play.”
Alas, too often when Washington steps in, failing grades follow.
Medicare, the Great Society’s shining jewel, is a battered gem. Its hospitals program already bleeds ruby-red ink. “Medicare Part A again will spend more in benefits than it receives in revenues” this fiscal year, observes Heritage Foundation analyst Bob Moffitt. Its Trust Fund is an accounting fiction, but even that fantasy disappears in eight years, with depletion in 2017. Even worse, Heritage’s Brian Riedl calculates that between 2009 and 2083 Medicare’s budget will zoom from 3.1 percent to 14.8 percent of Gross Domestic Product. Its unfunded liabilities (promises backed by campaign balloons instead of cash) equal $36.3 trillion.
Social Security, the New Deal’s cornerstone, is as cutting edge as a 78 RPM record. In 2016, barely six years away, it will begin paying more in pension checks than it collects in payroll taxes. Congress then will be unable to use Social Security’s surplus like a ShamWow to absorb red ink. Social Security’s unfunded obligations equal $17.5 trillion — again not financed by anything but congressional speeches.
Fannie Mae and Freddie Mac: These two government options in the home-mortgage arena are widely considered the twin jet engines that flew the economy into a hillside. These were supposed to be money-making, quasi-private companies, with no federal involvement beyond an implicit guarantee that government would cover their losses. Emboldened by this cozy federal safety net, these enterprises embarked upon financial acrobatics they otherwise might have avoided. Rather than generate profits between 2009 and 2019, the Congressional Budget Office estimates, Fannie and Freddie will cost taxpayers $389 billion.
The Hope for Homeowners program began last October 1. Congress gave it a hefty $300 billion to help some 400,000 homeowners avoid foreclosure. According to an August 10 Newsday editorial, “It has produced exactly one refinanced loan.” One down, 399,999 to go.
“UPS and FedEx are doing just fine, right?” Obama asked in August. “It’s the Post Office that’s always having problems.” Yes, indeed. Its two-year fiscal deficit approaches $8 billion. It has pried some 60,000 mailboxes off of America’s streets, the Lexington Institute reports. It also is weighing the cancellation of Saturday services. Even as e-mail, digitally attached documents, and online banking decrease demand for first-class snail mail, the Post Office keeps hiking the cost of stamps. What sort of business actually raises prices while customers walk away?
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