Thursday, July 16, 2009

Dire Warning on Economy and Democrats Health Care Plans

The Director of the nonpartisan Congressional Budget office made this dire prediction today:

Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy.


The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues.


On the Democrats new health care plans he said on his blog:

According to our preliminary assessment, enacting the proposal would result in a net increase in federal budget deficits of about $1.0 trillion over the 2010-2019 period. When fully implemented, about 39 million individuals would obtain coverage through the new insurance exchanges. At the same time, the number of people who had coverage through an employer would decline by about 15 million (or roughly 10 percent), and coverage from other sources would fall by about 8 million, so the net decrease in the number of people uninsured would be about 16 million or 17 million.


He also said in testimony before a Senate Committee:

"The point I made earlier this morning is that it raises future federal outlays more than it reduces future federal outlays."

"The coverage proposals in this legislation would expand federal spending on health care to a significant degree and in our analysis so far we don't see other provisions in this legislation reducing federal health spending by a corresponding degree."

This is getting very scary.