Blaming Obama for current "fiscal reality," WSJ falsely suggests health care bill will increase deficit

Ignoring Congressional Budget Office (CBO) estimates showing health care reform will reduce deficits, a Wall Street Journal editorial asserted that President Obama should "[d]rop the health-care bill" if Democrats "really are serious" about fiscal responsibility. The editorial further attributed all of the fiscal year 2009 spending to Obama, but the increases in spending and the deficit also reflect the impact of policies enacted under former President Bush.

WSJ: Dems should
"[d]rop the health-care bill" if they are "serious" about fiscal
discipline

From the January 27 Wall Street Journal editorial:

If the
middle-class tax cuts remain, the AMT doesn't soak the middle class and spending
grows at its historic norm, then CBO concedes "the deficit in 2020 would be
nearly the same, historically large, share of GDP that it is today and the debt
held by the public would equal nearly 100% of GDP." Buongiorno,
Italia.

Oh, and none
of this includes a penny for ObamaCare.

***

 

The tragedy
is that Mr. Obama's fiscal conversion is coming a year too late, assuming it is
now real. If the President and his party really are serious, they can do more
than promise a spending freeze after 2012. They can stop spending more now: Drop
the health-care bill, cancel the unspent stimulus spending from last year, kill
the $150 billion new stimulus that has already passed the House, and bar all
repaid bailout cash from being re-spent. Everything else is marketing.

CBO: Health care
reform bills reduce deficits over next 10 years and
beyond

CBO: Senate bill yields "a net
reduction in federal deficits of $132 billion" over 10 years.
On December 19, 2009, CBO reported
of the Senate bill incorporating the manager's amendment:

CBO and JCT
estimate that the direct spending and revenue effects of enacting the Patient
Protection and Affordable Care Act incorporating the manager's amendment would
yield a net reduction in federal deficits of $132 billion over the 2010-2019
period.

CBO also estimated
on December 20, 2009, that the bill will continue to reduce the deficit beyond
the 10-year budget window that ends in 2019 "with a total effect during that
decade that is in a broad range between one-quarter percent and one-half percent
of GDP."

CBO estimated the House bill will
result in $138 billion in deficit reduction through
2019. On November 20, 2009, CBO reported
of the House health care reform legislation, "CBO and JCT now estimate that the
legislation would yield a net reduction in deficits of $138 billion over the
10-year period." CBO also stated in its November 6 estimate
that "[i]n the subsequent decade, the collective effect of its provisions would
probably be slight reductions in federal budget deficits. Those estimates are
all subject to substantial uncertainty."

Ignoring Bush-era
spending, WSJ asserted Obama
"created" the fiscal reality through "record spending
spree"

WSJ attributed
fiscal year 2009 spending to Obama. In the January 27
editorial, the Journal called
Obama "the spender who has sent the federal deficit to levels unseen since World
War II" and asserted that Obama "created" this "fiscal reality." Although the
Journal acknowledged that "Mr.
Obama did inherit a recession" which caused a "collapse in revenues," the
editorial continued to attribute all fiscal year 2009 spending to Obama. The
Journal stated: "Obama's major
contribution to deficits has been a record spending spree. In 2007, before the
recession, federal expenditures reached $2.73 trillion. By 2009 expenditures had
climbed to $3.52 trillion. In 2009 alone, overall federal spending rose 18%, or
$536 billion." The editorial further stated, "CBO shows that over the first
three years of the Obama Presidency, 2009-2011, the federal government will
borrow an estimated $3.7 trillion," despite the fact that this figure includes
spending approved under Bush, who was in office during the first third of fiscal
year 2009 and presided over major commitments of federal funds in response to
the recession.

CBO: TARP,
Fannie, Freddie commitments comprised much of spending increase in FY 2009.
CBO stated in its January 2010 Budget
and Economic Outlook that "[m]uch of the rise in
outlays in 2009 came from mandatory programs." CBO added, "Three initiatives
accounted for nearly two-thirds of that increase. Outlays recorded for the
Troubled Asset Relief Program (TARP) totaled $152 billion in 2009; net payments
to Fannie Mae and Freddie Mac accounted for another $91 billion; and fiscal
stimulus legislation, the American Recovery and Reinvestment Act
of 2009 (ARRA), increased mandatory outlays by $80 billion." The spending
for TARP
and the Fannie
and Freddie conservatorship was approved before Obama was
elected.

Spending for
unemployment benefits, Medicaid increased as result of recession.
CBO also stated of fiscal year 2009:

Social Security outlays rose by 9
percent ($53 billion) last year, primarily because the 5.8 percent
cost-of-living adjustment that took effect in January 2009 was the largest
annual adjustment since 1982. Medicaid spending (excluding stimulus funding)
increased by 9 percent ($18 billion) in 2009 -- exceeding its 7 percent average
annual growth rate of the previous 10 years -- largely because higher
unemployment boosted enrollment in the program. Medicare outlays (including an
offset for premium payments) also rose at a faster rate than the average of the
past decade, growing by 10 percent ($39 billion).

In addition, payments for
unemployment benefits rose by

$76 billion in 2009, pushing outlays
for that program to more than double the level recorded in 2008. The jump was
caused by substantially higher unemployment as well as increased and extended
benefits to unemployed workers ($27 billion from ARRA and $17 billion from other
legislation).

New York
Times: Obama policies are "responsible
for only a sliver of the deficits." According to a
budget analysis
by The New York
Times, "Mr. Obama's main contribution to the deficit is
his extension of several Bush policies, like the Iraq war and tax
cuts for households making less than $250,000. Such policies -- together with
the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama
-- account for 20 percent" of the increase between the FY 2008 and FY 2009
budget deficit estimates. The
New York
Times wrote that 70 percent of the increase is attributed
to a combination of economic hardships, including "the fact that both the 2001
recession and the current one reduced tax revenue, required more spending on
safety-net programs and changed economists' assumptions about how much in taxes
the government would collect in future years" and "new legislation signed by Mr.
Bush ... like his tax cuts and the Medicare
prescription drug benefit."

CBO projected
outlays of $3.5 trillion and deficit of $1.2 trillion for FY 2009 before Obama
took office. On January 7, 2009, CBO stated in
its Budget
and Economic Outlook that "[w]ithout changes in current laws
and policies, CBO estimates, outlays will rise from $3.0 trillion in 2008 to
$3.5 trillion in 2009." This estimate included $240 billion -- in contrast to
the $91 billion recorded at the end of fiscal year 2009 -- for "incorporating
the two housing GSEs into the federal budget." Before Obama took office or
signed any legislation, CBO had estimated that the deficit would be $1.2
trillion for fiscal year 2009.