Obamacare and False Claims

Kevin Short over at the Huffington Post produced a wrongheaded post this week titled, “Obamacare Just Made Americans Richer Without Anyone Noticing”.  Citing a report issued by the Commerce Department’s Bureau of Economic Analysis and calculations made by the Wall Street Journal, Short claims Obama’s so-called Affordable Care Act (ACA), better known as Obamacare, was responsible for three-quarters of the rise in Americans’ spending and income growth in January.  Thus, according to Short, the ACA in its first month of operation has already made Americans richer.

The problem with Short’s analysis and the reason why Americans didn’t notice they were richer is because they aren’t.  Short’s claim is nothing more than typical Keynesian bunk.

So, how did the ACA make Americans’ richer in January according to Short?  Well, the expansion of Medicaid funding to the tune of about $19 billion and $15 billion in subsidies received by Obamacare enrollees did the trick.  The logic goes, because some Americans received a combined $34 billion in federal largess, that money will be spent in the economy providing new jobs for countless Americans.

Of course, what Short fails to mention is where the money for those welfare benefits (Medicaid and subsidies) came from.  Did they come from an increase in worker productivity?  Did they come from an expansion of business and employment?  No.  In fact, according to the Institute for Supply Management  its employment gauge in February declined for the first time in 25 months and currently stands at its lowest reading since March 2010.

Obviously, the money came from taxpayers, either through direct tax payments or debt monetization by the Federal Reserve.  Neither approach represents an expansion of the economy or wealth production.  What has happened is akin to taking money from one pocket and transferring it to the other.  Only in Short’s world and the world of Keynesians everywhere is this considered prosperity.

But, what is even more troublesome is how that $34 billion was spent in January.  Again, according to the Bureau of Economic Analysis, Obamacare handouts may have been responsible for a $29 billion increase in health care services.  Besides utilities, all other spending categories experienced a decline.

What this means is if Obamacare further increases government spending on health care, then the cost of health care will rise even higher.  All of that new money entering the health care industry will bid up prices to heights never seen before.  This is precisely the reason health care costs have been on the rise for the last 50 years.

Over the last few years, there have been many false claims made about Obamacare.  From “you can keep your coverage and doctor” to health care costs will decrease to more Americans will have health care coverage, there has been no shortage of mistruths.  And now we have the outrageous claim that the ACA is making Americans richer.  Not only does taking from one citizen and giving to another not make us richer, increased government spending on health care will surely make us poorer.

Young Voters Betrayed by Obama Policies

Barack Obama, in large part, owes his presidency to young voters.  In two presidential elections he has garnered 66 percent and 67 percent of their vote respectively.  Many of those votes proved pivotal for him in winning key states like Florida, Virginia, Pennsylvania, and Ohio.  And yet the President apparently feels no loyalty toward this group of voters that has given him so much.  In fact, it has become second nature for him to run roughshod over their interests.

To begin with, the economy Obama has produced for young people in close to five years of his leadership is horrendous.  His policies of regulate and spend have not permitted the economy to recover from the Great Recession that began in 2008.  Unemployment for 15 to 24 year olds is more than double the national average.  Many college graduates, unable to find a job, have returned to their parents’ nests to wait for better days and brighter employment prospects.  African-American teenagers face a jobless rate of more than 40 percent!

And while the President was attempting to “stimulate” the economy back to good health with profligate spending, what he did instead was run up a tab that young folks will have to pay back for many years into the future.  What’s more, when interest rates rise to their historic average and interest payments on the national debt more than double, paying back that debt will have to include much higher taxes or enormous cuts in government services.

Lastly, there is Obamacare.  The President is relying on young folks to make his health care scheme work.  He is counting on millions of them to purchase high cost plans to offset costs for the sick and elderly.  Of course, many will not accommodate the President’s wishes, thereby causing health care premiums to skyrocket for all consumers.  By the time the current crop of 18-30 year olds is interested in purchasing health care coverage the costs will be astronomical.  Thus he has put them in an unenviable position.  They are damned if they do, damned if they don’t.

Young people made a serious mistake giving Barack Obama their overwhelming support in the last two presidential elections.  But, what choice did they have?  John McCain and Mitt Romney weren’t much better alternatives.  What young people need are free market policies – sound money, a balanced federal budget, and deregulation.  It doesn’t appear this is going to happen anytime soon.

Old Beliefs Die Hard

It is very difficult coming to the realization that something or someone you truly believe in, have revered and defended for a long time, and have dedicated your life to following is not what you thought it was and might even be the exact opposite of what you appreciated about it.

For me recently, I have had to come to grips with the fact that former Penn State head football coach Joe Paterno was not the hero I revered for a long time.  See, I grew up in Pennsylvania and followed his winning teams every year.  His success was abundant while all along running a squeaky clean program with no recruiting violations and a good graduation rate.  To top it off, we shared an ethnic heritage (Italian) which became a source of personal pride.

Then the Jerry Sandusky child abuse scandal hit.  My world was shattered.  How could Coach Paterno only inform his superiors at the University when he was told that his former assistant coach Jerry Sandusky was caught showering with a young boy in a university locker room?  How could he not blow the whistle loudly to put an end to the carnage and bring a deviant to justice?  I mean, Paterno was the moral bastion of college football.  As an educator, he would never forsake the well-being of youngsters in order to protect a friend and/or his football program.

But, it’s true.  Paterno did not do all that he should have and many more young boys were abused at Penn State facilities by Jerry Sandusky as a result  This realization has negated close to 40 years of hero worship.  Joe Paterno made more than a mistake; he allowed a tragedy to continue.  He was not the moral bastion I naively thought he was.  It was tough and a long process, but he is no longer a hero.

Thus, I can now empathize with folks who need to come to grips with their wrongheaded thinking that government is the great solver of our problems.  Take the so-called “War on Poverty”(1) programs launched under Lyndon Johnson in the 1960s.  Supporters would argue that it was the right thing to do at the right time to eradicate poverty.  However, close to 50 years and $15 trillion later, the poverty rate has barely budged going from about 15 percent to 13 percent.  In fact, poverty was on a steep decline for five years preceding Johnson’s programs.  His “War on Poverty” halted that decline and stabilized the poverty rate in the low teens.  But if you listen to advocates of the federal social safety net, you’ll hear how without federal largess the problem of poverty would be more acute.  They just can’t bring themselves to accept the realization that federal welfare programs are wasteful, debilitating, and ineffective.

Of course, the best example from recent history where government policy has been wasteful, debilitating, and ineffective is the economic policies of the current administration.  The same folks that can’t admit to themselves that the War on Poverty was a failure are now defending the Obama Administration’s policies as if they have been successful in bringing about recovery from the Financial Crisis of 2008.  After trillions have been spent and interest rates kept at rock bottom lows for the last four plus years the unemployment rate has never fallen below eight percent.  In fact, the real unemployment rate (U6 which includes discouraged workers) is 15 percent and on the rise. Most embarrassing for the President is the fact that more people went on Social Security Disability than got jobs in June.

To be sure, there are many more examples of government intrusion gone wrong.  The greatest of which is Roosevelt’s New Deal because it prolonged the Great Depression through the 1930s.

So, with such a track record of failure, why is it that advocates of big government cannot bring themselves to realize that their philosophy is bankrupt and wrongheaded?  One reason is emotional.  They think with their hearts and not their heads.  They are so fixated on helping others and believe they may need the same kind of help someday, that they forsake logic and experience for empathy and generosity (of other peoples’ money of course).

Another reason is socialization.  There are so many Americans who rely on the federal government for one reason or another that it is hard to find many that are willing to bite the hand that feeds them.  Take college professors and the mainstream media (MSM) for instance.  Very, very few are willing to go against the Establishment line for fear of losing grant money, being denied tenure, or losing the interview or even their jobs (remember Helen Thomas?).  These are the societal elites that most Americans get their information from (many times academics appear on the MSM).  It’s no wonder many Americans lack basic economic knowledge.  They have been bombarded through the years with the party line instead of the truth.

At the end of the day, it’s brutal being challenged let alone acknowledging that what you have believed in for a long time is poppycock.  I know – I lost a long-time hero recently.  It is a tough and long process but one that needs to be undertaken by those that cherish big government intrusion in our economy.  It needs to be undertaken so the widespread suffering resulting from big government intrusion in our economy seizes.

Article first published as Old Beliefs Die Hard on Blogcritics.

Kenn Jacobine teaches internationally and maintains a summer residence in North Carolina