Romney can’t pay for his tax cuts by repealing Obamacare

at 02:44 PM ET, 03/01/2012

I owe S.E. Cupp an apology: I interrupted her a bit rudely on Alex Wagner’s show today, and I shouldn’t have. But I do find it frustrating when people assert that there is a massive amount of money to be saved by repealing the Affordable Care Act. There isn’t.

In 2016, Mitt Romney has promised to cut $500 billion from the federal budget. One way hell pay for it is “with the easiest cut of all: Obamacare, a trillion-dollar entitlement we don’t want and can’t afford.” So let’s say he repealed the Affordable Care Act in full. As you can see in the above graph, or in this report, in 2016*, that would cut spending by $110 billion, or a fifth of Romney’s promised total.

But if you repeal the Affordable Care Act, you also repeal the measures it uses to pay for itself. In 2016, that means repealing $35 billion in tax increases and $65 billion in spending cuts — most of which are the Medicare cuts that Romney routinely attacks on the campaign. Subtract them from the spending and now Romney’s only saving $10 billion, or 1/50th of his promised total, by repealing the Affordable Care Act.

This gets to a certain incoherence in the conservative case against Obama’s health-care reforms. On the one hand, Republicans say, the bill is a huge budget buster. On the other hand, they say it includes trillions of dollars in tax hikes and Medicare cuts, and they’re going to get rid of those. But it’s not like the Obama administration was brainstorming about how to make the health bill more popular and decided to raise taxes and cut Medicare. Those tax hikes and spending cuts offset its budget impact. That’s why they’re there! If Romney was saying he would repeal the spending but leave the tax hikes and spending cuts, that would be one thing. But he hasn’t. He says he’ll get rid of all of it.

The larger context of this discussion was a segment on Mitt Romney’s tax cuts and defense spending, and the cuts he would have to make to the programs for the poor in order to pay for them. Cupp said that people underestimate the money that could be saved by repealing the health-reform law, which is the point I’m responding to above. But it’s also worth saying that the health-care law is, for the most part, a program for the poor. Almost all of its spending is on subsidies to help poor and working-class folks afford health care. Repeal it, and 32 million people who would have gotten health insurance will instead be uninsured. That’s a very big cut to a very big program that helps the poor, irrespective of what you think of the broader merits of the bill.

Now, the health-care law’s benefits remain mostly abstract, and so cutting it doesn’t, for the most part, take away something people already have. That makes it much easier to cut than Medicaid, or Social Security. But that’s a political point, not a point about distribution.

*The numbers I’m using are from the Congressional Budget Office’s March 2010 estimate of the health-care bill. The graph is from testimony CBO director Doug Elmendorf delivered, also in March 2010. Newer estimates would show some differences. The CLASS Act is likely to be jettisoned, which costs the bill a few billion dollars per year in the short term but saves much more than that in the long term. The health-care system, for a variety of reasons, appears to be on a slower growth trajectory than we thought, which also means the law is likely to cost less than we thought. But none of this changes the underlying picture too much: Repealing the health-care law doesn’t save you much money in 2016, and in fact costs you money by the end of the decade because of the repeal of the attendant tax hikes and spending cuts.

 
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