Yes, Obamacare will significantly reduce our Debt

Today, a former Bush administration official (Charles Blahous) made a big splash when he wrote a new “study” saying Obamacare will increase the United States’ debt by $340 billion over ten years. This is exactly the opposite of what every independent organization has found about the law. The CBO, Washington’s authoritative legislation scorer, says that Obamacare will reduce our debts by $100-200 billion (depending on what time period you use) over a decade. So who’s right?

Not the new guy. Charles Blahous came to his figure using a dishonest accounting trick that does not reflect the costs of the ACA at all. Basically, he assumed that Medicare spending would be cut drastically, starting in 2017. No one in all of America actually thinks (or ever thought) this would happen. Since Obamacare makes it explicit that Medicare funding will not be severely curtailed in 2017, Blahous says that Obamacare will increase the deficit.

His assertion is preposterous. Obamacare makes Medicare spend its money more efficiently, cutting its spending by about $500 billion over a decade. But in twisted Blahous’ logic, Medicare cuts actually increase the deficit! What? If he used this same logic against the Republicans’ budget (which he wouldn’t) he would also find that their budget significantly increases the debt. That’s because his method is a preposterous way to look at our debt.

For a less succinct, more technical account of how this works, read Jonathan Chait or Paul van de Water.

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