Does health care reform reduce the deficit? No, but its tax increases do. 

Economist Greg Mankiw makes an excellent point about the debate over health care reform's effect on the deficit:

I have a plan to reduce the budget deficit.  The essence of the plan is the federal government writing me a check for $1 billion.  The plan will be financed by $3 billion of tax increases.  According to my back-of-the envelope calculations, giving me that $1 billion will reduce the budget deficit by $2 billion.

Now, you may be tempted to say that giving me that $1 billion will not really reduce the budget deficit.  Rather, you might say, it is the tax increases, which have nothing to do with my handout, that are reducing the budget deficit.  But if you are tempted by that kind of sloppy thinking, you have not been following the debate over healthcare reform.

He's absolutely correct, and appropriately sarcastic. Without the $770 billion in tax increases contained in Obamacare, there is no way to claim that the measure reduces the deficit. At its heart, the debate over the deficit is a conversation about whether we should have higher taxes in order to bring the deficit down. If you think so, then Obamacare is great because it contains lots of tax increases. The changes to health care are almost irrelevant to this part of the debate.

About The Author

David Freddoso

David Freddoso came to the Washington Examiner in June 2009, after serving for nearly two years as a Capitol Hill-based staff reporter for National Review Online. Before writing his New York Times bestselling book, The Case Against Barack Obama, he spent three years assisting Robert Novak, the legendary Washington... more
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