Obama Says: Read My Lips
August 4, 2009
http://www.powerlineblog.com/archive.../08/024197.php

Most Americans are convinced that Obamacare will mean higher taxes. They are undoubtedly right. Over the weekend, as we noted here http://www.powerlineblog.com/archive.../08/024180.php both Tim Geithner and Larry Summers opened the door to broad-based tax increases. But in his press briefing yesterday, Robert Gibbs slammed the door shut, as hard as he could:

QUESTION: Could I make that even a little more precise? The president, as you well know, has -- not just middle class -- but he's been very precise about it. No family... (CROSSTALK) GIBBS: Let me be precise. The president's clear commitment is not to raise taxes on those making less than $250,000 a year.

QUESTION: Any implication anybody drew from Geithner and Summers yesterday to the contrary is flatly wrong?

GIBBS: I think -- I think the president's been clear. I think you heard him reiterate it not -- not that long ago, right outside this room in the Rose Garden.

QUESTION: But you can understand why people took what they said yesterday as Geithner and Summers trying to open the door a little bit.

GIBBS: Well, I hope you will -- I hope you will take my reiteration of his clear commitment as an update.

QUESTION: So they did not -- the door is closed. They did not open the door at all.

GIBBS: I am -- I am reiterating the president's clear commitment in the clearest terms possible that he's not raising taxes on those who make less than $250,000 a year.
Yet, as Byron York wrote this morning, Obamacare will make tax increases inevitable, and most people know it: http://www.washingtonexaminer.com/po...-52382632.html

"After all this discussion about health care and cap and trade and loss of jobs and the budget and the stimulus, this group [middle class voters] is suddenly beginning to feel particularly vulnerable to tax increases," says one Republican pollster. "They don't see how things are going to work out for them in a positive way, and they worry that instead of being in a position to bounce back from the present economic environment, in fact more money may be taken away from them."

Their concerns are entirely rational. Economists left and right have long argued that there is no way Obama can pay for a national health care makeover and a host of other expensive initiatives without breaking his campaign pledge not to raise taxes for anyone making less than $250,000. The wealthy are already paying a grossly disproportionate percentage of federal income taxes, and increasing taxes on them won't raise enough money to meet Obama's needs.
So what's going on here? I think the Democrats know (as both Geithner and Summers essentially admitted) that broad-based tax increases will be necessary if their legislative agenda passes. Right now, though, that agenda is teetering on the brink of disaster. Cap-and-tax may be dead and Obamacare is looking tenuous at best. If the administration were to admit that these programs mean higher taxes on more or less everyone, they would have no chance of passage.

So Obama and his minions are doing what they think they have to do: they are misleading the public about the fiscal consequences of their legislative agenda, knowing that if they are successful, there will be a day of reckoning in the not-too-distant future. At the moment, their disarray is such that they are willing to take their chances with an electorate that will surely be enraged if Obama violates his iron-clad pledge not to raise the taxes of those who earn less than $250,000 a year.

Maybe they've forgotten what happened to the first President Bush; maybe they think their friends in the media will somehow soften the blow with voters; maybe they just don't think they have any choice. One way or another, this surely is not the situation Obama and his advisers thought they would be in a mere seven months into his term in office.





Not Waterloo, Just a Tactical Retreat

WASHINGTON - Yesterday, Barack Obama was God. Today, he's fallen from grace, the magic gone, his health care reform dead. If you believed the first idiocy -- and half the mainstream media did -- you'll believe the second.

Don't believe either.

Conventional wisdom always makes straight-line projections. They are always wrong. Yes, Obama's aura has diminished, in part because of overweening overexposure. But by year's end he will emerge with something he can call health care reform. The Democrats in Congress will pass it because they must. Otherwise, they'll have slain their own savior in his first year in office.

But that bill will look nothing like the massive reform Obama originally intended. The beginning of the retreat was signaled by Obama's curious reference -- made five times -- to "health-insurance reform" in his July 22 news conference.

Reforming the health care system is dead. Cause of death?

Blunt trauma administered not by Republicans, not even by Blue Dog Democrats, but by the green eyeshades at the Congressional Budget Office.

Three blows:

(1) On June 16, the CBO determined that the Senate Finance Committee bill would cost $1.6 trillion over 10 years, delivering a sticker shock that was near fatal.

(2) Five weeks later, the CBO gave its verdict on the Independent Medicare Advisory Council, Dr. Obama's latest miracle cure, conjured up at the last minute to save Obamacare from fiscal ruin, and consisting of a committee of medical experts highly empowered to make Medicare cuts.

The CBO said that IMAC would do nothing, trimming costs by perhaps 0.2 percent. A 0.2 percent cut is not a solution; it's a punch line.

(3) The final blow came last Sunday when the CBO euthanized the Obama "out years" myth. The administration's argument had been: Sure, Obamacare will initially increase costs and deficits. But it pays for itself in the long run because it bends the curve downward in coming decades.

The CBO put in writing the obvious: In its second decade, Obamacare significantly bends the curve upward -- increasing deficits even more than in the first decade.

This is obvious because Obama's own first-decade numbers were built on arithmetic trickery. New taxes to support the health care plan begin in 2011, but the benefits part of the program doesn't fully kick in until 2015. That excess revenue is, of course, one time only. It makes the first decade numbers look artificially low, but once you pass 2015, the yearly deficits become larger and eternal.

Three CBO strikes and you're out cold.

Though it must be admitted that the White House itself added to the farcical
nature of its frantic and futile cost-cutting when budget director Peter Orszag held a three-hour brainstorming session with Senate Finance Committee aides trying to find ways to save. "At one point," reports The Wall Street Journal, "they flipped through the tax code, looking for ideas."

Looking for ideas? Months into the president's health care drive and just days before his deadline for Congress to pass real legislation? You gonna give this gang the power to remake one-sixth of the U.S. economy?

Not likely. Whatever structural reforms dribble out of Congress before the August recess will likely not survive the year. In the end, Obama will have to settle for something very modest. And indeed it will be health-insurance reform.

To win back the vast constituency that has insurance, is happy with it, and is mightily resisting the fatal lures of Obamacare, the president will in the end simply impose heavy regulations on the insurance companies that will make what you already have secure, portable and imperishable: no policy cancellations, no pre-existing condition requirements, perhaps even a cap on out-of-pocket expenses.

Nirvana.

But wouldn't this bankrupt the insurance companies?

Of course it would. There will be only one way to make this work: Impose an individual mandate. Force the 18 million Americans between 18 and 34 who (often quite rationally) forgo health insurance to buy it. This will create a huge new pool of customers who rarely get sick but will be paying premiums every month. And those premiums will subsidize nirvana health insurance for older folks.

Net result? Another huge transfer of wealth from the young to the old, the now-routine specialty of the baby boomers; an end to the dream of imposing European-style health care on the U.S.; and a president who before Christmas will wave his pen, proclaim victory and watch as the newest conventional wisdom reaffirms his divinity.