- The Washington Times - Monday, July 20, 2009

ANALYSIS/OPINION:

President Obama repeatedly states two things about his national health care initiative that are not true.

The first untruth is that we cannot have truly long-term economic growth until we replace the present health care system with an entirely new government-imposed one. The second untruth is that the plan will end the explosion in health costs.

In fact, there have been periods in our country’s economic history when we’ve experienced relatively long-term growth with the health care system we have now.

The most recent was the nearly 25 years of growth that followed the 1981-82 recession (with a shallow slide in the early 1990s) when the Dow rose to 14,000, unemployment fell to about 4 percent, U.S. exports were booming, and new-business formation soared.

Indeed, during that time, the health care industry was one of the biggest and most dependable sources of job creation even when jobs became increasingly hard to find elsewhere in the economy.

As for reducing spiraling health care costs, just the opposite is likely to result as health care demands skyrocket, fueled by trillions of dollars in government subsidies that will be poured into the system, overburdening an industry struggling to keep up with the demands we place on it now.

“The health care overhauls released to date would increase, not reduce, the burgeoning long-term health costs facing the government,” said Congressional Budget Office Director Douglas Elmendorf on Thursday.

Meanwhile, despite claims that his health care plan will spur economic growth for years to come, Mr. Obama is pushing so-called health care reforms that will, in fact, weaken our economy.

The House and Senate bills making their way through the legislative system will impose draconian tax rates on investors and small-business owners, who will be forced to provide health insurance benefits that will drive many of them out of business.

Moreover, it will force the nation’s private insurers to compete unfairly with a federally subsidized public health insurance system that will impose expensive new health mandates on them and thus drive up their costs and their prices — driving many from the marketplace.

If timing in politics is everything, Mr. Obama and the Democrats couldn’t have picked a worse time to enact their sweeping nationalization of our health care system — in one of the deepest recessions since the Great Depression.

The administration says the higher taxes, penalties, regulations and other government mandates on individuals and businesses will not take effect until 2011, when it expects the recession to be over.

But government economists said last week that the economy could still be quite weak at that time and may not achieve full recovery for another five years. And this forecast does not take into consideration all of the cost burdens national health care will throw at it.

While the forecasts by a panel of 17 top Federal Reserve leaders said that the economy may grow modestly (between 2 percent and 3 percent), they suggested we could be facing a jobless recovery that would keep unemployment high throughout 2011 and beyond when companies will resist hiring many new workers.

Even so, if Mr. Obama gets his way, Democrats will pass a nationalized health program this summer that will sock the economy with one of the biggest entitlement programs and tax increases in American history. It will cost taxpayers and businesses more than $1.5 trillion over 10 years and trillions more after that.

This even though the Fed forecasts unemployment likely will rise to 10.5 percent before this year ends and hit 10.6 in 2010 — years when business advocates say it will be no time to burden our economy with higher taxes and costly health care mandates.

The U.S. Chamber of Commerce, which represents thousands of U.S. employers, sent a stinging letter to Congress last week saying it opposed the Democrats’ health care reforms. Its chief complaint: the taxes the reforms will slap on small businesses.

The Democrats’ bill “fails to pass our simple litmus test: This legislation will not address the national health cost explosion, will steeply raise taxes in an already precarious economic situation, will fail to lead to more affordable, accessible, quality health coverage, and will lead us toward government-run health care. In short, it will make a bad situation worse, at great costs to the nation in jobs, taxes and freedom,” the chamber said.

The National Federation of Independent Business [NFIB], the nation’s largest small-business association, said the bill would strike at the heart of the business sector that creates most of the jobs in this country.

“NFIB opposes the [Democrats’ bill] because it threatens the viability of our nation’s job creators, fails to increase access and choice to all small businesses, destroys choice and competition for private insurance and fails to address the core challenge facing small businesses — cost.”

The National Association of Manufacturers weighed in, too, against the House bill’s onerous surtax, which would push the top federal income-tax rate to nearly 50 percent and much more than that when state and local taxes are factored in.

“Nearly 70 percent of manufacturers pay taxes at the individual rate. Many of these businesses fall into the higher tax bracket, even though most of their taxed income — an average of $570,000 for small and medium-sized manufacturers — is being reinvested into the business,” the NAM letter said.

All this raises yet another promise by Mr. Obama that doesn’t ring true: that no one making less than $250,000 a year will experience a tax increase. In fact, the costs of these taxes, mandates and penalties, either directly or indirectly, will be borne — as they always are — by every American worker and his family.

Donald Lambro is chief political correspondent for The Washington Times.

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