The furor over the Congressional Budget Office’s report on the House GOP health bill is concentrated on predictions about insurance coverage, which suits Democrats fine. Lost amid the panic is that CBO shows the bill is a far-reaching advance for the market principles and limited government that conservatives usually favor.
The CBO is not omniscient, but if its projections are even close to accurate then ObamaCare repeal and replacement is the most significant government reform in perhaps three decades. Under conventional (static-revenue) scoring, the bill cuts spending on net by $1.22 trillion and eliminates a raft of new taxes worth $883 billion through 2026.
Despite this tax reform and new refundable tax credits for individual insurance purchases, the bill still reduces the deficit by $337 billion. Reducing spending, the tax burden and further debt generation is an enormous pro-growth fiscal bonus.
President Obama sought to permanently increase the government’s share of the economy to redistribute income to reduce inequality. ObamaCare was his spending wedge to force tax increases long after he had left office. The House health-care bill is the first crucial step to limit that wedge and restore the federal fisc to a more sustainable long-term path.
Absent reform, the brutal budget math is that the U.S. is headed for a debt crisis; major tax increases that subtract from GDP and living standards; or deep and immediate cuts to entitlements that Americans have planned their lives around—or maybe all three. The longer Washington waits, the more painful and politically convulsive the corrections will be.
We keep reading that President Trump and Speaker Paul Ryan are on a collision course over entitlements, though when was Medicaid demoted from entitlement status? The bill transitions the program’s funding formula to block grants starting in 2020—for the first time, limiting the automatic and open-ended commitment that defines an entitlement.