Wednesday, October 2, 2013

How much damage will the GOP dogma cost us?

I am equally disappointed and yet not surprised, that a recent poll shows that a majority (52%) of Republicans support the idea of the US defaulting, to stop the ACA.  Maybe they don't realize it, but this represents two layers of irony.

The ACA saves us money, and John Boehner knows this

Firstly, repealing the ACA would result in an additional $10B in federal debt, per year, according to the CBO.  The punch line here, is that it was John Boehner who requested the CBO study the effects of repealing the ACA.

I should be clear here, that the reason why federal debt would increase without the ACA, is because other provisions of the ACA increase federal income: medical devices tax, penalties paid by those who do not purchase insurance, etc.  The ACA subsidies to individuals does cost about $130B +/- a year and Democrats expected this, so to offset those costs Democrats bundled the individual subsidies with income-generating provisions.

Now, most Republicans think that the ACA will cost jobs and increase federal spending, but what is lost in some sectors, are gained by others.  The ACA will result in higher healthcare spending, including more higher-wage jobs, to add capacity for the millions of newly insured.  Don't believe me?  Look outside your house and look at all of the new facilities just coming online as the ACA opens up.

If you're looking for job stability, healthcare is it.  And again, the net effect of the ACA results in lower deficits and therefore lower debt, not higher deficits and higher debt.

The GOP dogma results in lower GDP

Secondly, Moody's Analytics' Mark Zandi estimated that a default would result in a 9% annualized loss of GDP in November; Princeton economist Alan Binder says that it is a 6% decline; Barclays thinks it'll be -4.2% decline; Credit Suisse, -5%.

To put into perspective, the US Commerce Department estimated that the 2008-2009 Recession resulted in a -5.1% reduction in total US GDP.

So, a majority of Republicans would risk a recession as deep (if not deeper) than the last one, because they think the ACA will end up growing the deficit and debt while slowing the economy.  But the ACA is going to save us money and by forcing a US default, we'd lose real jobs and grow the deficit and debt.

Truly, the debt ceiling is GOP dogma

Since they regained power in the US House of Representatives, they've pushed multiple versions of their Cut, Cap and Balance plan, a Balanced Budget Amendment, or dollar-for-dollar debt ceiling increases for non-discretionary cuts.  All of these come with the same effect: Slashing GDP by slashing federal spending.

Now, if you think for a minute that Democrats should be responsible adults and do everything they can to stop Republicans, as I have long espoused, there is nothing for Democrats to do but let Republicans shoot themselves in the head.

If Democrats help bail out Republicans, Republicans will blame Democrats for the very cuts that Republicans wanted in the first place -- see Sequestration.

No.  The responsible thing to do here, is to force Republicans to take credit for their failed dogma.

No comments: