Car Payments

President Obama has made much of his claim that those who denigrate his health care legislation are either lying or ill-informed. He suggests that Obamacare will reduce the deficit, lower health insurance premiums, and provide higher quality care. He further tells us that 10 years of taxes paying for 6 years of coverage will somehow result in a lower deficit when 10 full years of coverage occur after 2020, and that a $500 billion reduction in Medicare funding will allow him to create a health care bill that is deficit neutral and at the same time "strengthens" Medicare. Hmmm.

Let's just focus on the $500 billion reduction in Medicare funding for a moment. The best way to consider Obama's claim is to think about a simple real-life situation.

Let's assume that I feel I'm entitled to a brand new Ferrari. It's true that I currently have an automobile, and although I'd really like a luxury car, my current vehicle seems to work in most cases. Regardless, I think it's only appropriate that I have Ferrari because many other people possess the car, and I'm entitled to one.

But a Ferrari is expensive. How can I go about funding its purchase without increasing my own personal deficit? I don't have the quarter of million dollars necessary to purchase it outright, so I'm going to have to find the money someplace else.

I have an Uncle who was once wealthy but is now deeply in debt. But he's a high roller and says he'll lend me the money. All we have to do is properly structure the financial interaction and neither of us will increase our indebtedness. He agrees gives the funds to me. I purchase the car using the money he's borrowed.

I tell my friends that the car is paid for, that it does not increase my debt at all. I further tell my friends that I have not increased my uncle's indebtedness.

I think the bank and my uncle's accountant would think otherwise. My uncle will be forced to pay back the money, and he's now an additional $250,000 in the hole.

In essence, that is exactly what Pres. Obama is doing. He's borrowed a half a trillion dollars from a Medicare program that is deeply in debt and then uses that money to pay for the first 10 years of a new entitlement—his health care program. The problem is that the half a trillion dollars has been deducted from Medicare and that program falls further into debt. He pays for a new entitlement but at the same time increases the amount of debt associated with an existing entitlement.

Maybe the reason that so many average citizens are against President Obama's proposal is that it defies common sense. You cannot add 30 million people to a health care program and expect to save money—it simply will not happen. Further you can't raid one insolvent federal entitlement and use the money to pay for still another new federal entitlement and in the process reduce the deficit.

If anything, it appears that it is our President who is the one telling untruths or the one who is ill-informed.