Monday, October 12, 2009

Pay Now, Play Later -- Maybe

All of these grand schemes from the politicians are going to cost us money in the form of taxes and other expenses. The taxes start now but we won't see any tax relief that is proposed for several more years.

Under the Democratic bills, federal tax credits to help make health insurance affordable for millions of low- and middle-income households won't start flowing until 2013 -- after the next presidential election. But Medicare cuts and a sizable chunk of the tax increases to pay for the overhaul kick in immediately.

Obama administration officials and Democratic lawmakers say the reason for the three-year wait is the time it's going to take to set up insurance marketplaces, write consumer protection rules and reconfigure the bureaucracy to carry out the legislation. It took President George W. Bush's administration two years to phase in the Medicare prescription benefit, a more modest undertaking.

The $900 billion that this is supposed to cost is just an accounting trick. Lawmakers use a 10-year accounting window to assess new programs. Starting the Medicare cuts and some of the taxes in the early years -- and pushing the bulk of new spending into the latter years -- helps keep the cost of the health care overhaul within Obama's $900 billion limit. Bush used the same kind of maneuver to push the Medicare benefit through Congress.

You can find the original article here.

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