Yes, Virginia, Obamacare Does Grow the Deficit

Charles Blahous, a senior research fellow at the Mercatus Center, published a study last week about the disastrous effect of Obamacare on the budget deficit--in direct contrast to claims by the Obama administration (supported by the Congressional Budget Office) that the law would reduce the deficit. Blahous estimates that over 10 years, Obamacare will add a net $1.15 trillion to the federal deficit.

Some observers, notably Paul Krugman, criticized Blahous's study. Blauhous responds to their criticisms in a new blog post at e21:

Dr. Krugman is incorrect to assert that legislation is usually assessed against “current policy” rather than “current law.” The Congressional Budget Office (CBO) indeed constructs multiple baselines, and there is an ongoing argument over whether the “current law” or the “alternative” (current policy) baseline is the most meaningful. But as a technical matter, CBO typically scoresCongressional proposals, as well as the President’s budget, against “current law” on the tax side. The literal “current law” approach underlies CBO’s conclusion that extension of the tax rates established in 2001/03 would add to the deficit. The same approach would also, if applied to the Medicare Hospital Insurance trust fund, conclude that the 2010 health law adds to the deficit.