America Goes To Rehab: The Shutdown And Kicking The Habit Of Crackonomics – Forbes

Readers of my previous blog will recall that I compared America’s abuse of cheap money and deficit spending to the artificial stimulation sought by crack addicts who need more and more of the drug to satisfy their craving. Neither scenario plays out well—the U.S. deteriorates its economy and goes deeper into debt, while the crack addict overdoses and dies. In either case, an intervention is necessary to avert disaster. I prescribed a sort of four-step rehab program for America, where the first step was to cut deficit spending by reducing programs that don’t create a competitive advantage for our country.

The Shutdown: dysfunction or detoxification?

Without Congress listening to my advice, here we are in the midst of a government shutdown over the funding of Obamacare. Much of the press is hyping this as the result of a dysfunctional Congress, but they’ve got it wrong.  They are like the drug pusher trying to stop anyone who would prevent his customers from staying on crack. The pushers of big spending are a tough crowd and won’t take no for an answer. On the “Today Show,” Matt Lauer interviewed two experts who extolled the virtues of Obamacare, but he conspicuously skipped questions about the law’s downsides, such as a seven-thousand dollar increase in health care costs for the middle class. CNN’s Chris Cuomo got into a shouting match with California Representative Darrell Issa on “New Day”, trying to get Issa to admit he hurt families by letting the government temporarily close.

Unfortunately, the excess spenders are pushing Obamacare even when it may actually hurt the people it is supposed to be helping.  The shutdown will undoubtedly be uncomfortable for some, but it’s the tough medicine the country needs to wean itself off of its dangerous and unsustainable spending habits. Health care for everyone is a fine goal, but only if we can afford it, and we can’t for now.  The temporary shutters felt by some during the shutdown are necessary first steps in any detoxification program designed to reduce our addiction to national deficits and debt.

The Big Irony: Obamacare benefits the wealthy at the expense of many others

With a bit of sad irony, Obamacare will actually benefit the wealthiest people the most, even though it was intended to help the poor, as well as the working and middle classes. Obamacare has already enabled numerous large corporations—such as Walgreens and Sears—to send their employees to private health insurance exchanges. And IBM plans to do the same thing with 110,000 of its retirees. Over time, these workers and retirees will likely be responsible for more and more of their health care costs, as employers keep their contributions static despite inflation.

In today’s globally competitive world, these contributions are unlikely to climb, especially when Chinese businesses and the Chinese government offers little in the way of health care to its workers. Reduced medical costs will increase returns for corporations or their shareholders, who will then put that money into their growing businesses around the world. Instead of helping the working and middle classes, we’ve freed corporations from paying medical benefits and increased their profits. This is the exact opposite of what we should be doing, which is to grow our economy so more people can move up into the middle class and the middle class can keep their standard of living.

Obamacare also incurs a hidden opportunity cost that hurts the people it was intended to help. Instead of cutting the corporate costs of health care, the government could increase our competitiveness in the world economy through investing in innovation, training, and on-shoring. These investments will not only improve the quality of life for the poor and middle class, they will create new jobs and market growth in America. With Obamacare, we will make our corporations more competitive through lower labor cost, but our workers and retirees will lose their standard of living to do so.

Obamacare will also backfire by forcing the young to carry much of the burden.  Young people who are generally healthier and unlikely to need insurance are being forced to buy insurance when most may be better off taking the risk that they won’t really need it. Meanwhile, Medicare lost one half of a trillion dollars from its budget to subsidize the poor. This kind of wealth transfer will have devastating effects on both groups. The young won’t have the money to buy their first home or car, nor will they be able to pay for education and training at a time in their lives when they need it the most. Meanwhile, the elderly will waste their remaining assets on health care no longer covered by Medicare—dissipating the inherence of their children. Once again the young get stung.

No country ever got rich by impoverishing its youth, workers or middle class

Obamacare was sold to the people as “cheap health care insurance” for the middle class and the poor. In reality, it is a hidden tax on workers, young people, the elderly, and the middle class, as the Supreme Court held when it determined that it is constitutional for the government to require people to buy Obamacare insurance. And it is a boon to corporations and the wealthy who will benefit from reducing labor costs.

Let’s not forget that the baby-boomers will be retiring over the next 10 years, leaving the working and middle classes, and the young, with a heavy tax burden. They will have to pay the massive debts incurred for the president’s lackluster recovery program. And they will have to pay for the massive pension benefits of government employees that will come due in the near future as they retire.

These are going to add a crushing blow to our young people, and to the working and middle classes in the near future. They may not survive the burden.  So why voluntarily add the hidden tax of Obamacare to the weight on their shoulders when it may be the last (and most heavy) straw that breaks the camel’s back? To help corporations? To help the rich get richer? We must get out of our crack haze and stop listening to the pushers of crackonomics. It is truly time for rehab. The shutdown may be one of our last chances to get clean.