It will pile on to the largest post-WWII deficit stimulus in US economic history, creating huge additional tax disincentives to start businesses, and crowding out productive private investment.
Incentives are the gravitational force of economics. Removing incentives stalls economic growth, most often via taxes. Obama’s idea to fund his plan fails miserably, and taxes the largest economic producers:
The House bill proposes to raise the highest personal income tax rate by 5.4 percentage points. This is on top of the Obama administration's plan to raise the top rate by another 4.6 percentage points next year. The combined 10-percentage-point increase raises the top income tax rate to 45%—an economic growth-destroying level not seen since the early 1980s. Sen. Max Baucus (D., Mont.) proposes, instead, to tax some health insurance premiums.
In neither bill do higher taxes finance the proposed additional spending. Should the Medicare savings fail to materialize, as we* believe they will, the spending in either bill will add more than $100 billion per year in perpetuity to the already soaring national debt. [my emphasis – Pub.]
*John F. Cogan, R. Glenn Hubbard, and Daniel Kessler, Doubling Down on a Flawed Insurance Model, WSJ, 9/25/09
Notably, these new taxes start in 2010, a really stupid idea when we're still in an economic recovery, but health insurance full-coverage doesn't begin until 2013, comfortably after the 2012 election. Also note the indefinite expiration “in perpetuity” cost. That's not funded, either.
Barack's economic timing could not be worse: leftover misguided Depression-era, unfunded social welfare programs like Social Security, Medicare and Medicaid are about to step on the baby - boomer demographic landmine, effectively bankrupting them before the inevitable temporary ineffective politically expedient non-fix "fix."
Somehow, President Obama thinks adding to the problem will solve it.
He’ll make it far worse.
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