Obamacare is based upon insuring an estimated thirty million uninsured through ACA Exchanges and Medicaid. The CBO now projects the price of Obamacare to reach in excess of two trillion dollars. (1) (2) (3)
One has to fully appreciate that the few have decided to introduce a new entitlement and expand an existing entitlement through an entity that is seventeen plus trillion dollars in debt. Stated alternatively, the political power purveyors of a de facto bankrupt entity have introduced a new entitlement and expanded an existing entitlement. Not to worry as the spendthrift, the spendthrift to the tune of seventeen trillion plus dollars in debt, can fund the new and expanded entitlement. How so? (4)
These entitlements, other entitlements and a myriad of other U.S. government programs are “backed by the full faith and credit of the U.S. government.” Makes one feel warm and fuzzy, huh?
Then again, how valuable is such a promise? Maybe one should worry.
Yes, the government has the ability to tax or borrow to make good on its promises. Problem is: one would need to tax at near 100% to make good on all the debt and unfunded entitlements. One can not tax at 100% as private economic activity would end. A 100% tax on zero taxable revenue is zero. Borrowing? One has already borrowed the unfathomable sum of seventeen trillion dollars. (5) (6) (7)
What exactly does “backed by the full faith and credit of the U.S. government” mean when the phrase is constantly deployed to assure detractors that a proposition, a proposition brought into being by politicos through the mechanism of government, is solvent? One must appreciate that political power purveyors of a de facto bankrupt entity, that can not tax at a rate to make itself solvent, constantly rely on “the full faith and credit” each time one of their many, many, many existing propositions are questioned as to solvency.
When one aggregates all existing propositions and one considers the solvency of the aggregate, exactly how much meaning is conveyed when the supporter of any one of the propositions states: “backed by the full faith and credit of the U.S. government”?
(1) Obamacare Now Estimated to Cost $2.6 Trillion in First Decade, The Weekly Standard, 07/11/2012
(2) Estimated Cost of ‘Obamacare’ Is Now $2.6 Trillion — Nearly $1.7 Trillion More Than Obama Promised, Yahoo News, 07/11/2012
(3) New CBO health law estimate shows much higher spending past first 10 years, Fox News, 03/14/2012
(4) US Debt Clock
(5) Full faith and credit, investor words.com
(6) full faith and credit - Investment & Finance Definition, yourdictionary.com
(7) The Laffer Curve: Past, Present, and Future, Art Laffer, 06/01/2004