Five Republican Myths on Defunding Obamacare

Paula Dwyer writes editorials on economics, finance and politics for Bloomberg View. She was London bureau chief for Businessweek and Washington economics editor for the New York Times, and is a co-author of “Take on the Street: How to Fight for Your Financial Future.”
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Welcome to budget showdown week, version 2013. The Republican-led House has approved a spending bill that strips out funding for the Affordable Care and Patient Protection Act, otherwise known as Obamacare. Senate Democrats this week plan to delete the defunding section and send it back to the House. House members will then have just a few days to decide whether to stand their ground and allow a government shutdown on Oct. 1, or cave to the Senate.

As this game of chicken plays out, it's worth paying attention to Republican rhetoric -- mythology may be a better description -- to justify putting the economy at risk.

Myth No. 1: Shutting down the government will stop the health-care law from taking effect.

Not so. By coincidence, the start of enrollment for the health law and the first day of the new fiscal year both arrive on Oct. 1. Unfortunately for Ted Cruz, the senator from Texas leading the defunding drive, cutting off the government spigot wouldn't stop Obamacare. Turns out, the health law's funds come largely from the entitlement programs Medicare and Medicaid, which don't need Congress's annual blessing.

As Bloomberg News reported, even the ability of new insurance exchanges to link with Internal Revenue Service computers (to see if applicants are eligible) wouldn't be affected. Such computer connections can be defined as "essential business" and would keep working through a shutdown.

Myth No. 2: Republican governors oppose Obamacare.

False. Even though Florida Governor Rick Scott, a Republican who once ran a for-profit hospital chain, gets a lot of attention for blocking Obamacare's implementation, his view is far from universal.

As E.J. Dionnereports in the Washington Post, many died-in-the-wool Republican governors are expanding their state Medicaid programs as the fastest, least expensive way to care for the low-income and uninsured. One such governor, Ohio's John Kasich, is a former House Budget Committee chairman.

When confronted by a state legislator about his heretical views, Kasich responded that, at heaven's door, St. Peter is "probably not going to ask you much about what you did about keeping government small. But he is going to ask you what you did for the poor."

Kasich is joined by Michigan's Rick Snyder, Pennsylvania's Tom Corbett, New Jersey's Chris Christie, Arizona's Jan Brewer and New Mexico's Susana Martinez. They aren't exactly Obamacare cheerleaders, but they are going along with some of the Medicaid expansions the law allows but doesn't require.

Myth No. 3: The U.S. is headed toward a Greek-like budget crisis.

Wrong. There are no signs of a debt crisis or bond vigilantes demanding higher returns in exchange for lending to the U.S. As Bloomberg News also reports, demand for Treasuries from the biggest buyers of government debt is as strong as ever.

These are the facts: Investors who control 81 percent of the $11.6 trillion in Treasuries, including hedge funds, sovereign wealth funds and central banks, are snapping up government bonds even as dealers and individuals back away. These investors want the income, safety and liquidity of U.S. bonds.

The budget deficit, moreover, will fall to about $700 billion in the fiscal year ending Sept. 30, down from the $1.4 trillion record set in 2009, says the Congressional Budget Office.

Myth No. 4: Polls support Republican efforts to deny funds for Obamacare.

Nope. As late as last week this was true, but not any more. The CNBC All-America Economic Survey of 800 people finds that Americans oppose defunding Obamacare by a plurality of 44 percent to 38 percent.

As CNBC's Steve Liesmanreports, "Opposition to defunding increases sharply when the issue of shutting down the government and defaulting is included. In that case, Americans oppose defunding 59 percent to 19 percent, with 18 percent of respondents unsure."

Myth No. 5: Obamacare is causing job losses and is forcing people into part-time work.

Sorry, wrong again. That conclusion just isn't supported by hiring statistics, says Mark Zandi, chief economist of Moody's Analytics. "I was expecting to see it. I was looking for it, and it's not there," Zandi tellsUSA Today. His firm manages ADP's surveys of private-sector job creation.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

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Paula Dwyer at