It's a bargain.

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Obamacare Narrows the Deficit. Let's Move On.

Jonathan Bernstein is a Bloomberg View columnist. He taught political science at the University of Texas at San Antonio and DePauw University and wrote A Plain Blog About Politics.
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The Congressional Budget Office has released a report on the effects of repealing Obamacare. Bottom line: full repeal would blow up the long-term federal budget deficit -- and leave a lot of people without insurance.

In the short term, CBO says, repeal would narrow the deficit a bit. But when the effects kick in later, they’re huge, though there's some debate about how huge. CBO has two estimates. The traditional one is that the federal budget deficit would increase by $353 billion over 10 years. But CBO now includes “dynamic scoring,” which takes into account estimates of the changes' potential effect on the size of the economy and thus its broader impact on federal revenue. CBO asserts that dynamic effects -- mainly removing the disincentives to work created by Obamacare -- would have extremely positive impact on the economy, and only swell the deficit by $137 billion over the 10-year estimate window. I’m no economist, but I find the size of the “dynamic” effect -- a deficit estimate that is $216 billion lower based on much faster economic growth -- utterly implausible. We’ll see what economists say.

Either way, however, the long-term effects are a lot larger than the 10-year window implies, because the impact is backloaded and continues to grow. That is, CBO estimates the annual effect on the deficit would be to add $135 billion in 2025 alone (the 10th year in their budget window), and still increasing after that. So we’re looking at a hole in excess of $1 trillion in the second 10 years (if each annual deficit increase is more than $135 billion).

All that and considerably fewer people covered by health insurance.

Does anyone expect supposedly deficit-obsessed Republicans to either drop repeal, or to find offsets to make repeal budget-neutral? Of course not. Although this estimate is new, the general finding that the Affordable Care Act reduces the deficit has been well-known, and denied or ignored by “repeal” Republicans.

Apart from criticism of the individual mandate, the bulk of Republican hits on Obamacare have involved dismissing the cost savings or condemning the taxes Democrats included to (more than) pay for new benefits. Indeed, a substantial share of Republican attacks have been false claims that Obamacare widened the federal budget deficit.

That doesn't mean Republicans shouldn’t oppose the legislation. There really is a fundamental disagreement about whether government should guarantee (or at least come close to guaranteeing) universal health care coverage. And there are plenty of reasonable arguments to have about how Obamacare achieves that goal. For that matter, there are reasonable arguments about the appropriate size of budget deficits, too.

But like it or not, Obamacare reduces the deficit, and repealing it would put the U.S. a lot deeper in debt.

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

To contact the author on this story:
Jonathan Bernstein at jbernstein62@bloomberg.net

To contact the editor on this story:
Max Berley at mberley@bloomberg.net