Phil Kerpen

Syria has taken over the top of the agenda, but very soon Congress will necessarily return to high stakes fiscal negotiations, not just over the continuing resolution to fund the government, but also over the federal debt ceiling. Speaker John Boehner is committed to the principle that has so effectively constrained discretionary spending since the historic summer 2011 deal: debt ceiling increases must be matched dollar-for-dollar with new spending cuts. At the top of the spending cut priority list should be elimination of the most widely hated aspect of the new health care law: the individual mandate.

You might assume that repealing a mandate enforced with a tax would increase the deficit because of the lost tax revenue. But this particular tax is so destructive and ill-advised that repealing it would actually bring a shockingly large windfall in federal deficit reduction.

The Congressional Budget Office revealed this curious fact deep in the 2011 edition of its “Reducing the Deficit: Spending and Revenue Options.” The ten-year score showed that for the years 2012 to 2021, repealing the individual mandate would reduce deficits by a hefty $282 billion. And that included two years – 2012 and 2013 – with zero savings because the mandate was not yet in effect. A new estimate for the next ten years would likely show deficit savings of approximately $400 billion.

How can repealing a tax actually reduce the deficit? When the $27 billion the tax is estimated to raise is dwarfed by the spending impact, in this case well over $200 billion (for the old score). Half of the savings comes from reduced Medicaid spending.

(If you’re wondering why so many Medicaid-eligible people won’t enroll in the absence of a mandate forcing them to, the answer could be that, according to the New England Journal of Medicine: “Medicaid coverage generated no significant improvements in measured physical health outcomes.”)

The rest of the deficit reduction (other than some minor impacts on employer provisions) is about evenly split between the cost of subsidies for people who would only buy insurance because of the mandate, and higher tax revenue from people who would, in the absence of a mandate, earn more taxable compensation from their employers instead of health benefits.

President Obama knew the mandate was wrong back when he was a candidate in 2008. “The main difference between my plan and Senator Clinton’s plan,” he said, “is that she’d require the government to force you to buy health insurance and she said she’d ‘go after’ your wages if you don’t.”

Phil Kerpen

Phil Kerpen is president of American Commitment, a columnist on Fox News Opinion, chairman of the Internet Freedom Coalition, and author of the 2011 book Democracy Denied.

American Commitment is dedicated to restoring and protecting America’s core commitment to free markets, economic growth, Constitutionally-limited government, property rights, and individual freedom.

Washingtonian magazine named Mr. Kerpen to their "Guest List" in 2008 and The Hill newspaper named Mr. Kerpen a "Top Grassroots Lobbyist" in 2011.

Mr. Kerpen's op-eds have run in newspapers across the country and he is a frequent radio and television commentator on economic growth issues.

Prior to joining American Commitment, Mr. Kerpen served as vice president for policy at Americans for Prosperity. Mr. Kerpen has also previously worked as an analyst and researcher for the Free Enterprise Fund, the Club for Growth, and the Cato Institute.

A native of Brooklyn, N.Y., Mr. Kerpen currently resides in Washington, D.C. with his wife Joanna and their daughter Lilly.