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Obama's health care bill an enormous fiscal burden for U.S.

2010-03-25 14:45 BJT

CHICAGO, March 24 (Xinhua) -- The new health care bill signed by U.S. President Barack Obama on Tuesday is a major historical victory for the Democrats, but merely a victory of ideology, says a U.S. expert on Wednesday.

The new bill represents an enormous increase in cost for Americans both in individual taxes and deficit of the country, said Richard L. Wottrich, managing director of International at Dresner Partners, an investment banking firm based in Chicago.

"The 2009 report on the unfunded liability of social security and Medicare shows a 107-trillion-dollar deficit. Now the Obama administration puts 32 million people into Medicare and Medicaid, and a portion of this is unfunded mandate for the states," he told Xinhua.

As a result, Wottrich said about 17 state attorney generals are going to sue the federal government against the new health care bill.

"Most people agree that health care needs some reforming. However, the long-term cost of this health care bill, on top of all the other deficit spending, represents an enormous fiscal burden for this country."

The timing of the introduction of the obligation is also not good as the the country remains in the middle of a recession, he said.

"The health care bill is a welfare transfer. Health insurance has always been based on sound business principles of insurance, which spreads the risk of many people. However, the government took over the health care and changed it to welfare. By giving health care to 32 million people, it produces 32 millions voters who have an interest in making sure it continues."

Regarding the effect of this bill on average Americans, Wottrich believes that all people will feel the impact of tax increase as a result of this bill.

"This bill represents a large increase of taxes for many Americans in a year or two. For some tax payers they are going to see their tax bill hit 50 percent (of income) and higher because of the bill, combined with the Bush tax cuts, which needs to be renewed soon but the Obama administration will allow it to expire."

In addition to that, Wottrich said, there will be state income tax increase as well, but different states will have different increases. "Moreover, the insurance premium will go up and the cost of health care will go up one way or the other," he added.

Although the bill will create as many as 16,500 jobs in the Internal Revenue Bureau, Wottrich said it remains to be seen in terms of its effect on the U.S. economy.

"Any time you have a payroll cuts, which this bill does, you will have a negative impact on the economy. For people who are earning a significant income, they are going to have to pay more taxes or pay for a higher health insurance premium. I am not certain that it produces more disposable income."

Obama signed the historical health care reform bill into law in the White House on Tuesday, declaring it "a new season in America."

The main legislation would extend coverage to 32 million uninsured Americans over 10 years with a first-time requirement for nearly everyone to carry insurance and would ban insurance company practices such as denying coverage to sick people.

Editor: Zhang Pengfei | Source: Xinhua