Senator Judd Gregg Warns of $2.5 Trillion Cost of Health Care Reform on CNBC's "Squawk Box"

Strategic Insights -

Senator Judd Gregg, a member of the Senate Budget Committee, appeared on CNBC's "Squawk Box" on November 20, 2009, to discuss the cost of the health care reform bill. Gregg, a Republican from New Hampshire, estimated that the true cost of the bill is at least $2.5 trillion over ten years. He argued that the Democratic leadership is using a gimmick by scoring the bill over ten years, but delaying the spending until the fourth and fifth years. If the spending is phased in fully from day one, the cost would be significantly higher, at $2.5 trillion.

Key Takeaways:

  • Senator Judd Gregg estimated the true cost of the health care reform bill to be at least $2.5 trillion over ten years.
  • The Democratic leadership is using a ten-year scoring period to delay the spending until the fourth and fifth years, matching revenues and Medicare cuts against four to five years of spending.
  • A fully-phased in bill, with spending starting from day one, would cost $2.5 trillion.
  • The cost of the bill would be too high to be offset by tax increases or Medicare cuts, leading to a significant increase in the national debt.
  • Gregg believes that the bill would have a negative impact on the economy, stifling growth and reducing the standard of living of Americans.
  • The use of the Senate reconciliation process would allow the bill to pass with only 50 votes, but Gregg does not think this would be necessary, as the bill would have enough votes to pass in the Senate.
  • Gregg is concerned about the impact of the bill on small businesses, which would face significant penalties and taxes under the new law.
  • Gregg believes that there is an 80% chance that the bill will become law, pitting him against Senator Bob Corker, who predicts a 20% chance of the bill failing.
  • Gregg is critical of the Ron Paul measure to audit the Federal Reserve, calling it "absolutely wrong" and a threat to the independence of the central bank.

Statistics:

  • $2.5 trillion: Estimated cost of the health care reform bill over ten years, if spending is phased in fully from day one.
  • 10 years: Scoring period used by the Democratic leadership to delay the spending on the bill.
  • $200,000: Estimated cost to a small business of complying with the new health care law, according to Senator Gregg.
  • 20%: Chance that Senator Corker predicts the bill will fail, according to CNBC host Joe Kernan.
  • 80%: Chance that Senator Gregg believes the bill will become law, according to CNBC host Joe Kernan.
  • 300: Number of sponsors of the Ron Paul measure to audit the Federal Reserve.

Sources:

  • CNBC's "Squawk Box" interview with Senator Judd Gregg, November 20, 2009.
  • Federal News Service, Inc.