A month ago we revealed that, much to the chagrin of economists who proclaimed that the laughable 5.0% GDP surge in in Q3 was the result of the now undisputable economic "recovery" (where is that recovery now?), that the bulk of the upward revision came from the latest attempt to centrally-plan and socialist the US economy: an attempt which has immediate, and short-term benefits and a very long lasting adverse side-effects: the mandatory wealth-redistribution that is the tax known as Obamacare.
So looking forward, now that the soaring dollar and plunging crude are sure to punish the Q4 2014 and Q1 2015 GDP growth rate by more than half, with estimate now sliding to the mid to low-2% area, what "benefits" to the US economy can one expect from the tax that is Obamacare?
As the following chart courtesy of Goldman shows,thanks to contributions from Medicaid and Medicare and, drumroll, Exchange subsidies, the "benefits" from Obamacare will be with us, well, maybe not "us", but certainly with the way GDP is calculate for a long, long time, as the recent health spending ramp is only just getting started. Here's Goldman's Alec Phillips:
After several rounds of downward revisions to forecasts, projected spending on federal health programs has been more stable recently. CBO did make a small additional downward adjustment to Medicaid spending in its new estimates; that change was driven by evidence of slowing spending growth in that segment. However, overall the changes are a rounding error compared to the size of the programs and much smaller than the downward revisions made over the last few years, which cumulatively reduced projected spending over the next decade by more than $1 trillion. Recent data show an acceleration in spending growth in federal health spending programs, though this appears to be due mainly to the coverage expansion resulting from the Affordable Care Act (ACA) rather than increasing cost growth, as might be suggested by rising growth in Medicare spending, for example (Exhibit 2). That said, whether health spending growth begins to pick up will be an important factor for the medium-term budget deficit.
In other words, all that is needed for the Q1 "winter storm" impact to be fully offset in GDP is for millions of Americans to have no choice but to pay even higher monthly taxes, pardon Obamcare premiums. Then economists wonder where all those "low gas price" savings are going to.
And all this, we should reminder readers, is happening just as some 20% of American savings were "revised" away.
Perhaps all that is needed for 10% GDP growth every quarter, every year is for the government to confiscate all household savings and to dictate just how all this "excess" money is invested most cleanly and efficiently. In other words, just like the USSR.