Ready for the Next Trillion-Dollar Bailout?

Brian Riedl / July 27, 2010

Obamacare has been rightly blasted as fiscally irresponsible, yet few have noticed what may be Obamacare’s largest ticking entitlement time-bomb: the CLASS Act. My new op-ed on the subject is here, and my new report, co-written with Jim Capretta, is here.

CLASS is a new long-term-care insurance program that was inserted into Obamacare so that Congress could raid its $70 billion surplus through 2020 to cover Obamacare’s initial deficits. Like the raided Social Security trust fund, future taxpayers will have to repay that $70 billion with interest when the program falls into deficit later.

Thus, even Sen. Kent Conrad (D., N.D.) admits that Congress has enacted “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.”

It gets worse. CLASS is simultaneously 1) voluntary, 2) supposedly self-financing (premiums must be raised to match benefits), and 3) required to charge the same premium to healthy and unhealthy individuals of a given age. This is a recipe for insolvency. (more…)