White House Office of Management and Budget Director Peter Orzsag testified before the Senate Finance Committee today, and tacitly endorsed a massive tax increase to pay for socialized health care:

OMB Director Orszag today said a healthcare overhaul needs to be budget neutral over five to 10 years, what he described as the medium term. "You have to invest to get savings later, but again, given our medium-term fiscal trajectory, we think the best way to move forward is to invest in a deficit neutral budget," Orszag said.

In Washington, "budget neutral" is a code word for "tax increase."

If that leaves you scratching your head, maybe this example will help:

You find yourself sitting on a government that eats up 20% of the economic pie.  Taxes eat up the same amount of the pie.  You decide to grow government spending to 22% of the pie.  So, you raise taxes to 22% of the pie.

This is what "budget neutral" means.  It means that you increase taxes at the same pace as you're increasing spending.  Sure, it could also mean cutting spending somewhere else, but that's never the case in actuality.

In this case, health care spending could be increased by hundreds of billions of dollars per year simply by removing the tax exclusion for employer-provided health care.  If Pelosi-Reid-Obama were to force through this massive tax increase to pay for Hillarycare 2.0, this would be "budget neutral."  It would also be a massive tax hike and spending increase.

Posted by Ryan Ellis on Tuesday, March 10, 2009 4:06 PM EDT

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