The Wall Street Journal reports that Senator Edward Kennedy (D-MA), who chairs the Senate Health, Education, Labor and Pension (HELP) Committee, will soon introduce his disability program known as the CLASS Act.
If you were taking some consolation that Congress had spent so much money over the past few months that funding its remaining wish list, like health care reform, was impossible, well then unconsolate yourself. The CLASS Act could siphon out of the economy the estimated $1.2 trillion over 10 years for the Obama health plan, with billions to spare.
The legislation creates a new government-run disability program. All workers would be automatically enrolled. People could opt out—at least that’s what we’re being told now—but sponsors don’t expect many people to do that.
Workers would pay up to $65 a month—that’s up from $30 a month that Kennedy had been recommending for several years—into a government honey pot, er, fund. If a participant becomes disabled, that person would be able to draw $1,500 or $3,000 a month, depending on the disability.
All this when there is a very active long term care (LTC) insurance market, that sells very affordable coverage—especially if you buy in early—for people who need long term care and nursing home services. Well, if this legislation passes you can kiss that industry goodbye.
How much money does the good senator expect to rake in from this new “voluntary tax”? Aides say if every worker participates the government would get about $320 billion the first year, according to the Journal article.
And while the article doesn’t say it, Kennedy had included a provision that no one could draw on the funds for five years.
Do the math: $320 billion times five years and you get $1.6 trillion—before the program spends a dime. Think that would finance some serious government spending?
Of course, not every American would sign up. But based on their internal poling the Kennedy staff expects about 95 percent of the public to remain in.
The article goes on to say, “The money would be put into its own separate fund, not available for other government spending.”
Uh, sort of like Social Security?