The United States can still choose a different path.
If you want to know what political cowardice, short-term thinking, and economic unseriousness look like, look no further than France.
Last week, Prime Minister François Bayrou became the third premier in a little more than a year to fall in Paris, toppled by a legislature unwilling to accept even modest restraint on runaway spending. France’s debt is projected to reach 116 percent of GDP this year. Annual government outlays are nearing 60 percent of GDP. Yet the National Assembly will not even pretend to consider actual cuts.
Bayrou’s job was to cobble together a budget “plausible” enough to satisfy everyone. That task proved impossible. Macron himself once had the right reformist instincts, but implementing any of it would have required a little bit of courage, which is more than he has, and a willingness to lose his job, an outcome that he certainly would never accept. France is now stuck. Voters punish anyone who dares to tell them that the math no longer works.
President Macron’s party (whatever it believes, no one can tell), along with the populists on the right and left, and the greens, socialists, and communists, all share one conviction: the money must never stop flowing. French people might not all agree that nothing should change, but violent protesters blocking France today remind them that resistance is futile; France will make its way into the wall.
Americans, however, should not be smug. This same disease has long infected Washington. It has gotten to the point that our leaders are even proving unable to do the easiest thing in politics: nothing.
The clearest case is the so-called “COVID credits” in Obamacare. These were temporary sweeteners to the Affordable Care Act’s premium tax credits, first enacted during the pandemic and extended through 2025. They did two big things. First, they eliminated the income cap, so even affluent families — for example, a family of 4 earning around $130,000 — could qualify for taxpayer subsidies. Second, they vastly increased the size of the credit, so that households between 100 and 150 percent of the poverty level pay nothing for coverage, while taxpayers cover the entire premium.
Congress does not need to act to end these credits. If legislators simply allow the current law to stand, the expansions will expire on December 31, 2025. The original Obamacare subsidies remain. That is the promise Congress made when it passed these temporary provisions.
Yet, as the National Taxpayers Union warned, the political class is already scheming to extend them. If Congress cannot even do what it does best, which is doing nothing, how will it tackle the bigger fiscal problems we face. Poorly, I am afraid.
Yet, the case for letting these credits expire is overwhelming. These were emergency tax credits’ expansion. The emergency is over, so should the expansion be. The fiscal case only adds to the case for letting them expire on schedule. Economist Brian Blase at the Paragon Health Institute calculates that continuing the credits would cost an additional $450 billion over the next decade. That includes more than $35 billion in 2024 alone, sent to insurers on behalf of people who never paid a premium and never filed a single claim. Nearly 40 percent of enrollees in zero-premium plans in 2024 had no health-care use whatsoever. In total, 12 million exchange enrollees filed no claims in 2024, triple the number from 2019. That is not insurance. It is a taxpayer subsidy to insurance companies for phantom coverage.
The integrity problem is staggering. For instance, data from Paragon Institute suggest that in 29 states, more people claimed incomes below 150 percent of the poverty line than actually live in that category, a sign of widespread underreporting to qualify for free coverage.
Meanwhile, the subsidies fuel higher premiums. Because they are linked to the “benchmark” plan price, consumers are shielded from premium hikes. Insurers know taxpayers cover the difference, so insurers have every incentive to raise premiums. Since 2020, average ACA premiums have jumped by 75 percent. With taxpayers financing over 90 percent of the increase.
Further, the credits distort private coverage. Before the pandemic expansions, enrollment in the exchanges was flat. Once free coverage became available, millions abandoned employer plans or private coverage to take the government option. The Congressional Budget Office warns that millions more will lose workplace insurance if the COVID credits are made permanent, as employers respond to the subsidy structure by shifting workers onto the exchanges.
Americans are rightly concerned about health-care costs, but the answer is not endless subsidies. The pandemic is over. Nearly every other temporary measure has ended. If legislators cannot let this one expire, then nothing will ever expire. Every program will become permanent, regardless of how wasteful or destructive it may be.
France’s experience shows what happens when politicians refuse to confront arithmetic. The United States can still choose a different path.