Many economists heralded the collapse in oil prices since last summer as a major windfall for the U.S. economy. They predicted consumers would save billions from lower gas prices, and then spend it on cars, TVs and Apple watches.
But a funny thing happened on the way back from the filling station. Obamacare devoured the gas-cut bonanza, said Michael Pento, president of investment adviser Pento Portfolio Strategies.
“It appeared most analysts assumed if consumers liked their gas tax cut (much like Obama’s promise to keep their health plan)…they could keep it,” he said in a May 11 blog post
. “Unfortunately, Obamacare may be the Grinch who stole the gas tax gift meant for consumers.”
Oil prices plunged
almost 60 percent from $107 a barrel last summer to $44 a barrel in March, leading economists to predict a major boon for consumers and the economy. Analysts anticipated that consumers would save as much as $150 billion
on gasoline – then spend the money on discretionary items.
But oil bounced back by about 20 percent since that March low, leading to a steady rise in gas prices. In addition, Obamacare drained away any possible savings in several ways, such as hitting small businesses with costly rules for health insurance, Pento said.
“The increase in health care costs passed on by employers caused individual year-round employees at businesses with 50 to 99 workers to lose $935 in take-home pay annually,” Pento said, “while those at firms with 20 to 49 workers were out an average of $827.50.”
Corporations are growing more likely to offer health plans that have high annual deductibles, which means employees have to shoulder a greater part of their medical expenses before the insurance kicks in.
“The average worker with employer-sponsored health insurance
will pay about $2,664, or nearly 24 percent of the total cost of their plan premium in 2016,” Pento said. “Five years ago, employees paid $1,835.”
As for the previously uninsured, many are getting hit with higher tax bills because they underestimated their income and eligibility for government subsidies.
“It is anticipated that at least half of subsidy recipients owed more in taxes this year due to underestimating their income,” Pento said. “And according to H&R Block
, 61 percent of those filers saw their refunds reduced by an average of $729.”
Pento paraphrased former House Speaker Nancy Pelosi, who championed Obamacare, with his closing words:
“Those expecting a second-quarter rebound driven by consumer spending from the erstwhile drop in oil prices should, unlike Ms. Pelosi, be careful to ‘read the bill
now that they have passed it.’”
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