Free Markets, Free People

Obama Administration Finally Admits CBO Was Right (Update)

Right about what? Well, in this case, the 10 year budget estimate. Remember this chart first seen in March?

wapoobamabudget1

This was the difference between the Obama administration and the CBO estimate based on the Obama administration’s 10 year budget. At the time the CBO said that the budget estimate would raise the debt by 9.1 trillion dollars. The Obama administration said, at the time, that the CBO was wrong.

Quietly, at 7pm this last Friday night, the Obama administration raised its estimate of what their budget would add to the debt by the 2 trillion the CBO had said was always there. What that means for the chart is you can ignore the pastel red bars – the Obama estimate – in favor of the dark red bars.

The administration claims that its change in the estimate is due to things which have apparently changed since March, but of which they were just unaware might happen:

Obama administration officials have concluded the economy was much worse last year — and tax revenues much lower — than they had initially assumed, which means that the estimated budget deficit will increase from $7 trillion to about $9 trillion over the coming decade.

This has to give you all sorts of confidence in other White House cost estimates not to mention their denials of the CBO’s accuracy on things like cap-and-trade and health care in favor of their own.

They didn’t know enough to make an accurate estimate. But the CBO did.

So when the administration says that health care reform will save money and the CBO says it will “bend the cost curve upward”, what should this example lead us to believe?

The cost curve is going to bend upward.

UPDATE: James Pethokoukis thinks this is a prelude to CBO kicking their estimate up a notch:

Expect the CBO to also crank up its forecast, which will be higher than the administration’s. Also, this is further evidence that the common wisdom that people don’t care about budget deficits (no matter what the polls say) is wrong. C’mon, leaking such news on a late Friday afternoon?

~McQ

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12 Responses to Obama Administration Finally Admits CBO Was Right (Update)

  • If other countries can spend half the cost less in health services and yet have universal coverage, we can finance Obama’s plan with half the moneys needed in this country to pay today for health care of only 60% of the population.

    The point missed is that the “status-quo” has never worked better than the government run program of Medicare, for example. So, where is the basis of the argument that government cannot do it?

    • The point missed is that the “status-quo” has never worked better than the government run program of Medicare, for example.

      I guess the 58 trillion in future unfunded liabilities doesn’t at least hint to you that perhaps you’re being dazzled by some glittery words that don’t mean what you think they mean. And don’t forget about that private “medi-gap” insurance that is necessary to make medicare work at all.

      And then there’s the cost shifting that both Medicare and Medicaid do. Medicare pays .94 cents for every dollar of health care delivered. Medicaid pays .86 cents. Private health care pays about $1.34 per dollar of health care delivered. Without that history of cost-shifting to private insurance, Medicare’s already in the toilet.

    • “The point missed is that the “status-quo” has never worked better than the government run program of Medicare, for example.”

      The comparison between Medicare and the status quo is a false analogy to begin with. In Medicare, the large majority of the American population pays in full for a minority. The only reason Medicare has been sustainable this long is because it has supported a comparatively small percentage of the general population. As that grows, due to the aging of the Baby Boomer generation and increasing longevity due to medical advances, it is going to become more and more expensive. It is projected as becoming insolvent by 2019. So, I’d say, no, Medicare does not work better than the “status quo”.

    • God you are stupid. Did it ever occur to you to actually read anything critical about public health schemes? Anything at all? Or does all your information come from Mother Jones, your liberal professors, or Obama speeches?

      Grow up.

    • One red flag is that doctors are fleeing Medicare. And, as others pointed out, Medicare leverages off of non-Medicare payments.

      Comparing US costs to Canadian or NHS costs is dangerous. Not only is US healthcare of superior quality, but the US should be paying more into the medical system.

      Condiser that the US, overall, does poorly with respect to average life span, yet when you factor out homicide and auto accidents, that reverses and the US has a longer average span due to superior quality care. Well, this can apply to costs as well; some of our additional costs are due to our additional auto accidents, shootings, stabbings, etc.

  • “So when the administration says that health care reform will save money and the CBO says it will “bend the cost curve upward”, what should this example lead us to believe?”

    Clearly Obama. He’s just so damn eloquent.

  • Just wait. Tuesday the CBO releases its new numbers, and I suspect that there will still be a gap between the Administration’s numbers, and the CBO’s.

    I suspect some times Wednesday there will be a new graphic from the WaPo.

  • “The point missed is that the “status-quo” has never worked better than the government run program of Medicare, for example. So, where is the basis of the argument that government cannot do it?”

    There’s not just one basis. Health insurance is heavily regulated in the USA, with government placing limits on coverage and pricing, as well as not allowing insurers to offer their services across state lines. Also, unlike those insurers, government doesn’t worry about being profitable or even solvent, as the trillions in unfunded Medicare and Social Security liabilities attest. Another reason that the status quo isn’t as efficient as it should be is the high malpractice premiums that doctors must pay.

    I suppose that in regards to the latter, the public option will fix that, by making it so that you have no legal recourse if your doctor is negligent in treating you. Otherwise, I’m a bit leery of having the same people who are currently botching the Cash for Clunkers program run a nationalized health care system.

  • Ah yes, the famous 7:00 pm on a Friday night news cycle.

    Hope and Change.

  • I think his approval ratings have gone down because he promised us change, and all we got is change…(coins-leftovers). Terrible!!! Now, that’s all we are left with..some pocket change.