More analysis of the HCR bills and CBO numbers
Megan McArdle takes a first look at the bill and CBO numbers and gives her preliminary assessment. I want to specifically discuss a few of them:
1) Thanks to reconciliation instructions, they needed to improve the budget impact by at least $1 billion in the sidecar. They improved it by exactly $1 billion. Which goes back to what I’ve now said several times: the CBO process has now been so thoroughly gamed that it’s useless.
That’s the point I’ve been attempting to make for some time – CBO is limited to a 10 year window when it “scores” a bill. When you look at the graph below, you see the literal gaming that has taken place to get the numbers needed to make this seem palatable.
That brings us to a second point raised by McArdle:
2) The proposed changes increase spending dramatically, most heavily concentrated in the out-years. The gross cost of the bill has risen from $875 billion to $940 billion over ten years–but almost $40 billion of that comes in 2019. The net cost has increased even more dramatically, from $624 billion to $794 billion. That’s because the excise tax has been so badly weakened. This is of dual concern: it’s a financing risk, but it also means that the one provision which had a genuine shot at “bending the cost curve” in the broader health care market has at this point, basically been gutted. Moreover, it’s hard not to believe that the reason it has been moved to 2018 is that no one really thinks it’s ever going to take effect. It’s one thing to have a period of adjustment. But a tax that takes effect in eight years is a tax so unpopular that it has little realistic chance of being allowed to stand.
This proposal with the reconciliation package actually costs more than the previous version. And, she’s dead on right about the tax provision which will most likely never be enforced. That, of course, would add 32 billion to the net cost of the bill pushing it to over 826 billion. That’s not all:
3) As I expected, the size of the magic asterisk–the modern equivalent of David Stockman’s infamous “savings to be named later” in the Reagan budgets–has had to be beefed up to offset the new spending.
Go back and look at the chart here. She’s talking about the last line, “Other Effects on Tax Revenues and Outlays”. No specifics. Assumed savings of 44 billion to help arrive at the net 794 billion. Will there be any savings? Who knows, but given government’s history in that regard – the “magic asterisk” whose saveing never seem to actually materialize – probably not. So when you add that to the tax that’s never taxed, your net is now $860 billion over 10 years.
Add the 200 to 250 billion “doc fix” not in the bill and where are we “net”? Over a trillion dollars hidden in a gamed 10 year period.
I think this is a fiscal disaster waiting to happen. But no one on the other side cares, so I’m not sure how much point there is in saying that any more.
I think she’s right, but it is well worth recording the sentiment though. This has devolved into an exercise in power, politics, party and the presidency. It has little if anything to do with what’s best for the other “p” – the people.
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