Free Markets, Free People


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.

 She concludes:

 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.

~McQ

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8 Responses to More analysis of the HCR bills and CBO numbers

  • A perfect storm.

  • I believe you could cause enough of an uproar to reverse the whole mess if we could get one fact out to the public through the mainstream media:

    It has been posted in a number of places yesterday that a subsection of the bill contains language that states that the government can access private bank accounts to enforce b. hu-inssein-a care. You would probably turn a lot of liberals who hate government intrusion against the bill.

    Anyway this would drive a powerful, wide ranging core group who rabidly hate this sort of thing, not just conspiracy nuts, but people who are as absolutist as animal rights activists and will not stop once they find out.

    Anyone got a way to get it reported by the mainstream media? The tea parties are this weekend- someone print signs or make it a point when interviewed by mainstream media, someone has contact with some high officials who will be interviewed nationally like John Boehner to get this push button issue to the forefront as soon as possible, all they have to do is drop this bombshell tonight and get it mainstreamed and it will get immediate reversals of yes votes because of pressure. Far more inflammatory than the fact that they are hiring 17k IRS and 150k gov workers to administer the program.

  • You would probably turn a lot of liberals who hate government intrusion against the bill.

    No you would not. They apparently are okay with such stuff if its about healthcare/when their guy is in power.

    • Well, most of them are.  As we’ve seen from the (ahem) antics of Tom Daschel, Tax Cheat Timmy, and Taz Rangle, others of them will do anything to avoid the rules that they impose on the rest of us.  Some pigs are more equal than others, you know.

  • Speaking of people.  This topic is the perfect opportunity to put Professor Erb in his proper place.  His whole schtick could be summed up as:  “I am smart, but not that much smarter than many other people, most of whom are, incidentally, Progressives too.  The thing is, I have studied some things and I have done some things, that all make me much more able to understand how things should work.  You people, in your relative ignorance, are simply projecting what your base desires tell you that you want into situations and issues that you just don’t understand.  If you had my knowledge and experience, you would agree with me.”

    OK.  That is fine – as far as it goes.  Where it breaks down is a situation like we have in this post.  FACTS are presented that must be either accepted, reversed or their meaning made clear.  Professor Erb will simply pass.  He knows that these facts make a mockery of the horsesh*t he has been peddling here on the current bill.  He has ignored the fact that this bill is bankruptcy incarnate.  It advances the progressive agenda he wants and, hey, “everything will work out, once we (Progressives) get what we want”.  He knows that trying to use these facts in a cogent argument would be attempting a flim-flam, as Congress has done, and any such argument must fall of its own weight.  So he votes “absent” just as our failed leader does on this point.

    Proffesor Erb is our wannabe part-time guru, appearing only when the situation lends itself to his particular brand of bullsh*t.  We are (if we are as stupid as he takes us to be) supposed to (as the Progressives in government do) just “fill in the blanks” ourselves if we need to  make his policy points coherent.  Inconsistencies?  Ignore them.  Impracticalities?  Just wait for a better topic that lends itself to your talking points.  Talk specifics in very limited areas (damn any inconsistencies with other such limited discussions) then leap to vast generalities – never attempt to tie the two together (they don’t tie!).  When they don’t tie, vote “absent”.

    The irony is that he is just like he claims we are.  He wants what he wants because he is ignorant of how things in life really work.  For instance: What is his response to Thatcher’s observation that eventually you run out of other people’s money?  Many opportunities have been presented here for a response.  He has consistently voted “absent”.

    Progressives like him are ignorant, parasitic pigs.  Nevermind his taste for fine whiskey.  How about his taste for defending our nation or tolerating his offspring doing so?  How about his obligation to fill in the inconsistent holes in his arguments, such as the hole indicated in this post?

    Note:  I believe it is fair to attack Professor Erb here when he has not commented here, given the point being made.

  • I really don’t see how anyone can “score” any bill’s financial impact more than three, four years out. By that time, taxpayers have had time to adjust their behavior and smart people have figured out ways around the bill’s provisions.