Free Markets, Free People
Last Friday, the Committee for a Responsible Federal Budget released a report commenting on the CBO’s long term budget outlook. As one might imagine, it’s not pretty:
Yesterday, the Congressional Budget Office (CBO) issued its Long Term Budget Outlook. Under CBO’s “Extended-Baseline Scenario,” the long-run fiscal picture has slightly worsened over the next twenty years, compared to last year, but significantly improved over the longer run – due largely to the impact of health care reform on spending and especially revenues. However, CBO’s overall analysis shows the budget to be on an unsustainable path, with debt moving to unprecedented and cripplingly high levels.
One has to wonder how any budget found to be on an “unsustainable path, with debt moving to unprecedented and crippling high levels” could at the same time show significant improvement over “the longer run”. The fact remains that whatever “significantly improved” picture any particular budget provides over another one, the bottom line remains “unsustainable, unprecedented and crippling” for our future. The Committee’s report goes on:
Under current law, CBO projects that public debt will rise from 62 percent of GDP this year, to 84 percent by 2040, and to 107 percent by 2080. This scenario is highly optimistic, since it assumes that all the 2001/2003 tax cuts will expire this year as scheduled, there will be no AMT patches or doc fixes, all of the savings in the health care bill will be sustained over the next two decades, and revenues will eventually exceed 30 percent of GDP.
“Highly optimistic” doesn’t begin to describe this budgetary charade. A 6 month “doc fix” has been passed the Senate and is awaiting House approval. Most believe it will continue to be passed in the foreseeable future. Legislators do not have the spine necessary to refuse the fix and weather the consequent political fallout which would see a mass exodus of doctors from the Medicare program. And anyone with the IQ of an onion knows that the “waste, fraud and abuse” savings promised for health care are simply throw-away promises made to balance out the numbers and get the bill passed into law.
So there are no savings on the way through health care. Optimistic is the wrong word to use here. It should be “fraudulent”. In fact, if we throw out the fraudulent health care assumptions, we end up with reality – which CBO calls its “Alternative Fiscal Scenario”:
Under CBO’s Alternative Fiscal Scenario, which does not make these assumptions, debt will rise to 87 percent by 2020, 233 percent by 2040, and to 854 percent by 2080.
There’s the most likely picture we’ll see in 2020. And frankly, at that point, it will almost be a runaway fiscal train. Impossible to stop and headed for a disastrous crash.
Even under the “highly optimistic” scenario, we’re in deep, deep trouble:
Yet, even under the current law revenue scenario – in which all the 2001/2003 tax cuts expire at the end of this year, policymakers discontinue the annual practice of enacting AMT patches, real bracket creep continues unfettered into perpetuity, and the excise tax on high cost health care plans grows to raise an increasing amount of revenue (3 percent of GDP by 2080) – revenues will fall short of spending. And under this scenario, revenue will grow to 30 percent of GDP. That’s twice as large a share of the economy as we will raise in 2010, and nearly 50 percent greater than any time in our history.
We’re certainly seeing history in the making, but it isn’t history in which we should be willing participants. The solution isn’t difficult to see, but politically its implementation is very hard to do. That’s because there are no political incentives to solve the problems. In fact, there are tremendous political incentives not to do that. That’s because no matter how much fiscal sense austerity measures (spending cuts, reductions in force, closing government agencies and departments, etc.) make, they’re painful and a political minefield. And we’ve yet to see the political class – regardless of their ideological bent – willing to seriously tackle this crisis in any meaningful way and take the political hits necessary to do so.
No one really expects that to change. Of course, that means the doomsday analysis by the CBO, which will be mostly ignored by politicians on both sides, is likely to come to pass. What the politicians of today plan on doing is letting those of their ilk in office at the time the fiscal train crashes deal with it and the fallout. How’s that for being ill served by the political class? Of course it’s nothing new – it’s been going on for decades.
Unfortunately for us, when the avoidable crisis finally hits in the near future, it will most likely be too late to do what is necessary and politically viable at the same time. Those stuck with the problem, at that time, will essentially have to commit political suicide. Of course, given the gravity of the situation they will face, they’ll have absolutely no choice.
What will come out of the trainwreck is anyone’s guess – but whatever it is will be a country that is weaker, less powerful and more vulnerable than it has been since its founding. And its enemies will be sure to take advantage of that situation, you can count on it.
Yes, yes, I know – it comes as a complete surprise. No question, we all thought having more covered by insurance, no pre-existing conditions, no caps on payouts and lower premium costs – all the while run by our efficient government – would surely lower costs. It’s just logical, right?
President Obama’s health care overhaul law will increase the nation’s health care tab instead of bringing costs down, government economic forecasters concluded Thursday in a sobering assessment of the sweeping legislation.
You know, you want to laugh at this because most people who gave up on moon ponies and unicorns when they were 8 knew that what was promised by this bill wasn’t possible. But it is hard to laugh at this level of mendacity. Isn’t it interesting that now suddenly the truth begins to filter out – after the fact, of course.
USA Today, in true sycophantic fashion, tries to lessen the blow to the administration by calling it a mixed verdict. It also notes it is the first look at the legislation by “neutral experts”. That’s because it was so important to rush this bill through without giving anyone time to read or analyze it – you know, so the benefits could kick in … in 2014.
And what do these experts find? Well it is less than a “mixed verdict”. As I read it, it’s an outright condemnation of the law.
[T]he analysis also found that the law falls short of the president’s twin goal of controlling runaway costs. It also warned that Medicare cuts may be unrealistic and unsustainable, driving about 15% of hospitals into the red and “possibly jeopardizing access” to care for seniors.
Translation: this goes to the central political point about the bill. Who among the politicians in DC are going to be willing to take on the necessary cuts to Medicare promised by the bill (to “pay” for it) and alienate one of the most powerful demographic election blocs?
The Medicare actuary says no one.
The report acknowledged that some of the cost-control measures in the bill — Medicare cuts, a tax on high-cost insurance and a commission to seek ongoing Medicare savings — could help reduce the rate of cost increases beyond 2020. But it held out little hope for progress in the first decade.
“During 2010-2019, however, these effects would be outweighed by the increased costs associated with the expansions of health insurance coverage,” wrote Richard S. Foster, Medicare’s chief actuary. “Also, the longer-term viability of the Medicare … reductions is doubtful.”
Of course they are, and anyone but the moon pony crowd knew that going in. It’s like the promise of eliminating “waste, fraud and abuse”. If there was any appetite or ability to do that, don’t you think the estimated $60 billion a year in Meidcare waste, fraud and abuse would have been eliminated by now?
And what if they did make the cuts? Anyone, what is the likely reaction of health care providers? Uh, “we don’t take Medicare/Medicaid patients anymore”? That is exactly what will happen. That means those with government insurance coverage won’t be able to find access (unless that too is eventually mandated).
A separate Congressional Budget Office analysis, also released Thursday, estimated that 4 million households would be hit with tax penalties under the law for failing to get insurance.
The U.S. spends $2.5 trillion a year on health care, far more per person than any other developed nation, and for results that aren’t clearly better when compared to more frugal countries. At the outset of the health care debate last year, Obama held out the hope that by bending the cost curve down, the U.S. could cover all its citizens for about what the nation would spend absent any reforms.
The report found that the president’s law missed the mark, although not by much. The overhaul will increase national health care spending by $311 billion from 2010-2019, or nine-tenths of 1%. To put that in perspective, total health care spending during the decade is estimated to surpass $35 trillion.
The administration doesn’t even argue the point, claiming that’s a bargain for insuring 95% of the country. Of course, what USA Today doesn’t point out is that 75% of the 4 million households that will be hit with those tax penalties average less than $60,000 a year individually and families making less than $120,000 a year.
Also keep in mind that the CBO analysis and estimate are based in the assumption that absolutely everything in the bill goes as planned – to include the Medicare cuts. Or said another way, the $311 billion “cost’ is a joke and it will most likely cost far more than that.
The CBO also looks at Medicare:
In addition to flagging the cuts to hospitals, nursing homes and other providers as potentially unsustainable, it projected that reductions in payments to private Medicare Advantage plans would trigger an exodus from the popular program. Enrollment would plummet by about 50%, as the plans reduce extra
benefits that they currently offer. Seniors leaving the private plans would still have health insurance under traditional Medicare, but many might face higher out-of-pocket costs.
That brings us back to the politics and the polite word used -’unsustainable’ – to mean the cuts just aren’t going to happen.
USA Today ends its article with this:
In another flashing yellow light, the report warned that a new voluntary long-term care insurance program created under the law faces “a very serious risk” of insolvency.
What they’re talking about is this:
One other interesting note from this study was a paragraph on the new Community Living Assistance Services and Supports insurance program for home care, known as the CLASS Act.
While it produces a $38 billion net savings through 2019, that’s mainly because you have to pay five years of premiums before you can start taking advantage of the program.
After that, the Medicare Actuary doesn’t like the way it looks in financial terms.
“Over the longer term, expenditures would exceed premium receipts, and there is a very serious risk that the program would become unsustainable as a result,” the study says.
“Unsustainable” – pay 5 years of premiums before you get the first benefit and the “expenditures would eventually exceed premium receipts”. Sounds exactly like every other program I’ve seen designed and engineered by politicians. That’s why we’re in the freakin’ fiscal mess we’re in now.
And the moon pony crowd keeps believing you can get something for nothing and that we can fix crap like this to where it will actually work and cost less too.
Mary Katherine Ham reports that the CBO is being hit with a lot of questions about the Value Added Tax (VAT) by Congress. Taking Paul Volker at his word, they’re obviously in the beginning stages of trying to make the VAT “not as toxic an idea” as it has been in the past. As the title implies, the masters at gaming the CBO are probably already hard at work.
Said CBO chief, Douglass Elmendorf:
“Many people in Congress are interested in it,” he said of the VAT, a national sales tax that adds between 10 and 20 percent to purchases in European countries where it’s been implemented. “We’ve had conversations with a number of members and their staffs.”
You don’t say?! I know, dear reader, you’re as shocked as I am, aren’t you?
A couple of points – this is going to be constantly misrepresented as a “national sales tax”. It’s not a national sales tax. VAT is a tax levied against every step in the production process rendering any retail good 10 to 20% higher than it would have been without the tax. No one is going to add 10 or 20% at the register – instead everything you purchase will have that additional cost of taxation already added to its final purchase price. It’s a nicely hidden tax (thus very attractive for the looters in DC) that saves you being reminded of it at the register everytime you buy something. You’ll just see your overall purchasing power erodeded by whatever the VAT percentage is.
Oh, and that will be in addition to the income tax. You didn’t think the IRS was going away, did you? Finally, it certainly isn’t a progressive tax as it will lower the purchasing power of the poor much more than that of the rich. And we all know what that means – somewhere there’s going to be a subsidy or a kick-back to consumers of certain levels of income. And yes, you’ll pay for that as well. Trust me, this will only end up being fully levied on the despised “rich”, as usual in t.
Revenue, folks, revenue – the beast is hungry and insatiable. And it has a very serious problem looming the future. It wants no part of lean and mean. Instead, it wants to be fat, happy and expanding – and VAT would do that. And you, dear wage earner, are the means to its dreams.
I’m sure this is a CBO report (the “gold standard” remember) that Democrats and the administration will try to ignore. Especially since adding to the debt so significantly with ObamaCare.
President Obama’s fiscal 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next 10 years, $1.2 trillion more than the administration projected, and raise the federal debt to 90 percent of the nation’s economic output by 2020, the Congressional Budget Office reported Thursday.
In its 2011 budget, which the White House Office of Management and Budget (OMB) released Feb. 1, the administration projected a 10-year deficit total of $8.53 trillion. After looking it over, CBO said in its final analysis, released Thursday, that the president’s budget would generate a combined $9.75 trillion in deficits over the next decade.
Of course that’s a static assessment that assumes nothing changes over the next few years. Or said another way, if left to their devices, this is precisely what Democrats and this administration plan for our future. And all the denial in the world won’t change that. This is a plan for fiscal ruin.
To put it in a more easily understandable context:
The federal public debt, which was $6.3 trillion ($56,000 per household) when Mr. Obama entered office amid an economic crisis, totals $8.2 trillion ($72,000 per household) today, and it’s headed toward $20.3 trillion (more than $170,000 per household) in 2020, according to CBO’s deficit estimates.
That figure would equal 90 percent of the estimated gross domestic product in 2020, up from 40 percent at the end of fiscal 2008. By comparison, America’s debt-to-GDP ratio peaked at 109 percent at the end of World War II, while the ratio for economically troubled Greece hit 115 percent last year.
So, is it time to demand those calling the path we’re on “unsustainable” (i.e. Timothy Geithner, Barack Obama and the Democratic Congress) to put up or shut up? As usual, we continue to hear Democrats blather on about PAYGO, but we continue to see them ignore it in legislation they pass. It appears, given the budget numbers, they also plan to ignore it in the future – wouldn’t you say?
Look at that per household figure from 2008. It was already outrageous and yet within the next 10 years they plan on tripling it to $172,000.
Anyone have any idea of the effect such debt will have on our economy?
For countries with debt-to-GDP ratios “above 90 percent, median growth rates fall by 1 percent, and average growth falls considerably more,” according to a recent research paper by economists Kenneth S. Rogoff of Harvard and Carmen M. Reinhart of the University of Maryland.
Hey, when you have the fiscal policy of Greece or Argentina, what do you suppose the end result might be?
It has always been a smoke and mirrors show, but now we’re beginning to see through it to the truth of the matter. At the GOP’s request, the CBO confirms what I and many others have been saying for quite some time:
Contrary to recent claims, the Democratic health care overhaul will increase Federal deficits by at least $59 billion, and more likely $260 billion, over the next 10 years.
New analysis from the Congressional Budget Office [CBO] provided at the request of House Budget Ranking Republican Paul Ryan, indicates that including the “doc fix” in the Majority’s health care overhaul adds $208 billion to the cost of the bill, increasing the deficit by $59 billion over the next 10 years.
In response to a question regarding passage of the doc fix, Speaker Pelosi said “it’s not in this bill but we’ll have it soon. We’ve made a commitment to do this.”
The fact that they intended to repeal the law cutting fees to doctors isn’t a secret and hasn’t been a secret. As I said, the Senator from Louisiana talked about a permanent fix last night on Fox News. But she tried to dodge the question about why it wasn’t included in the health care bill when it certainly is a large chunk of the future cost.
The reason of course is obvious. Not that it is going to change what will probably happen on Sunday. But it is clear, regardless of the spin, regardless of the hype and despite the promises and hoopla – this monstrosity is going to add to the debt.
Of course, how could it not – more insured, no payment caps, no pre-existing conditions? How could any rational person actually conclude it would cost less?
And after 2019? Well, dealing in reality and removing some of the historically unrealistic assumptions which Democrats built into the bill to reach their number yields an entirely different outcome, as you might expect:
Removing these assumptions reveals a stark reality. If these assumed savings are never realized – as is the likely scenario – CBO projects that rather than reducing the deficit in the years beyond 2019, the deficit would increase over the decade following 2019 “in a broad range around one-quarter percent of GDP.” Using the Majority’s own methodology, this amounts to a second decade deficit of $600 billion.
Bendin’ that cost curve down, boss. Bendin’ it down …
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.
Well the dice are cast and the only thing we’re waiting for is to see if Democrats come up with their point or crap out. Right now, I’d have to say it’s inching toward making their point – but I’m not sure they’re going to end up considering that to be a good thing in the near future. What’s caused me to reconsider my thinking about whether or not this will pass is yesterday’s vote on the Slaughter rule or “deem and pass”. In a straight party-line vote, 222 Democrats (6 more than they need to pass HCR) said yes to “deem and pass”. That says that the bulk want this monstrosity to pass and are looking for the appropriate cover to make it happen. So all whip counts aside, there are enough votes to make it happen, they just don’t want to be on record saying so – thus yesterday’s vote.
If they don’t use the rule, I think the bill may fail. If they do, the state of Virginia is lined up to take the Congress to court with a Constitutional challenge. Although the court has been loath to rule about Congressional procedures for the most part, this particular rule flies directly in the face of a Constitutionally mandated duty to record the “Yeas and Nays” in “the journal”. That says to most who read it that votes must be recorded by name.
That aside, the numbers from the CBO are being widely panned as misleading. Those aren’t the CBO’s numbers – they simply deal with what they’re given – they’re the numbers from the pending bill and reconciliation package. The Weekly Standard gives them some pretty good context that all can understand:
[It] is like the introductory price quoted by a cell phone provider. It’s the price before you pay for minutes, fees, and overcharges — and before the price balloons after the introductory offer expires.
If you need a more graphic representation, this will do:
Of course, if you take the decade of 2014 to 2024 into account, the “introductory” offer doesn’t at all look so rosy or good.
Maggie’s Farm has a great round up (and is where I found the graphic). Good quotes from some of the analysis being done on both tdhe numbers and the bill.
Keith Hennessey adds some analysis here.
The Heritage Foundation also looks at the bill and taxes involved. Here are three effects they find within the bill and reconciliation package:
New Middle-Class Taxes: Throughout his campaign, President Barack Obama promised he would not raise taxes on American households making less than $250,000. The Senate bill shatters that promise. For starters, just look at the reason Trumka went to the White House yesterday: the excise tax on high-cost health insurance plans. This tax would overwhelmingly hit middle-class taxpayers. Taxes on prescription drugs, wheel chairs and other medical devices would also be passed on to all consumers, hitting the lower- and middle- classes the hardest.
Increased Health Care Costs: The Senate bill manifestly does nothing to bend the health care cost curve downward. According to the latest CBO report, the Senate bill would actually increase health care spending by $210 billion over the next 10 years. This follows a previous report from the President’s own Center for Medicare and Medicaid Services (CMS) showing the Senate bill would result in $234 billion in additional health care spending over 10 years.
Increased Health Insurance Premiums: The President initially promised that Americans would see a $2,500 annual reduction in their family health care costs. But under the Senate bill, premiums would go up for millions of Americans. In fact, according to the CBO, estimated premiums in the individual market would be 10–13 percent higher by 2016 than they would be under current law.
In fact, further commenting on the last paragraph, in a letter to Sen. Olympia Snowe, the CBO has said those premium increases would be significant. Identifying the most basic level of health care coverage as “Bronze level”, the CBO’s Douglas Elmendorf said:
“Overall, CBO estimates that premiums for Bronze plans purchased individually in 2016 would probably average between $4,500 and $5,000 for single policies and between $12,000 and $12,500 for family policies,” he wrote.
If you can divide by 12, that’s not in anyway cheaper than health care is now. And that’s for the bare minimum which covers an estimated 60% of cost.
Cost containment? Lower premiums? Cheaper health care costs?
Let’s review the promise one more time: The Democrats promise more people on the insurance roles, no cap on payouts, sicker people on the insurance roles and it’s all going to cost less.
I don’t know where you’ve been all your life, but I’ve existed in the real world where experience tells me that such promises are indicative of scam of the worst kind. Nigerian emailers score on the same sort of scam daily. It’s a crying shame when it is your government that is involved in the scam. But, given Medicare, Medicaid and Social Security, it’s not unexpected.
The just released CBO scoring for the Senate bill and reconciliation package comes in at $940 billion over ten years.
A reminder: the benefits (i.e. spending) don’t begin until 2014. The taxation (revenue collection) begins immediately.
A true number? The CBO says the cost over the first 4 years would be $17 billion. The last 6 would equal $923 billion. So isn’t this a better representation of true cost?
$923/6*10 = $1,538 trillion or over 1.5 trillion dollars if the spending is factored evenly over the 10 years like it will be the following 10 years.
And that doesn’t include the $200 billion yearly “doc fix” which was deliberately taken out of the bill to make it seem like less spending. Add that to their claimed “net” and see what it gets you. It’s certainly not $794 over 10 years or any deficit reduction.
Note also the chart in the CBO report how the “net cost” is accomplished:
Taxes and penalties. Penalties on individuals and employers. Taxes on “Cadillac” plans. Question – what happens when those all dry up as revenue streams? The scoring assumes a constant stream. I think we all know better than that. Of course the answer is they must find new revenue streams, i.e. new taxes (or “penalties” as they’re sure to deem them). Additionally full into the spending curve of the plan, we’re looking at around 200 billion a year. Over 10 years that 2 trillion dollars.
Again, remember – the CBO’s scoring assumes absolutely no changes in the bill, revenue streams or projected spending over those 10 years. That’s absolute nonsense on a saltine cracker and we all know that. There is no way those revenue streams remain constant, there’s no way the spending on health care – if this is enacted – won’t be increased as the bill is built upon and despite the CBO’s guess for the following 10 years in which it says it will continue to “save” money, there’s very little to support that premise. In fact, the most telling line in the whole CBO report is this one:
Our analysis indicates that H.R. 3590, as passed by the Senate, would reduce federal budget deficits over the ensuing decade relative to those projected under current law—with a total effect during that decade that is in a broad range between one-quarter percent and one-half percent of gross domestic product (GDP).3 The imprecision of that calculation reflects the even greater degree of uncertainty that attends to it, compared with CBO’s 10-year budget estimates.
You can believe all this nonsense if you wish, but even the CBO isn’t real keen on its own calculations. And by the way, this post isn’t a swipe at the CBO – they score what they get and do it according to the statute under which they operate. But that doesn’t render the GIGO rule invalid.
In the meantime, the House has just passed the “Slaughter Resolution” which would allow it to “deem and pass” this monstrosity. All 222 who voted yes were Democrats. That means Democrats badly want cover on this thing and if they can get it, they’ll let it pass. The House is scheduled to meet at 1pm on Sunday to do so.
If they pass it through “deem and pass”, we’ll essentially have become a Banana Republic.
If Democrats want to have a vote on the bill this week, after a promised 72 hours availability on-line before the final vote, they have until tomorrow afternoon if they plan on voting Saturday. But Congressional Quarterly is reporting:
House Democratic leaders are still struggling to produce a final health care overhaul bill at an acceptable official cost estimate, but Majority Leader Steny H. Hoyer said Tuesday they continue to plan a final vote this week. House leaders were to huddle late Tuesday afternoon, following a noon session of the full Democratic Caucus. There were reports they are having trouble drafting a bill that meets their budgetary targets….
Rank-and-file Democrats did not talk about the details, but said that the CBO scores had come up short. “They were less than expected” in terms of deficit reduction, said Rep. Gene Green, D-Texas, who plans to vote for the bill.
In reality it isn’t the Congressional Budget Office that is coming up short, but the cost of the bill they’re proposing as a fix. As the American Spectator reports:
There are several things that Democrats are up against when it comes to the CBO score. The most important is that, based on reconciliation instructions, the “fix” bill must be shown to reduce the deficit by at least $1 billion. The challenge is, that’s after assuming that the Senate bill is law. In other words, the reconciliation bill can’t claim any of the deficit reduction from the Senate bill, but rather it must reduce the deficit relative to the Senate bill. Yet the changes that are being talked about will cost a lot of money. This includes eliminating the “Cornhusker kickback” and offering enhanced Medicaid subsidies to all states, increasing subsidies for the purchase of insurance, eliminating the so-called “donut hole” on Medicare prescription drug benefits, and whatever else they put in the bill. At the same time, delaying until 2018 the enactment of the “Cadillac tax” would be scored as a reduction in revenue, and thus add further to the deficit. They’d have to make up the gap through tax increases as well as try to siphon “savings” away from the student loan bill.
Yes, the rumors about the inclusion of a full takeover of the student loan program by government appear to be true and it has been included in health care reform. Look, if they’re going to trash the Constitution and the legislative process this badly, they may as well go all-in. Their problem is going all-in has apparently cost them much more than they thought it would and thus they still don’t have an acceptable bill.
Most likely they’re going to tinker with this until they get what they want in a score. Again keep in mind that this is reform which collects taxes for 10 years but only spends for 6 (benefits in full don’t kick in until 2014) thereby giving the appearance of bending the cost curve down within the 10 year window the CBO is statutorily limited to look at (and shooting the cost curve up after that). I have every confidence that House Democrats can come up with the same sorts of accounting tricks and nonsense that are in the original bill to get the score they want from CBO. But can they do it this week?
Everyday this is delayed means House Democrats are one day closer to the mid-terms and more and more Democrats are saying “no” to the original bill.
As I recall, one of the things the left most enjoyed calling George Bush was “liar”. Of course all politicians fall into that category from time to time (some stay in it most of the time), but few are as blatant as this:
In the interview, Obama vigorously defended the legislation, saying he is “not just grudgingly supporting the bill. I am very enthusiastic about what we have achieved.”
“Nowhere has there been a bigger gap between the perceptions of compromise and the realities of compromise than in the health-care bill,” Obama said. “Every single criteria for reform I put forward is in this bill.”
Really? “Every single criteria?” Like the public option? And though he’ll deny it, it was one of his criteria. So was “no mandates”. You may remember the debate with Hillary Clinton where he rejected her call for them. Then there was universal coverage. This bill leaves 18 million uninsured. Wasn’t that, after all, the entire reason for the reform? I’m sure fining or jailing those who don’t get insurance was high on his criteria list as well.
All that to say that this monstrosity isn’t anything like what he touted nor does it meet most of his previous criteria. It’s a 2000 page abomination, and regardless of the shine he or anyone else tries to put on it, it is legislation that is ill formed, poorly thought out (if it is thought out at all), filled with bribes and something we simply can’t afford. The CBO has already halved its estimate of the savings it will bring.
Speaking of the CBO, two things from the Director’s blog:
The estimate includes a projected net cost of $614 billion over 10 years for the proposed expansions in insurance coverage. That net cost itself reflects a gross total of $871 billion in subsidies provided through the exchanges, increased net outlays for Medicaid and the Children’s Health Insurance Program (CHIP), and tax credits for small employers; those costs are partly offset by $149 billion in revenues from the excise tax on high-premium insurance plans and $108 billion in net savings from other sources.
By now anyone but the most blinkered partisan hack should be able to interpret the CBO report properly. It’s a simple formula – 10 years worth of revenue against 6 years worth of spending. In fact, divide 817/6 and take that times 10. What do you get? 1.361 Trillion. That’s the true net cost of this over 10 years. That is what it will cost – plus – from 2020 to 2029. It won’t bend any cost curve down.
And don’t forget, most of the savings are to come from Medicare – 500 billion over 10 years, remember? So, the CBO wonders:
Based on the longer-term extrapolation, CBO expects that inflation-adjusted Medicare spending per beneficiary would increase at an average annual rate of less than 2 percent during the next two decades under the legislation—about half of the roughly 4 percent annual growth rate of the past two decades. It is unclear whether such a reduction in the growth rate could be achieved, and if so, whether it would be accomplished through greater efficiencies in the delivery of health care or would reduce access to care or diminish the quality of care.
The CBO avoids the biggest problem in this “plan” – the political will to do it. And while it gives us a choice of options – “greater efficiencies” or rationing and “diminish[ing] the quality of care”, there are few who’ve objectively observed government operate anything over their lifetime who’d pick “greater efficiencies”. So if those savings are realized – certainly not a given as demonstrated by the lack of political will to make hard decisions on much less controversial items in the past – they’ll most likely be realized by rationing and/or a diminished quality of care.
Or to quote myself and any number of others – I told you so.
So while the country founders economically and real unemployment approaches 18%, Obama and the Democrats are screwing around with something that doesn’t even kick in for 4 years? Is it any wonder that his approval rating has approached all time lows for a new president?
One of the criticisms of the Bush administration is it was “isolated” from the main stream of America. In the case of the Obama administration, it seems disconnected from that main stream. “Tone deaf” doesn’t even begin to describe this crew who seem both unaware and unaffected by the real problems facing Americans – polls be damned. For someone who seemed to have his finger on the popular pulse during the campaign, Obama appears to have completely lost it since. He touts the “financial rescue” as his most significant accomplishment during his first year, claiming the 787 billion stimulus as the vehicle of that accomplishment. But as most know, the majority of that money has yet to be spent and that which as been spent has had little or no effect. As mentioned, unemployment remains at record highs. And credit is still difficult to get, businesses have no incentives and plenty of disincentives (health care reform, cap-and-trade/EPA regulations, etc) to not hire or expand, and economy’s only positive quarter (now revised down twice to 2.2% from 3.5%) came from government spending. That is not a “financial rescue”. That’s a bandaid on a sucking chest wound. Meanwhile his administration is in Copenhagen waving more money we can’t afford around in an effort to buy off third world dictatorships who were in search of the payoff from the pseudo-science of “global warming”.
Then, in the Senate, 100 to 300 million bribes were the order of the day to get Senators who claimed to be “standing on principle” off their lofty perches and back to the money-grubbing reality that is politics in the US today.
This is “hope and change”?
As one friend – who was anything but a George Bush fan – said recently it absolutely makes him “pine” for Bush. And trust me, that means he is less than impressed with the man he voted for presently in the White House.