…and Nancy, and other economic ignorami, ObamaCare will not reduce the deficit.
[Update early afternoon]
Garbage-Out, Garbage-In budgeting.
37 thoughts on “No, Ezra”
Comments are closed.
…and Nancy, and other economic ignorami, ObamaCare will not reduce the deficit.
[Update early afternoon]
Garbage-Out, Garbage-In budgeting.
Comments are closed.
The director of the CBO, writing today, disagrees, to the tune of “roughly $145 billion.”
The facts are on Klein’s side.
If H.R. 2 was enacted, premiums for health insurance in the individual market would be somewhat lower than under current law, mostly because the average insurance policy in this market would cover a smaller share of enrollees’ costs for health care and a slightly narrower range of benefits.
“Slightly”. Gotta love it. My hysterectomy won’t be covered (and I won’t have to pay for it), so I’ll have that going for me. Which is nice.
Although premiums in the individual market would be lower, on average, under H.R. 2 than under current law, many people would end up paying more for health insurance—because under current law, the majority of enrollees purchasing coverage in that market would receive subsidies via the insurance exchanges, and H.R. 2 would eliminate those subsidies.
Wait… it will eliminate subsidies, but it would increase the deficit. Nice try Chris.
The CBO is always wrong.
Curt – the very next paragraph from your quote says Premiums for employment-based coverage obtained through large employers would be slightly higher under H.R. 2 than under current law. That and the cost of the 54 million non-insured are what drives the deficit up.
Again, Klein is relying on the assessment of the guy Congress pays to measure the impact of bills on the deficit. How that makes him “ignorant” is beyond me.
Williamson makes a good argument.
How in the hell does “slightly higher premiums for employment-based coverage obtained through large employers” cause the deficit to go up?
Klein is relying on the assessment of the guy Congress pays to measure the impact of bills on the deficit.
It doesn’t matter how much they pay him (and the fact that they pay him should make you suspicious). He doesn’t know. No one knows.
Oh come on Rand, Chris knows. He just needs a little encouragement to share it with us. I’m sure it has something to do with the 54 billion non-insured. Err.. under-insured. Or something.
Any CBO analysis is only as good as the bugetary assumptions that feed into it, and those assumptions are provided by Congress. That alone is enough to make the results highly suspect.
Egad, Chris, even you know that the CBO provides their scoring using only the criteria they are given. If they are asked to score a bill and are specifically told which criteria to use, even if they know full well that they have been asked to work with a limited set of data, they will do what they are asked.
The methods employed by the CBO are designed to generate an internally consistent portrait of the impact of a particular piece of legislation relative to alternatives. This means imposing somewhat arbitrary limits, including no effort to assess the macroeconomic impact of implicit marginal tax rates, etc.
This means imposing somewhat arbitrary limits, including no effort to assess the macroeconomic impact of implicit marginal tax rates, etc.
Which is why the CBO is always guaranteed to be wrong.
Chris, do you have any facts to back up your assertions? Or are you going to continue to use CBO pipedreams as a substitute for facts.
IIRC the method used to make Obamacare appear deficit neutral was by cutting Medicare by $600 billion. We don’t seem to hear much about that anymore.
Contrast that with expanding the sates responsibility to funding expansions to Medicare coverage. No one seems to be explaining how states will come up with the extra revenue.
How in the hell does “slightly higher premiums for employment-based coverage obtained through large employers” cause the deficit to go up?
Perhaps think of the economy as a black box. When you add economic inefficiency, say via a sub optimal arbitrary punitive hack of a tax, then economic output is decreased. Reduced economic output does not necessarily lead to greater deficits, however considering it is generally much easier to ratchet government expenses up rather than down, in practice it generally does.
Here’s a line-by-line analysis of additional revenue and reduced costs from the health care bill that works out to the deficit reduction number.
Once employers spend less money on health care, they will use the money saved to pay workers higher wages, or so the economic theory goes. The workers will then owe income tax on those higher wages, providing revenue to help pay for health reform.
Of all the crazy crap I’ve read about Obamacare, this is the first I’ve heard that whopper. I can expect a raise??? Why didn’t someone tell me? I’ve changed my position, I’m all for it!
So as they keep kicking the Medicare cuts down the road that number shrinks by how much? Gerrib? Gerrib? Anyone?
From the article which some have claimed proved the deficit would be reduced.
“In the first 10 years, the program it is expected to take in more money than it pays out, which is why the CBO says it would reduce the deficit by $70 billion. But in the second decade and beyond, the program is projected to pay out more than it takes in, and will therefore contribute to the deficit.”
In short, another ponzi scheme.
Bill Maron – the Medicare “cuts” already went in – that was getting rid of the wasteful “Medicare Advantage” HMO.
MattM – One part of the program may spend more than it takes in, not the whole thing.
One part of the program spending more then it takes in until the end of time. Thats a big deficit. Especially since the assumption for the CBO is that the bill will not ever be modified.
Unrealistic, I know, but that is the assumption.
Given that was the second act of the Congress which immediately followed the one which passed it, I’d agree that assumption is suspect.
Grand Economic Vizier of the Left, Krugman, already went on “This Week” calling for “death panels” (his words) and VAT taxes, so clearly kicking seniors out of their HMOs is insufficient.
Director Elmendorf, “estimates of the effects of comprehensive reforms are clearly very uncertain, and the actual outcomes will surely differ from our estimates in one direction or another.”
In other words, I’ll keep making projections even though they aren’t worth the paper they’re written on.
Don’t forget Pelosi’s minions split out the”Doc fix” to make the numbers look better.
“Bill Maron – the Medicare “cuts” already went in – that was getting rid of the wasteful “Medicare Advantage” HMO.”
No Chris. the reimbursement cuts. Still waiting on the fraud and abuse actuals too.
Wait…I thought Obamacare was supposed to reduce health care costs, not merely the Federal deficit. My premiums were supposed to go down! The same or better care for less money, that’s what I was promised. Hell, it’s easy to create a program that reduces the deficit. Anything that raises taxes more than it adds to costs qualifies. Are the goalposts being moved now? Do I even need to ask?
The CBO has its limitations, but what’s the alternative? And the CBO has been wrong in both directions. Enacting H.R. 2 might not increase the deficit by what CBO says, or it might be even worse.
If the Republicans are actually serious about cutting the deficit without raising taxes, they’ll need to identify a lot more than $145 billion in cuts over ten years.
So let them start now instead of opening with empty symbolism.
The CBO has its limitations, but what’s the alternative?
Common sense?
Rand’s link to NRO above contains some very specific issues with the information the CBO was given (or not given in some circumstances) when they were asked to score their original estimate:
Recall that the rules forced CBO to incorporate a wide range of budget gimmicks in their original estimate of the health care law:
● Leaving out the roughly $115 billion in discretionary spending needed to implement the bill,
● Counting the $70 billion in premiums for long-term care insurance (CLASS Act), but ignoring the unsustainable CLASS Act spending that starts after the first 10 years,
● Using over $50 billion in higher Social Security taxes to offset health spending,
● Leaving out entirely the cost of paying Medicare doctors,
● Pretending that over $450 billion in payment cuts to Medicare providers will be possible without changing in any real way the operation of Medicare,
● And planning to collect a tax on cadillac health insurance that the unions have already gutted and will not tolerate.
In short, there was never any reason to believe that the law reduced the deficit by roughly $140 billion over ten years. Starting two new open-ended entitlements without fixing the existing budgetary cancers just doesn’t work that way.
How can anyone defend the original CBO scoring? And I am not saying the CBO didn’t do their job. They did exactly what they were asked to do, but the promoters of the Health Care bill clearly gamed the CBO’s score.
I just realized I failed to include my final paragraph in the prior post…
Failing to include the cost of paying doctors when scoring the costs of a health care plan would be hilarious if it weren’t so incredibly incompetent.
Carl Pham:
Please tell me how common sense would estimate the cost of H.R. 2 compared to current law, and why.
One man’s common sense is another’s nonsense.
Please tell me how common sense would estimate the cost of H.R. 2 compared to current law
It has no costs whatsoever, because in the Real World, outside of fantasy budget games, the word “costs” means “money you spend to do stuff.” Since HR 2 does absoultely nothing, and indeed commands the government to stop doing stuff, it can by definition have no costs.
You may certainly argue that the ultimate indirect effect of HR 2 may raise or lower the budget deficit, raise or lower healthcare costs, or for that matter raise or lower the amount of winter sea ice observed off of West Antarctica on or about April 15.
But once we start down the kaleidoscope path of attaching any imaginable future effects to present actions, and, worse, equating the importance of theoretical future changes in budget to actual genuine dollar bills going out of pockets right now, we have cast ourselves loose from any mooring in common sense (uh oh) and rationality, and might as well take a mighty drag on the bong and zone completely the foo out.
One man’s common sense is another’s nonsense.
Apparently you have overlooked the word “common” in the phrase. Only in the weird solipsistic word of the leftist does it normally make sense to speak of “one man’s” version of reality, and contrast it with another’s.
Economists want to create lovely, elegant graphs like this because they want to have us believe that what they are doing is “scientific” and certain, since there are mathematical equations involved. As sure as F=ma is to us engineers. This only “wows” laymen who do not understand economics, (physical) science, or the meta-scientific issues in play.
Carl: H.R. 2 doesn’t do nothing. It increases Medicare payments relative to current law, repeals the tax on high price employer provided insurance, and has other explicit impacts on the deficit.
Reasonable people can differ on the best way to estimate this. That isn’t solipsism.
If the Republicans are actually serious about cutting the deficit without raising taxes, they’ll need to identify a lot more than $145 billion in cuts over ten years.
So let them start now instead of opening with empty symbolism.
Wow. No logic in this comment at all unless one really believes $145 billion is both empty and symbolism but not a start.
Hey, how about we repeal the act passed by the last Congress that we can’t afford. Let’s start there. Then we can move on to other cost cutting measures. But if all we did was start with cutting $145 billion; that’s 4 to 5 orders of magnitude more than President Obama accomplished by having his Cabinet look into office supply cuts when he took office. That too could have been a start, but it can be called empty and symbolic because it was done just prior to spending* a far greater sum of money on ARRA.
*Well allocation of funds that required adding to the US deficit and debt. Much of that money remains as sort of a DNC slush fund rather than actually being spent.
Wrong, Will. Your logic error is apparent every time you use the phrase relative to, as in “relative to the current law” or “relative to what we expected to be the case” (which is how cranks are able to describe the recent preservation of the tax rates as a “gargantuan tax cut”).
In the real world, costs are not relative things. Costs are costs, full stop. Costs is a check you write. Only delusional people measure “costs” as differences between what you pay today, and what you paid yesterday, or what you might pay tomorrow, or expected to pay, or think you ought to pay, and so forth and so on.
Again, I have no problem with assessing what the indirect and ultimate fiscal effects of a bill before Congress are, or will be. But I strongly object to the “convenient” shorthand of calling negative differences between projected expenses “costs” and positive differences “income” — because these things are actually used not to simplify and clarify the discussion, but to obfuscate it, to delude people, and to allow them to delude themselves.
Call a spade a spade. Speak plainly, think in straight lines. Orwell was quite right that the first goal of a system designed to rule your thoughts (and not in your interests) is to pervert your language, and destroy its roots in common sense and plain experience.
Reasonable people can differ on the best way to estimate this.
Once again, your word choices betrays the logic failure. You don’t need to estimate costs, because costs are direct and obvious. It’s the number you put on the check, or commit to putting on the check. If you are off in the vague world where differing reasonable assumptions can change the nature of the estimate, you are no longer talking about something as plain and direct as a cost. I don’t know what you want to call it — fiscal expectations, whatever — but you can’t call it a cost, because that plain word is reserved for something much simpler.
In general, we need to reserve plain words for plain concepts, and strenuously resist the tendency of the Newspeak people to try to graft complex, shifting, and sneakily evolving meanings onto them. Let them invent complex, shifting, and sneakily evolving phraseology — so at least their games are not hidden under the veneer of plain speaking that adheres to plain words.
Very well, how would you estimate H.R. 2’s impact on the deficit?
Very well, how would you estimate H.R. 2′s impact on the deficit?
I wouldn’t. It should pass regardless of its impact on the deficit, because of its beneficial effects on our freedom and health.
Very well, how would you estimate H.R. 2′s impact on the deficit?
If this is accurate, the CBO estimates the effects as follows: (emphasis added)
We have been asked to provide the revenue and direct spending components of that total. Extrapolating the estimated budgetary effects of the original health care legislation and accounting for the effects of subsequent legislation, CBO anticipates that enacting H.R. 2 would probably yield, for the 2012-2021 period, <b<a reduction in revenues in the neighborhood of $770 billion and a reduction in outlays in the vicinity of $540 billion, plus or minus the effects of forthcoming technical and economic changes to CBO’s and JCT’s projections.</b<
So, they estimate killing ObamaCare would result in a reduction of expenditures of $540 billion (which is laughable considering how the Medicare cuts required to achieve this level will never happen) and a reduction of tax revenues by $770 billion. Which brings to mind the question: why were the taxes in the bill so much greater than the anticipated expenses?
Very well, how would you estimate H.R. 2′s impact on the deficit?
I don’t care. That’s not the primary motive for the bill, and the bill does sufficient good that it doesn’t matter.
If I want to tackle the deficit, I want to slash $500 billion from servicing the Democratic union drones who swill at the public trough. And I’m very comfortable that HR 2 helps accomplish that. If it rolls back some taxes along the way, that’s good, too.