Give or Take a Few Hundred Billion

Jacob Sullum | February 9, 2005

The White House now puts the cost of the new Medicare drug benefit that President Bush championed at $720 billion over 10 years. But the administration says it's not fair to compare that figure to the $400 billion price tag it used to sell the program to Congress (which was raised to $534 billion two months after the vote). As The New York Times explains, "The original estimate was for the years 2004 to 2013. The new estimate covers the period from 2006, when the drug benefit becomes available, to 2015." But part of the fraud lay precisely in selecting a range of years that would make the progam look a lot cheaper than it really is. Why else include two years before the program would be up and running?

Bush's opponents will be quick to point out that he's trying something similar with his estimate of the transition costs for adding personal accounts to Social Security, keeping the 10-year estimate low by including years when the accounts are not yet available. Unlike the Medicare drug benefit, this spending will not add to the government's debt over the long term, since it will be balanced by lower spending on benefits when peopled with personal accounts retire. But that fact does not excuse the administration's continued use of tricky numbers, a technique that has earned the public's distrust and will make the task of selling Social Security reform harder rather than easier.

Comments

|2.9.05 @ 9:58AM|#

Ok, I have 2 to 1 odds that the actual price tag for the medicare bill will clear $1 Trillion by the end of Bush's second term. Meet me in the Rose Garden at noon to place yer bets.

|2.9.05 @ 10:09AM|#

Now you don't really expect us to use numbers based on years we haven't even gotten to yet, do you?

We used 2004 because that was right after the year we were in - which is later than I thought we should have started. I mean first off, you SHOULD start with the year your actually in when you make you case.

Don't you understand? I mean who knows what's actually going to happen in 2005 or 2006...the rapture...I mean the deficit could go down all of a sudden or the dollar could just start strengthening all by itself.

If we had quoted numbers starting a whole 2 years after the years we were in, we could have REALLY been off. I mean WAY off. That is more off than we already are....which isn't really off.

That's just a liberal media interperatation of otherwise meaningless numbers...I mean after all...they're JUST NUMBERS. They could've just as easily been letters.

'sides...the numbers aren't up 'cause of anything WE did. It's all the liberals fault...and the terrorists....and the French...don't forget the French, by God...

|2.9.05 @ 10:47AM|#

"The original estimate was for the years 2004 to 2013. The new estimate covers the period from 2006"

I don't get it. Why the 2006-2015 estimate almost twice as much as the 2004-2013 estimate, if both are for the same number of years? I understand a 5% difference, but why a ~90%?

|2.9.05 @ 11:22AM|#

But...But...Whatta 'bout all of the OLD PEOPLE who'll be livin' in the TARPAPER SHACKS!?!?

I'm sorry. I assumed that someone would say it eventually. So I just wanted to be first.

David Nieporent|2.9.05 @ 11:49AM|#

Isn't the far larger problem the likelihood that, based on precedent, we can assume that any number, no matter how honestly generated, is going to severely underestimate the costs involved?

|2.9.05 @ 12:07PM|#

a, because the program doesn't come into effect until 2006. By starting at 2004, they were able to add in zeros for two of the years. By starting the calcuation when the program actually existed, they have to include 10 years when funds will actually be spent.

And by replacing 2004 and 2005 with 2014 and 2015, they are replacing those zeros with figures that reflect both the higher costs from the rocketing price of drugs, and the higher numbers of people that will be enrolled in the program, at that time.

|2.9.05 @ 12:19PM|#

So, joe, do you think the drug benefit costs too much and ought to be scaled back or repealed?

|2.9.05 @ 12:51PM|#

The prescription drug benefit is such a win-win situation for the politicians. They get to please the geezers (BIG voters) AND the pharmaceutical companies (BIG money). Everyone wins!!

|2.9.05 @ 1:00PM|#

But, I thought Bush was a heartless scrooge who is savagely cutting spending to the bone. Or at least that is the impression I got from a lot of the media coverage of his budget.

|2.9.05 @ 1:10PM|#

You whippersnappers are selfish and ungrateful.

Why, if I have to pay for my own drugs I'll have to make some serious sacrifices, like give up the trip to Europe or something.

|2.9.05 @ 1:24PM|#

I think it's a miracle of intellectual honesty that the administration didn't simply quote the cost of its plan as $0, citing the years 1981 - 1991.

|2.9.05 @ 2:14PM|#

Hmmmm. Let's take an example here. A burglar calls up your house and informs you that he's going to steal 25% of all your belongings. But when he comes to take your stuff, he steals 75% of your belongings.

Now, should you get upset that he wasn't accurate/honest when he informed you about said theft? Or should you be upset that he stole from you in the first place?

Lies and bullshitting are status quo in DC. The issue here, whether it's $400 billion or $1 trillion, is that we're getting robbed. Yet, instead, everyone gathers round and moans that the burglar wasn't honest with you in the first place. Hmph. Okay...

|2.9.05 @ 2:56PM|#

I hope this doesn't undermine anybody's trust in the Bush administration ;)

|2.9.05 @ 3:13PM|#

When did the fedral government move to this "5 year plan" style of accounting? I've seen it used to make programs seem bigger (and thus better) or bigger (and thus more expensive).

75 billion a year? That's about 1500 per geezer (assuming there's 50 million of them). How many drugs are these people taking?

SP

|2.9.05 @ 3:18PM|#

It doesn't undermine mine. I never had any in the first place.

James Anderson Merritt|2.10.05 @ 2:44AM|#

What is all this about "transition costs" and borrowing? If the powers that be are serious about 1) wanting to keep the safety net intact for seniors who are now or soon to be dependent on social security; 2) wanting to trim or cut the deficit and bring the government back to fiscal responsibility; and 3) wanting to harm post-boomers as little as possible in the transition, the answer is clear: sell off government assets (mostly land) to shore up the system.

I was flabbergasted to read recently that, as late as 1992, almost 47% of California land belonged to the Federal government! Hey Uncle Sam! Give me a few acres of decent land in the state of my birth and we'll call it even on this whole Social Security thing! Or feel free to put 10% of California on the market! You'd lower median housing costs (over $700K in my neck-o-th-woods -- that's why I'm a RENTER!) as well as make Social Security flush for many years to come, while taking care of the seniors who depend upon it and moving post-boomers into privatized retirement investments.

The problem is that the government isn't really serious about any of the above, especially about conducting their finances in an honest or sound way. Think about that, the next time you go to vote, my friends.

|2.11.05 @ 3:45PM|#

LET'S SEE. I BET THAT JUST ONE IRS AUDIT OF ONE OR TWO MAJOR DRUG COS. WOULD PAY FOR THE WHOLE PROGRAM. NAAAAAAAAH.