Government Spending

A Few Tricks to Make Your Deficit Look Smaller

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I'm sure Peter Suderman will have more later, but here are a few things worth noting about the CBO's preliminary analysis (PDF) of the Senate health care bill as modified by the reconciliation bill Democrats have put together:

1. The Medicare savings, which may not actually materialize because they depend on reimbursement changes Congress has been loath to maintain in the past, total about $500 billion during the first decade, compared to  total deficit reduction of $130 billion.

2. The reconciliation bill includes changes to student loan programs that CBO estimates will reduce spending by $19.4 billion during the first decade. By contrast, the "doc fix" that was originally envisioned as part of the health care package, since it deals with Medicare payments to physicians, was carved out and placed in a separate bill. It costs more than $200 billion.

3. CBO warns that it "does not generally provide cost estimates beyond the 10-year budget projection period" and that its projections for the second decade are subject to "an even greater degree of uncertainty" than its projections for the first 10 years. It estimates that the unmodified Senate bill "would have a total effect during that [second] decade that is in a broad range between one-quarter percent and one-half percent of gross domestic product." The changes in the reconciliation bill, it says, would "further reduce federal budget deficits in that decade, with a total effect that is in a broad range between zero and one-quarter percent of GDP." When the range of numbers in a projection includes zero, it seems fair to say the projection is not very helpful as a guide to policy decisions. Yet the Democrats have transformed these highly uncertain projections into a seemingly precise and reliable dollar figure: $1.2 trillion in deficit reduction during the second decade.

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  1. its projections for the second decade are subject to “an even greater degree of uncertainty” than its projections for the first 10 years

    If I were them, I’d refuse to make any projection past the next election cycle. Nobody has any business predicting what the next Congress or President will do. These spending arguments are completely irrelevant.

  2. Anyone else expecting a deficit exploding program to reimburse people for their mandated health insurance if ObamaCare passes?

    “You need help paying for the insurance you have to buy; you cannot afford it. We could have put this subsidy in the original bill, but that would have upped the cost past what we could get votes for, so we didn’t. Now that you’re being hit w/ the mandate, we will add that subsidy to the program by saying IF THE REPUBLICANS OPPOSE IT, THEY ARE TOO EVIL AND GREEDY TO GIVE YOU MONEY YOU NEED and you should vote for us instead. Please ignore the total dishonesty behind this, as your need for a subsidy to pay for your mandated insurance is now a ‘crisis’.

  3. I was thinking at lunch about what will happen if they do pass this monstrosity. It seems to me that it will be caught up in a court challenge for at least a year. The day Obama signs it there will be at least two challenges, a challenge by the states to the mandate and a challenge to the way it was passed that will have to be heard by the Supreme Court.

    This is not Bush v. Gore where the timing is such that the Supreme Court will just drop everything and hear it. I can’t see it being heard until next term and a decision not coming out until next spring. That means this whole thing should be enjoined until well after the election.

    I am not totally sure how that will play for the Democrats. But it seems like it won’t be good. The bill will won’t be in effect and people won’t be given a reason not to hate it and the hate the way it was passed.

    1. I was thinking at lunch about what will happen if they do pass this monstrosity. It seems to me that it will be caught up in a court challenge for at least a year.

      The first question is whether a court will enjoin the bill while the challenge is pending. I find that unlikely, verging on impossible.

      The second question is whether the courts will rule that there is even a justiciable question (at least as far as deem and pass goes). I think the easy exit from a radioactive controversy offered by ruling in favor of passage will be irresistible.

      Perhaps the most fertile field for litigation will be whether the mandates are permissible under the Commerce Clause. I find it almost impossible to believe that our courts have the stones to say no.

      Face it: when your best argument is that the omnipotent Commerce Clause doesn’t quite extend this far, you are screwed.

      1. I see no reason why they wouldn’t enjoin it. If the issue is spending the money, you no longer have a justicable issue once the money is spent. A court would have to enjoin it.

        Second, you miss both the issues by which it can be challenged. It is not just a commerce clause issue, it is a due process and supremacy clause issue. The mandate is a license to breath. Further, if the state law outlaws the mandate and the federal law demands it, you can’t enforce either law until the courts sort out which is valid.

        1. One of the elements for a preliminary injunction is likelihood of success on the merits. That’s pretty low in this case. Another is irreparable harm. Spending some money isn’t going to get there.

          1. “Spending some money” without the proper authorization of Congress is a violation of the anti-deficiency act and a felony. People get injunctions to prevent federal projects all the time. What is the harm of building a road without following the proper contracting procedures? But, whenever there is a bid protest, the project stops until it is resolved.

            And further, how do you not grant an injunction on the mandate? State law and federal law will be in direct conflict. And “the likelihood of succeeding on the merits” is not that high of a standard to meet. People fail to meet it when they have no evidence. Here, it is strictly a legal question not a factual one.

            I bet it gets enjoined. And you can hold me to that prediction.

            1. Bid protests are stayed under cica, not a preliminary injunction standard. When projects get enjoined under other statutes, like nepa, the harm is usually the inability to undo any environmental injury. the ada does make it a felony to spend money without an appropriation, but i’ve never seen a case where that’s led to a finding of irreparable harm. if you have one, i’d love to see it.

            2. correction, bid protests are stayed based on cica in gao. preliminary injunctions and tros are used in cofc. but i still have never seen the possibility that the government might spend money in violation of a law or regulation used as a basis for irreparable harm.

        2. I see no reason why they wouldn’t enjoin it.

          Because they are members of the Establishment, who place a very high premium on Not Rocking the Boat. Enjoining a massive bill like this would be very much Rocking the Boat. They could, of course. They just won’t.

  4. What a bunch of convoluted, unbelievable b.s. A new healthcare entitlement controlled by 100+ new government boards and panels will insure the uninsured and reduce the deficit? A new tax on medical devices will make healthcare cheaper? Having the government take over student loans will cut costs? Do these people believe in Santa Claus, too?

    1. No. They just have absolutely no sense of shame and are incapable of embarrassment.

    2. All you have to do is include a provision that says: what the government pays x for under current law, the government will pay x-10 for under the new law. Then you get to count the -10 as deficit reduction, even if everyone knows they’ll pass another law next year that will add +10 back.

    3. Some of them do. They think we can suspend various laws of nature, like supply and demand, and the fact that people expect to be compensated for their work.

      Others know there is no Santa Claus but are so determined to ram this down our throats that they want to pass a general scheme and work out the details later.

  5. “Yet the Democrats have transformed these highly uncertain projections into a seemingly precise and reliable dollar figure: $1.2 trillion in deficit reduction during the second decade.”

    There are creepy parallels to the global warming situation, if you ask me. In either case, the people should not let themselves be railroaded on the basis of claims of certainty or clarity, which do not hold up under even superficial examination.

  6. We need to get government out of healthcare as much as possible and let the shape of healthcare of the future be sculpted by the dynamics of a market that is as free as we can make it. The goal should never have been “get everyone insured.” Rather, it must be “make it possible for most people to get most of the health care they need without any insurance at all, paying out of pocket as for food, shelter, clothing, transportation, and other necessities of life.” If we have the wrong goals, we will only “succeed” by accident — or by the usual political trick of declaring failure a success. I hope we’re wise enough to see through such shenanigans.

    1. Think about it. On the one hand they are screaming that everyone needs to have insurance. But on the other they are telling us insurance companies are evil.

      1. Once insurance passes through the filter of government, it becomes good. Don’t you know anything.

    2. A big part of the problem is that they are savagely abusing the word “insurance”. They are using it as a synonym for “welfare”. Insurance is not about paying for your every need; it’s a mechanism for handling risks associated with unusual events.

  7. The bill would cost $940 billion, and reduce the deficit by $130 billion over the first 10 years and $1.2 trillion in the second 10 years.

    Well, since they’ll be paying for the insurance with magic money, money that doesn’t exist in reality, using magic numbers isn’t that big of a stretch.

  8. “I’VE HAD IT WITH THEM . . . I’LL NEVER VOTE FOR ANOTHER DEMOCRAT:” Howard Stern says he’s over the Democrats.

    http://iowntheworld.com/blog/?p=19620

    I think Howard is a pretty good proxy for the kind of left leaning moderately informed every man that inhabits a lot of places like New Jersey, New York that the Democrats think they will win forever no matter what they do.

  9. God damn, in a rational universe there would be a skeptical press corps to ask questions about the numbers. Instead we have a bunch of giddy children coming all over themselves at the idea that the CBO just passed the bill.

    1. Remember this when those rat bastards come begging for a bailout of the newspaper industry. I hope every news outlet in America goes fucking broke and every journalist in America ends up waiting tables.

  10. Does any of this matter? The director of the CBO admitted that even after the fact, all they do is use a Keynesian model to predict what the results of a bill should have been:
    A confession from the CBO director

    1. my link didn’t work, but it should have been
      http://www.cato-at-liberty.org…..-director/

  11. There’s a thread on Reddit about this right now. If you’ve got a strong stomach, go check it out and see how many horrible cretins think this bill is a great idea and that it’ll go exactly as planned. And how little regard they have for freedom. It’s truly revolting.

    http://www.reddit.com/r/politi…..will_save/

  12. Now some of the deals to turn votes in the House are coming out.

    Two Central California Reps got increased water for their districts.

    One Rep is going to go head NASA.

    One is going to be appointed Ambassador to NATO.

    Predictable, really – when you put an acolyte of ACORN and the Daley machine in the White House, what else can you expect?

    1. Those appointments have to be approved by the Senate. Does those dumb asses actually believe Obama will spend one ounce of political capital trying to get their appointment through after the Republicans inevitably filibuster and put holds on them? You really have to be retarded to think those promises are worth anything.

  13. Just remember when the time comes, conservatives can only slam the brakes on progress towards socialism. It will take some real libertarian ideas to reverse the damage.

  14. There will be definitely an initial surge in costs. A lot of people will have a health insurance for the first time and these people are currently “saving” their medical problems for the time when they get that insurance. Might be really hard to make projections at this point. I’m sure the costs in the second year will be lower than in the first year.

  15. I would love to see a 1.2 Trillion dollar reduction in the defecit. I just don’t see this happening and who can predict this accurately. A war with Iran could blow the whole plan. It is pointless to try and predict this number. Youtube to MP3

  16. If the economy starts tanking again now, how will they manage to reduce deficit? They will need money to finance all the health care and other initiatives they have a long list of.

    Jacob
    My blog: lose 10 pounds

  17. If the economy starts tanking again now, how will they manage to reduce deficit? They will need money to finance all the health care and other initiatives they have a long list of.

    Jacob
    My blog: lose 10 pounds

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