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Fun with Numbers: CBO Estimates from Wonderland

History shows that estimating the costs of a health care entitlement is a fool's errand.

by
Rick Moran

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March 19, 2010 - 12:00 am
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The non-partisan Congressional Budget Office has released its “score” on the reconciliation fixes the House wants to pass and send along to the Senate. The exhausted green-eyeshade guys who have been slaving away these many months probably wish they were being paid by the hour, given the “100-hour weeks” that their boss, Doug Elmendorf, claims they’ve all been working to satisfy the Democrats and their ever-changing health care plans.

The raw numbers, on the surface, are being cheered on the Democratic side of the aisle. The combination Senate bill/reconciliation fixes clocks in at a “cost” of $940 billion over 10 years with a “savings” to the budget of $138 billion. The reason I have “cost” and “savings” in quotes is because the numbers are based on premises that only Lewis Carroll could love. For it appears that the CBO made a trip to Wonderland in order to come up with “costs” and “savings” that bear such little semblance to reality.

It’s been known for many months that the cost of the health care bill has been phoney baloney budgetary gimmicks. Most of the costs of the bill won’t kick in until 2013, while the bulk of the costs would be picked up in the next six years. A true cost of this bill over the first ten years (2013-2023) is well into the trillions of dollars.

CBO makes no apologies for basing their projections on what they acknowledge is tomfoolery. Nor do they seem to see it as their job to highlight this legislative legerdemain.

I guess that’s why they’re “non-partisan.” They cooperate in hoodwinking the American people with both parties.

There are other tricksies the Democrats are trying to get away with. Jacob Sullum of Reason’s Hit & Run highlights a few:

As before, those projections depend on Medicare cuts that, given Congress’ track record in this area, probably will not be sustained. Furthermore, the Democrats continue to double count Medicare savings, pretending to use them both to pay for insurance subsidies and to improve the program’s long-term financial condition. As our own Peter Suderman has noted, both the CBO and Medicare’s chief actuary have criticized this trick. Yet the talking points released this morning by House Majority Leader Steny Hoyer (D-Md.) claim the bill both “IS FULLY PAID FOR” and “EXTENDS THE SOLVENCY OF MEDICARE.”

And what about that part where the CBO guys took off their green eyeshades and put on rose-colored glasses to give us an estimate of $1.2 trillion in savings 20 years down the road? Not so fast says Sullum:

The changes in the reconciliation bill, it [CBO] 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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