The Congressional Budget Office's preliminary "score" says the health care overhaul will cost $940 billion over the first 10 years, saving $138 billion over that time. But the CBO must assess legislation as written, rather than whether it will actually be carried out. Or, as the Economist put it, "The CBO is required to pretend to believe many impossible things before breakfast."
1. Medicare cuts
The Senate health care bill relied heavily on unprecedented cuts in Medicare spending increases. If implemented, this would have a huge impact on seniors' care. But Congress has always balked at Medicare cuts. (See No. 3).
2. Delayed start
To make the budget math work, Democrats plan on delaying the start of subsidies and other costly provisions for several years. (The bill spends just $17 billion through 2013). The true 10-year cost is far higher.
3. The "doc fix" is excluded
The Sustainable Growth Rate imposes automatic cuts in Medicare payment rates to doctors.
For several years, fearing a revolt by doctors -- and seniors -- Congress has suspended those cuts. The original draft of the House health care bill included a permanent "doc fix." But that ballooned deficits, so Democrats dropped it, even though everyone knows Congress isn't going to slash doctors' rates. The CBO has estimated a "doc fix" would cost $247 billion over 10 years.
4. Student loans are included
Doctors' payments are excluded from the health bill, but major student loan program changes are included? Yep. The reconciliation bill will end student loan subsidies to lenders. The CBO says this will save $19.4 billion over the first decade, accounting for virtually all of the $19.8 billion in deficit reduction from the health care reconciliation bill. Reconciliation bills must cut the deficit by at least $1 billion. So, without the non-health care items, the health care reconciliation bill would not pass muster.
5. It's a CLASS act
In the Senate health bill, a new, voluntary long-term care insurance program called CLASS accounted for some $72 billion of the deficit reduction. The Community Living Assistance Services and Supports program is supposed to be deficit-neutral long-term. But Democrats are counting the upfront premium surplus in the short term and ignoring the significant operating deficits after 2029. Update: Democrats also are counting on projected additional Social Security revenues from payroll taxes on higher wages in lieu of lower health benefits. Again, those benefits have to be paid out.
But wait, there's more! Let's assume that the cost savings materialize as planned. It still makes the long-term fiscal outlook worse. Why? Democrats are using up a lot of tax hikes, spending cuts and upfront payment just to get barely better than deficit-neutral. That leaves future lawmakers less scope to bring the nation's finances into order.
One of the more egregious gimmicks in what the Democrats are doing is attaching their student loan takeover program to the reconciliation sidecar. Then they are counting supposed savings from that program as offsets to the cost of the health care proposal. This really is carrying sneaky to whole new levels.
The reconciliation version of the bill chops out much of the student aid, making the measure fairly profitable on paper. After all, government will now have a monopoly in an industry already being subsidized by other parts of government.
Over the next decade, between reduced subsidies to private lenders and interest collected from students, the expected profit is $60 billion. Student aid would be increased by about $40 billion, leaving the U.S. Treasury $19.4 billion in the black thanks to this takeover. That profit gets counted toward the reconciliation bill's score from the Congressional Budget Office, and voila! more deficit reduction from the health care reform bill.
If only Democrats had thought of this trick back in the spring, they could have budgeted in the nationalization of other profitable industries. Throw the porn industry into the Department of Health and Human Services and nationalize Exxon Mobil, and your budget score looks even better.
And on top of things, they threw in an extra sweetener that goes to only one bank in the country.
The CBO revealed Thursday the bill would "establish a new program for lenders who were chartered before July 1, 2009, and are owned by a state under the control of a board including the governor and offered guaranteed loans prior to June 30, 2010."
That's an oddly specific description of a financial institution. That's because this program applies to exactly one lender: The Bank of North Dakota. The CBO explains, "Under the new program, these banks [sic] would be allowed to offer guaranteed student loans." In other words, all student lenders would be killed by the budget reconciliation bill, except for the biggest one in the state of Budget Committee Chairman Kent Conrad.
And don't forget the one wavering House member from North Dakota, Earl Pomeroy, who is supposedly undecided. The Republicans are already insinuating that this was put in to "help" him make up his mind. But in this day and age, people aren't getting away with sticking in some obscure passage that they can claim the benefits of without everyone else realizing that they were bought off.
-- Posted by blogbudsman on Fri, Mar 19, 2010, at 8:10 AM
You forgot Reason 6 - The CBO analysis doesn't support the Republican position.
Any one who tries to project numbers and costs out 10 years is blowing smoke. The most sensible solution is to pass the health care bill and then make necessary adjustments in the future.
-- Posted by commonsensematters on Fri, Mar 19, 2010, at 9:26 AM
The most sensible solution is to pass the health care bill and then make necessary adjustments in the future.
-- Posted by commonsensematters on Fri, Mar 19, 2010, at 9:26 AM
If we think about it, starting over makes more sense. Giving America one more flawed bill from Washington is not the answer.
If this thing needs to be reworked in the future, as even the party faithful agree that it does, then it should not be passed in the first place.
-- Posted by Have_Wheels_Will_Travel on Fri, Mar 19, 2010, at 9:32 AM
"The most sensible solution is to pass the health care bill and then make necessary adjustments in the future."
I believe that was Governor Gray Davis' approach to California's power woes. He signed a bill, admitting that it was flawed and might do more harm than good, but hoped that the next legislature would fix it. They didn't. Nothing was done until the blackouts started happening.
"Do something, even if its wrong" is usually reserved for situations where all hope seems lost and no formal plan exists. Our health care system is not so bad that 'something, even if it is wrong' needs be done. Something needs to be done, but we have the time to make it the right thing. This bill is not the right thing, it very wrong on many levels, and needs to be scrapped.
Once it is passed, it might be 'tweaked' but it wont' be 'fixed'. Once people have become dependent on the entitlement, no elected official will be willing to risk undoing it. Just look at Social Security. We've known for decades now that it would be in trouble, but nothing has been done. Now, it is running out of money, and still nothing is being done. What makes you think health care will be handled any differently?
The whole idea is flawed and needs to be scrapped. Mr. Obama wants his name on something he can claim as an accomplishment, and he is hanging his fortune on this monstrosity. He would be better served to have no legacy as to have this one, but he doesn't realize it. If it passes, he may well be remembered as the man who killed the country.
Better to be remembered as one who tried and failed than to be remembered as one who succeeded in implementing a great injustice.
-- Posted by Shapley Hunter on Fri, Mar 19, 2010, at 9:47 AM
It doesn't prove the numbers are accurate either, Ike
-- Posted by voyager on Fri, Mar 19, 2010, at 9:56 AM
I think that this country needs 10 or 15 other pieces of legislation like this so that the Federal deficit is completely eliminated.
-- Posted by Lumpy on Fri, Mar 19, 2010, at 10:24 AM
Not me Ike. I've been told time and time again I ain't go no sense no how. Makin'sense ain't me and numbers ain't my forte or fortissimo maybe. Hell, I don't know nothing.
-- Posted by voyager on Fri, Mar 19, 2010, at 10:26 AM
If this thing needs to be reworked in the future, as even the party faithful agree that it does, then it should not be passed in the first place.
-- Posted by Have_Wheels_Will_Travel on Fri, Mar 19, 2010, at 9:32 AM
I guess we could say the same thing about the constitution...it should have been perfect (or not signed) and no amendments needed.
-- Posted by concerned4all on Fri, Mar 19, 2010, at 11:06 AM
concerned4all,
The Constitution is a flawed document, and the Framers realized this when they signed off on it.
They did however establish the amendment process to correct the Constitution when the need arises. This process is difficult and tedious for a reason. In this way, I guess that it can be argued that the Constitution is a "living document", but not in the sense that politicians should be allowed to legislate on a whim.
Ultimately, the Constitution established the central government. I am not going to roll out the Constitution vs. Articles of Confederation argument today. The Constitution is what we have; for better or worse.
-- Posted by Lumpy on Fri, Mar 19, 2010, at 11:20 AM
vandeven - thank you for agreeing with my point. Within government, laws, rules, can be amended and that's part of the plan.
-- Posted by concerned4all on Fri, Mar 19, 2010, at 11:27 AM
But the Constitution was not recognized as seriously flawed at the time of its passage. The amendment process allowed for changes to be made if problems were discovered in implementation, or due to the changing climate of the times. They founders did not say: this is a flawed document, but we'll go ahead and establish this law and fix it later. They said 'this is the best form of government to date, and we support it by signing our names and submitting it to the various states for ratification."
Note the part about signing their names, putting them on record as endorsing it. That's a big difference between the brave men who threw off the shackles of oppression and risked their lives to establish a new form of government, as compared to the cowardly fools today who won't risk their jobs by actually voting up or down on this piece of garbage.
I guess we get the government we deserve.
-- Posted by Shapley Hunter on Fri, Mar 19, 2010, at 11:35 AM
I guess we could say the same thing about the constitution...it should have been perfect (or not signed) and no amendments needed.
-- Posted by concerned4all on Fri, Mar 19, 2010, at 11:06 AM
Was the Constitution recorgnized as being flawed when it was agreed upon? I don't think so.
Virtually everybody agrees this piece of crap is flawed, even Obama.
-- Posted by Have_Wheels_Will_Travel on Fri, Mar 19, 2010, at 11:45 AM
"So yes, most of the Founders did support passing a very flawed document and then fixing it up later on."
Not entirely true. The majority viewed the Bill of Rights as reduntant. That is, since the Constitution did not empower the government to infringe those rights, no specific guarantee was needed to protect them. The Bill of Rights was proposed to placate those who felt specific guarantees were needed.
In retrospect, the minority was correct, had we not specifically guaranteed those rights, they might have been trampled on a lot sooner than the 20th and 21st centuries...
-- Posted by Shapley Hunter on Fri, Mar 19, 2010, at 12:03 PM
I guess we could say the same thing about the constitution...it should have been perfect (or not signed) and no amendments needed.
-- Posted by concerned4all on Fri, Mar 19, 2010, at 11:06 AM
Was the Constitution recorgnized as being flawed when it was agreed upon? I don't think so.
-- Posted by Have_Wheels_Will_Travel on Fri, Mar 19, 2010, at 11:45 AM
Vandeven, doesn't agree with you wheeels.
He posted, "The Constitution is a flawed document, and the Framers realized this when they signed off on it."
-- Posted by Vandeven 2010 on Fri, Mar 19, 2010, at 11:20 AM 
Oops - Nil doesn't agee with you either. But of course you only objected to my comment, because I can't be correct - ever! laughing. Live with it sport!
-- Posted by concerned4all on Fri, Mar 19, 2010, at 12:21 PM
Vandeven, doesn't agree with you wheeels.
He posted, "The Constitution is a flawed document, and the Framers realized this when they signed off on it."
-- Posted by Vandeven 2010 on Fri, Mar 19, 2010, at 11:20 AM 
Oops - Nil doesn't agee with you either. But of course you only objected to my comment, because I can't be correct - ever! laughing. Live with it sport!
-- Posted by concerned4all on Fri, Mar 19, 2010, at 12:21 PM
Could be Suelynn, and since Vandeven is much more knowledgable on the subject than I, I can accept that. You however are little more than a political hack and I take with a grain of salt what I read on your posts.
Bearing in mind that a stopped clock is correct twice a day, you will be correct occasionally.
-- Posted by Have_Wheels_Will_Travel on Fri, Mar 19, 2010, at 1:34 PM
Sure - Ok Wheels - weak comment, but your pride is showing. ☻ ☻ ☻ ☻ ☻ ☻
Made my point anyway.
-- Posted by concerned4all on Fri, Mar 19, 2010, at 1:59 PM
Could be Suelynn, and since Vandeven is much more knowledgable on the subject than I, I can accept that. You however are little more than a political hack and I take with a grain of salt what I read on your posts...
- Posted by Have_Wheels_Will_Travel on Fri, Mar 19, 2010, at 1:34 PM
But since I got it right, perhaps you are the "political hack". I'm just sayin...ooh kinda hurts doesn't it? ☻ ☻ ☻ ☻ ☻ ☻
-- Posted by concerned4all on Fri, Mar 19, 2010, at 2:05 PM
Nil,
Looking at the timeframe, I'll accept that you are correct. However, looking at the Bill of Rights, I would argue that they do not alter the content of the Constitution, they only delineate a series of rights which the Constitution theoretically protected anyway. The first two amendments, which did not actually impose 'rights' per se, were rejected and not inlclude in the 'Bill of Rights' as passed. also, the content of that 'bill of rights' was fairly understood by the signators, even though the final draft was not yet established.
The current bill is hopelessly flawed, so they are hoping to pass the bill with the promise of some unnamed and unspecified amendments to repair it. Supposedly, the bill is necessitated by the false premise that the 'system is broken'. I would argue that repairing a broken system with a broken part makes no sense whatsoever. The system is drivable as is, even if it is somewhat erratic. Don't compound the problem with a hasty repair job when there is time to do the job properly.
This Congress has been all about haste. As a result, they've had to go back and pass new legislation to undo the hasty legislation previously imposed. (Remember the 100% tax on executive bonuses?) Haste makes waste, as they say, and they have been extremely hasty.
-- Posted by Shapley Hunter on Fri, Mar 19, 2010, at 2:25 PM
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http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/1524-...
The Congressional Budget Office's preliminary "score" says the health care overhaul will cost $940 billion over the first 10 years, saving $138 billion over that time. But the CBO must assess legislation as written, rather than whether it will actually be carried out. Or, as the Economist put it, "The CBO is required to pretend to believe many impossible things before breakfast."
1. Medicare cuts
The Senate health care bill relied heavily on unprecedented cuts in Medicare spending increases. If implemented, this would have a huge impact on seniors' care. But Congress has always balked at Medicare cuts. (See No. 3).
2. Delayed start
To make the budget math work, Democrats plan on delaying the start of subsidies and other costly provisions for several years. (The bill spends just $17 billion through 2013). The true 10-year cost is far higher.
3. The "doc fix" is excluded
The Sustainable Growth Rate imposes automatic cuts in Medicare payment rates to doctors.
For several years, fearing a revolt by doctors -- and seniors -- Congress has suspended those cuts. The original draft of the House health care bill included a permanent "doc fix." But that ballooned deficits, so Democrats dropped it, even though everyone knows Congress isn't going to slash doctors' rates. The CBO has estimated a "doc fix" would cost $247 billion over 10 years.
4. Student loans are included
Doctors' payments are excluded from the health bill, but major student loan program changes are included? Yep. The reconciliation bill will end student loan subsidies to lenders. The CBO says this will save $19.4 billion over the first decade, accounting for virtually all of the $19.8 billion in deficit reduction from the health care reconciliation bill. Reconciliation bills must cut the deficit by at least $1 billion. So, without the non-health care items, the health care reconciliation bill would not pass muster.
5. It's a CLASS act
In the Senate health bill, a new, voluntary long-term care insurance program called CLASS accounted for some $72 billion of the deficit reduction. The Community Living Assistance Services and Supports program is supposed to be deficit-neutral long-term. But Democrats are counting the upfront premium surplus in the short term and ignoring the significant operating deficits after 2029. Update: Democrats also are counting on projected additional Social Security revenues from payroll taxes on higher wages in lieu of lower health benefits. Again, those benefits have to be paid out.
But wait, there's more! Let's assume that the cost savings materialize as planned. It still makes the long-term fiscal outlook worse. Why? Democrats are using up a lot of tax hikes, spending cuts and upfront payment just to get barely better than deficit-neutral. That leaves future lawmakers less scope to bring the nation's finances into order.
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