Whether the bill reduces the deficit or not depends on how you look at the deficit and the federal budget. If you count the Medicare trust fund as part of the federal budget, then the bill reduces the deficit because more money will go into the fund, and then some of that money is “borrowed” by the treasury to pay for new programs like the subsidies. This is the view the CBO takes when it says that the bill reduces the deficit, because more money goes into the fund than is borrowed from it.

On the other hand, if you don't consider the trust fund as part of the federal budget, then the bill does not lower the deficit because more money will be borrowed (thus increasing the deficit) from the trust fund. If you take this view, you can then argue that Medicare is being made more sustainable since more money is in the trust fund (which is then borrowed by the treasury, but that's irrelevant because they are obligated to pay it back).

I think it's reasonable that the CBO took the first approach, since their concern is with the entire scope of federal fiscal picture. This letter does not say that the CBO counted the money twice, but it does make clear that those who are saying that the bill both helps make Medicare more sustainable, and lowers the deficit, *are* counting the money twice. It does not do both. That is an important point to make because it undercuts liberals who have been attempting to sway seniors by saying “Don't worry. We are making some cuts, but it will make Medicare more sustainable”.

(I really wish the Republicans wouldn't overstate their case by saying that the CBO has double-counted the money. It just causes more confusion and the real point, which still supports their case, will end up getting lost in the debate.)

(yeah, it's weird that I replied to myself. For some reason disqus wasn't seeing me as logged in unless I did it this way).

I was using the numbers from CBO's website. Link here: http://cboblog.cbo.gov/?p=448

Although I did have a typo: I said $368 billion when I meant $358 billion (I added $245b and $113b incorrectly, and I ignored interest for simplicity's sake).

(Michigan continues its bad news.  Georgia is ready to replace Michigan soon, and North Carolina has already replaced its “sister” state in some ways, New Jersey, as I had anticipated some years ago.)

http://buffalo.bizjournals.com/buffalo/blog/the…

http://www.census.gov/Press-Release/www/release…

If I understand your point, the “clarification” from the CBO was just that, not an admission that the scoring of the Reid bill was in error. Moreover the 132B reduction in the deficit is still good data.

Or revive one of the earlier New York City mayors. Who knows, maybe Bloomberg as an alternate.

However, I have noted in the past the inconsistency in saying that these Medicare cuts make the Medicare system more fiscally sustainable, while at the same time we're told that these savings are going to help pay for new government programs. However, I was arguing against what I thought was just rhetoric. I hadn't realize that (if it turns out to be true) the CBO had actually fallen into the same fallacy.

Note the wording: claiming that the $368 billion is net savings would “overstate the improvement in the government's fiscal position.” That is, the bill would still improve the government's fiscal position, but not by the full $368 billion. Rather, it is only the $132 billion.

However, CBO's letter also said that the effect on the “unified” budget deficit (which includes all Federal government spending and revenues) would be an improvement of $132 billion. That means that the bill doesn't reduce the deficit by $368 billion; rather it only reduces it by $132 billion. That $132 billion figure doesn't have the double-counting problem.