First Set of CBO Numbers In (UPDATED)
Mar 18th, 2010 | 61 responses
Politico has just announced that House Majority Leader Steny Hoyer (D-Md.) has released the first set of Congressional Budget Office numbers to reporters this morning.
According to Politico:
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. The deficit numbers Democrats have been most worried about, and will be key to convincing moderates to coming on board with the bill.
More details here
UPDATE:
According to The New Republic, In “Dems Get the CBO Score they Want”:
Democrats in the administration and Congress have agreed on a set of amendments to the Senate health care bill. And, according to House leadership, the Congressional Budget Office (CBO) is certifying that the amendments will reduce the deficit. That should fulfill the parliamentary requirements of the reconciliation process, satisfy the demands of many nervous Democrats, and clear the way for the House to vote on health care reform.
Overall, according to leadership aides, the underlying Senate health care bill plus the amendments will reduce the deficit by $130 billion in the first ten years and $1.2 trillion in the second ten years. Democrats are calling it the “biggest deficit reduction measure in 25 years”–that is, since the 1993 Clinton budget.
This news should ease the anxiety of reform critics, both in Congress and beyond, who worry that health care reform will bankrupt the government or the country. CBO projections are not an exact science, but they’re as reliable as anything we have. If anything, their projections err on the side of excessive caution.
UPDATE II:
A copy of the preliminary CBO budget report is now available here.
UPDATE III
This just in by Ezra Klein:
The question people generally ask about the final health-care reform vote is, “Won’t it be politically difficult for many House Democrats to vote yes?” But with the release of the CBO report (pdf), I’d flip that question a bit: Won’t it be substantively difficult for many House Democrats to vote no?
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People pay a lot of attention to the difficult politics of health-care reform, but at the end of the day, the task of writing the policy will be seen as the harder, and more consequential, element of this effort. But it worked. Democrats got the score they needed, and now they can go to their liberals and say that this is closer to universality than we’ve ever been, and they can go to their conservatives and say this does more for deficit reduction than has ever been done, and both things will be true.
If this bill does pass on Sunday, that, and not deals or polls or rides on Air Force One, will be why
To read everything in between, click here.
61 Responses to “First Set of CBO Numbers In (UPDATED)”
Yes,
They are including all the things they want in the sidecar. Remember, the Byrd rule simply says that the sidecar in total must not add to the deficit. So they can put anything in there they want. Now if they took the non HCR stuff out, the sidecar would fall to the Byrd rule because it would increase the deficit.
Thank God Ezra likes the bill and thinks people should vote for it. That is a real surprise to me.
That fact is that the CBO score is entirely rigged and the sidecar score is even more rigged since the “deficit improvements” in the sidecar are driven by things that have nothing to do with healthcare.
Ezra has been an any form of HCR fanboi since day 1.
The score says that it will save “$1.2 trillion in the second 10 years.” That blows the “6 / 10 year,” “unrealistic Doc Fix,” and “underfunding Medicare” criticisms all out of the water.
“6 / 10 year accounting”: This criticism is that the bill isn't really deficit neutral because it counts revenues for 10 years but only counts spending for 6 years. The premise of this argument isn't really true, since some revenue generators like the Cadillac tax are only phased in slowly, meaning you actually have less than 6 years of revenues. But the fact that it reduces the deficit by such a huge amount in the second ten years tells us that on a long-term basis it actually saves a ton of money.
“unrealistic spending cuts:” This amounts to about $200 billion in identified savings in the first 10 years, which some don't find believable. I'm not sure what it would amount to in the second decade, but I'd guess it would amount to no more than double that, $400 billion (rough estimate). That means that adjusting for this would turn the bill from a net reducer of deficits of $140 billion over ten years to a net increaser of deficits by $60 billion in that window. But in the second decade, it would still reduce the deficit by $1.2 trillion minus $400 billion = $800 billion. That's huge savings, even if we assume that the identified savings from doctor payments never materialize.
“underfunding Medicare”: This criticism is that taking money out of Medicare to spend elsewhere puts Medicare on worse footing. Of course, we all know that Medicare's fiscal situation is quite literally equal to the fiscal situation of the entire Federal government, since divisions between payroll taxes and income taxes are just meaningless accounting fictions. But the score says that the bill would reduce the Federal deficit by $140b + $1.2t = $1.34 trillion over the next twenty years, which clearly puts Medicare in a better fiscal position.
Just breaking: (WaPo)
The House voted 222-203 Thursday to set aside a resolution that would have required an up-or-down tally on the Senate health bill, halting a Republican effort to block Democrats' preferred method for getting a reform measure through the chamber
Galt,
Let me take your points 1 by 1.
6/10 year accounting is true. Look at table 1 in the CBO report. Expenditures in the bill are $80 billion from 2010 to 2014. That's the first 5 years and total for the 10 year period is $792 billion so that would mean that 10 percent of the expenditures happen in the first 5 years.
Now let's look at the “offsets”. In the period 2010 to 2014 about 20% of the offsets happen. So clearly the bill is building up a fund in the early years to offset deficits in the out years. It's not exactly 6/10 but it is pretty clear that nothing in the bill happens until about 2015 so any money gathered during this time is used to offset spending in later years and game the 10-year window.
The spending cuts analysis you've done is wrong I'm afraid. The unspecified spending cuts are made by trimming the rate of growth in Medicare from a baseline rate of 8% to a post-bill rate somewhere in the 6.5 to 7 percent range. Because of the magic of compound growth, this number becomes much larger over time. If we did a simple analysis. I take the number 100 and grow it at 6.5% and 8% for 20 years. The correct factor is more like 4 than the 2 you suggested. That would mean $800 billion or fully 2/3 of the second decade savings is unspecified/made up.
So what if, instead of taking the supposed $1.2 trillion over 20 years we took $3.5 to $4.0 trillion that the program will actually cost and used that instead. The argument about Medicare is basically looking at the $35 trillion funding gap and saying that HCR is taking the easy Medicare savings and, instead of using those to make Medicare sustainable, it's spending them on something else. Said differently, taxes will be higher in the future or other benefits lower as a consequence of this bill because, as you rightly point out, the budget is unified.
Single payer is our only way out of the deficit problem. Not just the health care mess, but debt and deficit. Take a look at the picture comparing our baseline with what the deficit would be if we paid what Canada, Germany or the UK pays for health care:
http://voices.washingtonpost.com/ezra-klein/hea…
I must say, it is nice knowing I have a health care system here in Germany that I can trust.
Reconciliation Bill posted here:
http://www.politico.com/static/PPM153_reconcili…
“Single payer is our only way out of the deficit problem. Not just the health care mess, but debt and deficit. Take a look at the picture comparing our baseline with what the deficit would be…”
Wow, you are really a true believer, GD. Unfortunately, Medicare for All or VA for All won't extract us from our debt and deficit. The real-world opposite case of Greece, the first (and believed to be far from ever the last) European nation to teeter, is truly instructive. And the lesson is not to assume public, non-profit health care conversion will cure this. It will only delay this.
(The real world is there before everyone, if they're only willing to observe and learn.)
http://www.slate.com/id/2244878/?from=rss
(earlier report on Greek health care, for those who are interested)
http://www.euro.who.int/document/e72454.pdf
I'm a true believer in evidence, DLS. Did you even look at the chart? I don't know or care by what exact mechanism we lower health care costs, but we must. All other advanced nations pay less, and single-payer is the common feature of all of them. We have tried our model, and we've seen the evidence from others. We need to achieve something approaching their cost as a % of GDP or we're screwed.
” Did you even look at the chart?”
Yes, I looked at little Ezra's chart, and scoffed at the claims (which is what they were, and which was the intended subject) shown for the other nations compared to the big, bad USA's high, lofty trajectory of projected costs. It's as if he knows nothing, including future aging in Europe, which is going to make health care much more costly even with the declines in population (and economy) from low fertility. The graph also, of course, claims plain costs, and neglects the big change in the dependency ratios in Europe compared to the USA, also outside the scope of the graph and its intentions. (There is nothing “sustanainable” [snicker] about Europe's future entitlement situation.)
“I don't know or care by what exact mechanism we lower health care costs, but we must.”
Actually, you've demonstrated that you do care, because you have been militantly in favor of “single-payer” and have notably done so on numerous occasions specifically because it is a way to control costs.
The correct word is “control,” or the phrase “reduce the growth of,” because that's all it will do. It won't resemble that laughable graph of little Ezra's, meant to fool the gullible into support his little politics. Nobody can seriously claim a flat line or descending cost graph without withholding a hell of a lot of health care to people eventually. (Of course, normal people fear this from government.)
Cost control is why I suspect we're not merely likely to have Medicare for All eventually (with its being “real” or “serious” single-payer, meaning no private duplication and opting out of the system for those who can afford it and want to opt out, undermining the system and support for it), but VA care, beginning with probably public takeover of all the hospitals and other expensive facilities.
Cost control is a good thing. Note the purpose of cost control is to reduce the tax burden on our society, not to wrongly see recovered costs as something we can [mis]spend freely on other things, like more entitlements or vote-buyer goodies. (This was the great moral failing of the disgusting concept of the “peace dividend” after the Cold War, money that was wrongly presumed to be able to be spent on other, preferred, things, rather than correctly be used to cover the downsizing of the military, payment of any debt, then ending with a tax reduction that should have been permanent.)
“We have tried our model, and we've seen the evidence from others.”
Actually, we haven't given our model anything approaching an honest “try,” as with federalism since the 1930s (or, for that matter, the truly free marketplace in general since then or earlier, either). The health care reform effort this year should have been limited to true reform of the existing system as it is, to buy time to do something not done — think about what would be sought in its place, to end the insurance-employer model that is the biggest failing of the current sysetm — and to undertake something intelligent. This is the opposite of what the Dems have done all year, rushing stupidly to pass bad legislation and overreach of all kinds all year, and for that reason, too, the current reform should be limited. (The Dems need to demonstrate they have learned their lesson and are not going to continue to be threatening and repellent to the public, at least the mainstream.)
There is plenty of time to start over with more fundamental changes and do it right, for a (real) Change [tm]. Plenty of incremental steps toward federal health care (which is not the only way and if our constitutional federal system were honored, would be avoided or unheard of — the states are the governments of choice in our system, something sadly unheard of nowadays among the Herd) could be done, by combining other health programs into Medicare, by age-category extension (perhaps to children before older pre-retirement adults), and so on. The problem is getting decent minds to do decent work in our federal government, which has become an intimidating challenge.
What we're seeing with the Dems right now is near-anarchy to recover from self-made disaster from trying to do too much, too quickly that nobody but a fringe wanted (and even most of the fringe disliked it for not being extreme enough) and I fear that they haven't learned their lesson, that this “reform” legislation will be aimless, confused, incoherent, excessive (beyond the federal student loan takeover, which not only had no business being in health legislation but has no business happening in our republic under our current system with our mainstream culture), harmful or destructive…it's such mindless junk we're almost relieved in not knowing yet how bad it really is.