Saturday, October 10, 2009

Once again--surprise, surprise--the government is bad at math no matter who is in charge

From the Gormogons:

Sen. Max Baucus (D-MT) unleashed his long-awaited "bipartisan" health care reform bill September 16 (since amended, with more goodies for everyone). Yesterday, the Congressional Budget Office (CBO) released its estimate of the Baucus bill's price tag: $829 billion over ten years, allegedly reducing the federal deficit by $81 billion over the same time frame. Mind you, the Baucus bill will only raise the insurance coverage rate 9%.

What the CBO does not highlight, however, is that Sen. Baucus cooked the books. Under the Baucus plan, revenue enhancement (taxes) goes into effect immediately. Coverage does not kick in for two and one-half years. So, to make the numbers work, Sen. Baucus has to collect ten years of revenue to cover seven and one-half years of cost.

'Puter thought the whole thing smelled a little fishy, so he gave Sleestak an abacus, a quill and some parchment and set him on the CBO math. Using the above numbers, Sleestak calculates that projected revenues will generate $910 billion over 10 years. Outflows will be $829 billion over 7.5 years. Based on Sleestak's math, that's an average yearly inflow of $91 billion and an average yearly outflow of $110.5 billion, or a average annual deficit of $19.5 billion each year the benefits are actually paid.


Nifty trick: we begin paying for the benefits years before anybody ever actually sees them, in an effort to hide the fact that they actually generate nearly $20 billion in deficit each year.

Here is what the supporters will say:

1) "Now you're claiming it's irresponsible for President Obama to try and pay for something up front, unlike Bush?" No, I'm saying that it is irresponsible to pretend that this program is only going to last for ten years, and that he's not using an accounting trick to jump=start it.

2) "Show me where they have deceived anybody--it's all right in the bill." Yeah, sure. Everytime somebody criticizes the current health insurance reform bill, the defenders respons with "which bill?" or "why don't you wait to criticize until there is actually something for the President to sign?" Both of which are political rather than policy arguments, and the people making them know that.

3) "$20 billion is not so much to add to the deficit to take care of the American people. You didn't have trouble with spending billions and billions for Iraq and Afghanistan when Bush was frothing at the mouth." Uh. Yes. Well, actually: I did.

The bottom line here is that this is not an indictment of President Obama, but a libertarian observation on the system: no matter who is in charge, governments--much like big corporations--see you and me as revenue-generating units and not much else.

1 comment:

Miko said...

By my (admittedly quick) reading, it looks like the Baucus bill will indeed start increasing deficits in 2015, but that they'll still be increasing more slowly that they would with the other bad things the government was already planning to do, so that we might actually "save" money compared to other plans.

Interestingly, the numbers also suggest that the cost for coverage of those previously uninsured will average $3,811, which isn't bad (depending on what coverage they're getting). However, it looks like this figure is reached by offloading a fair amount of the cost to the states in the form of unfunded mandates.

Also, one of the sources used by the article cited here is Karl Rove, which makes me skeptical.