The Fraudulent Assumptions of the Dems’ CBO Report

One of the selling points of healthcare reform, repeated yesterday by President Obama when he signed the bill into law, is that it will reduce the federal deficit. To bolster this statement, which is absurd on its face, they point to the conclusion of a CBO report promulgated at the request of and with the, shall we say, heavy input of Dem Congressional leaders.
Under Justin’s post, Tim describes the dubious methodology by which the CBO is compelled to generate a report.

All the CBO does is crunch numbers that are presented to them. If Congress wants an analysis from the CBO on how much it will cost to provide every American citizen (300 million) with one apple and they tell the CBO that the cost of each apple is $1 then the CBO will tell Congress their plan will cost $300,000.000.
What the CBO does not consider, because it’s not their function, is how the REAL cost of a single apple is $2 and therefore the REAL cost of the program is actually $600,000,000.
CBO answers are only as legitimate as the numbers they’re given to work with.
Garbage In = Garbage Out!

In a New York Times OpEd, Douglas Holtz-Eakin confirms Tim’s description of the flawed methodoology that the CBO is compelled to employ.

The answer, unfortunately, is that the budget office is required to take written legislation at face value and not second-guess the plausibility of what it is handed. So fantasy in, fantasy out.
In reality, if you strip out all the gimmicks and budgetary games and rework the calculus, a wholly different picture emerges: The health care reform legislation would raise, not lower, federal deficits, by $562 billion.

Holtz-Eakin goes on to detail the “fantasy” assumptions supplied by Dem Congressional leaders so that they could obtain a report that concludes, incredibly, that the largest entitlement program contemplated by the US government will REDUCE the deficit.

Gimmick No. 1 is the way the bill front-loads revenues and backloads spending. That is, the taxes and fees it calls for are set to begin immediately, but its new subsidies would be deferred so that the first 10 years of revenue would be used to pay for only 6 years of spending.
Even worse, some costs are left out entirely. To operate the new programs over the first 10 years, future Congresses would need to vote for $114 billion in additional annual spending. But this so-called discretionary spending is excluded from the Congressional Budget Office’s tabulation. …
Finally, in perhaps the most amazing bit of unrealistic accounting, the legislation proposes to trim $463 billion from Medicare spending and use it to finance insurance subsidies. But Medicare is already bleeding red ink, and the health care bill has no reforms that would enable the program to operate more cheaply in the future. Instead, Congress is likely to continue to regularly override scheduled cuts in payments to Medicare doctors and other providers.
Removing the unrealistic annual Medicare savings ($463 billion) and the stolen annual revenues from Social Security and long-term care insurance ($123 billion), and adding in the annual spending that so far is not accounted for ($114 billion) quickly generates additional deficits of $562 billion in the first 10 years. And the nation would be on the hook for two more entitlement programs rapidly expanding as far as the eye can see.

In short, if this CBO report were a stock offering, it would now be the subject of a criminal investigation.

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11 years ago

Excellent article, but depressing.
I now understand why some say we’re hurling ourselves off a cliff, but towards what? Do we eventually turn the U.S. over to its lender (China)? If so, then perhaps we’ll finally have full employment, at $0.50 per day, in factories that build nonsense items for export (to the newly wealthy in China).

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