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Friday, January 21, 2011

If they lie about this, why trust them on the rest of it?

Charles Krauthammer reminds us of the phony gimmickry that went in to trying to claim that Obamacare actually saves money.
Suppose someone - say, the president of United States - proposed the following: We are drowning in debt. More than $14 trillion right now. I've got a great idea for deficit reduction. It will yield a savings of $230 billion over the next 10 years: We increase spending by $540 billion while we increase taxes by $770 billion.

He'd be laughed out of town. And yet, this is precisely what the Democrats are claiming as a virtue of Obamacare. During the debate over Republican attempts to repeal it, one of the Democrats' major talking points has been that Obamacare reduces the deficit - and therefore repeal raises it - by $230 billion. Why, the Congressional Budget Office says exactly that.

Very true. And very convincing. Until you realize where that number comes from. Explains CBO Director Douglas Elmendorf in his "preliminary analysis of H.R. 2" (the Republican health-care repeal): "CBO anticipates that enacting H.R. 2 would probably yield, for the 2012-2021 period, a reduction in revenues in the neighborhood of $770 billion and a reduction in outlays in the vicinity of $540 billion."

As National Affairs editor Yuval Levin pointed out when mining this remarkable nugget, this is a hell of a way to do deficit reduction: a radical increase in spending, topped by an even more radical increase in taxes.

Of course, the very numbers that yield this $230 billion "deficit reduction" are phony to begin with. The CBO is required to accept every assumption, promise (of future spending cuts, for example) and chronological gimmick that Congress gives it. All the CBO then does is perform the calculation and spit out the result.

In fact, the whole Obamacare bill was gamed to produce a favorable CBO number. Most glaringly, the entitlement it creates - government-subsidized health insurance for 32 million Americans - doesn't kick in until 2014. That was deliberately designed so any projection for this decade would cover only six years of expenditures - while that same 10-year projection would capture 10 years of revenue. With 10 years of money inflow vs. six years of outflow, the result is a positive - i.e., deficit-reducing - number. Surprise.

If you think that's audacious, consider this: Obamacare does not create just one new entitlement (health insurance for everyone); it actually creates a second - long-term care insurance. With an aging population, and with long-term care becoming extraordinarily expensive, this promises to be the biggest budget buster in the history of the welfare state.

And yet, in the CBO calculation, this new entitlement to long-term care reduces the deficit over the next 10 years. By $70 billion, no less. How is this possible? By collecting premiums now, and paying out no benefits for the first 10 years. Presto: a (temporary) surplus.
The gimmicks go on and on.

If they're going to be so brazenly dishonest about how they're paying for all this, what else in the bill is a deception? As Krauthammer recommends, the Republicans need to hold hearings to expose once again the lies that went into generating a favorable CBO report. He advises that they call the director of the CBO to explain all this. Then they can transition over to the other parts of the bill that are being mischaracterized.
To be sure, the effect on the deficit is not the only criterion by which to judge Obamacare. But the tossing around of such clearly misleading bumper-sticker numbers calls into question the trustworthiness of other happy claims about Obamacare. Such as the repeated promise that everyone who likes his current health insurance will be able to keep it. Sure, but only if your employer continues to offer it. In fact, millions of workers will find themselves adrift because their employers will have every incentive to dump them onto the public rolls.

This does not absolve the Republicans from producing a health-care replacement. They will and should be judged by how well their alternative addresses the needs of the uninsured and the anxieties of the currently insured. But amending an insanely complicated, contradictory, incoherent and arbitrary 2,000-page bill that will generate tens of thousands of pages of regulations is a complete non-starter. Everything begins with repeal.


Rick Caird said...

Many of us recognized the frauds in the concepts of national health care. The proponents lied to us about these frauds and hid many new frauds in the bill while giving no one time to read it.

A friend of mine was magistrate judge. He tells me the first case in law school was whether a politician could be sued for violating his campaign promises. The answer was "No" because the politician is assumed to be lying. Some of the Blue Dog Democrats paid a heavy price for lying, but the Pelosi's, the Franks, and the Waxman's get away with it. There is no penalty for lying. That is what we need to fix.

Nemesis Jewelry said...

I agree-Rick- that this needs to be fixed. It is a fraud perpetrated on the public. Would they have won if they told the truth? - probably not. If let's say a doctor lied to this extent or a CEO they would be wearing striped pajamas. They also need to stop calling their bills such misleading names.

Sheldon said...

Krauthammer is flat-out wrong. Check out Chait's response to him here for yourselves:

Rick Caird said...

Actually, Chait has it wrong. Exactly the same argument about raising taxes more than spending was raised is made by Mankiew (Harvard University economist) yesterday:

But, Chait then veers off to claim Krauthammer is not paying attention to any benefits from the health care bill. But, that is not what Krauthammer is saying and Chait knows that. He just hope you, Sheldon, don't notice and you didn't. Krauthammer is pointing out the claim by Democrats that repealing the bill will increase the deficit is absurd. One thing Krauthammer, correctly claims, is the idea we can continue to collect 10 years of taxes and provide 6 years of benefits and that we can do that for decades is also absurd. Chait attempts (unsuccessfully) to finesse this by ignoring the fact that most of the early "benefits" come, not from government spending, but from forcing insurance companies and, hence, their policyholders to subsidize benefits such as insuring so called children until they are 26. The legislation also forces policyholders to pay for unlimited reimbursement rather than lifetime maximums. Those things are not free, but Chait does not count them.

Jonathan Chait has debunked nothing. Chait is a deeply dishonest man and you, Sheldon, have been taken in by believing his distortions. said...

The legislation also requires that the CLASS Act program be actuarially sound and not funded by taxes. All benefits must be paid from the premiums of the participants in the program.

There are 2 reasons the projected premiums for the CLASS Act are much higher than a comparable long-term care insurance policy.

1) Anyone who is working (even just part-time) can enroll in the CLASS Act regardless of their health history.

2) Those who earn less than the federal poverty level will be automatically enrolled in the CLASS Act for only $5 per month (unless they opt-out). Their premiums are being subsidized by the rest of the enrollees.

Scott A. Olson