Budget Deficit Magic Tricks
John Stossel, at reason, finds himself incapable of suspending disbelief. More of us should follow his lead. An excerpt:
President Obama insists that health care "reform" not "add a dime" to the budget deficit, which daily grows to ever more frightening levels. So the House-passed bill and the one the Senate now deliberates both claim to cost less than $900 billion. Somehow "$900 billion over 10 years" has been decreed to be a magical figure that will not increase the deficit.It's amazing how precise government gets when estimating the cost of 10 years of subsidized medical care. Senate Majority Leader Harry Reid's bill was scored not at $850 billion, but $849 billion. House Speaker Nancy Pelosi said her bill would cost $871 billion.
How do they do that?
The key to magic is misdirection, fooling the audience into looking in the wrong direction.
I happily suspend disbelief when a magician says he'll saw a woman in half. That's entertainment. But when Harry Reid says he'll give 30 million additional people health coverage while cutting the deficit, improving health care and reducing its cost, it's not entertaining. It's incredible.
The politicians have a hat full of tricks to make their schemes look cheaper than they are. The new revenues will pour in during Year One, but health care spending won't begin until Year Three or Four. To this the Cato Institute's Michael Tanner asks, "Wouldn't it be great if you could count a whole month's income, but only two weeks' expenditures in your household budget?"
To be deficit-reducers, the health care bills depend on a $200 billion cut in Medicare. Current law requires cuts in payments to doctors, but let's get real: Those cuts will never happen. The idea that Congress will "save $200 billion" by reducing payments for groups as influential as doctors and retirees is laughable. Since 2003, Congress has suspended those "required" cuts each year.







I won't mind too much if national health insurance does not pass. Like many people, I wonder if the feds are up to a tightly run system, they way they do in France, Great Britain, Israel, etc.
The Israelis have become some world-beaters in capitalism, but they still insist on national health insurance--interesting, no?
But the 10-year calculations for national health insurance are puzzling--why not 10-year estimates for national defense, probably at $8 trillion or so. 10 years for the Department of Agriculture is more than $1 trillion. Homeland Security would be $600 billion. Something called "Civilian Defense" is another $600 billion.
Then we have annual subsidies for rural telephone systems, at $80 billion for the next 10 years, but probably more as the amount has been escalating.
All these numbers are from publicly available documents.
Odd that "libertarians" are so obsessed with national health insurance, but turn into mutes at these even larger federal outlays.
That is why some people say libertarians have become the catamite wing of the Rush L. crowd.
Mr Big Sphincter at November 27, 2009 8:36 AM
I am fascinated with the obsession BOTU has with defense spending, since by every measure domestic spending is far larger.
But there is, and was, no need to cause public debt for the private problems of medical care.
Pay your own way. Make your doctor listen to you. Earn money when you invest in medical savings.
And don't ever, ever give the keys to anything in your life to a government agency. They simply cannot have the same goals you do.
Radwaste at November 27, 2009 1:03 PM
"Obamacare will reduce the deficit by $81 billion while spending $829 billion" (An earlier figure)
The government has fooled the people into thinking that it is deficits that matter most. But, it is the SPENDING that matters. The deficit is a red flag, of course. But the healthcare bills "reduce the deficit" by increasing taxes and fees by more than the increased spending.
The clearer statement is:
"Healthcare legislation will raise spending by $829 billion. But don't worry, it will raise taxes and fees by $910 billion, providing an extra $81 billion to the Treasury."
Worse, the savings included in the plans are unrealistic. They are there only to get a good score from the Congressional Budget Office.
The major problem in writing the healtcare bills has been how to hide the massive tax increases by making them taxes on business and insurers, or merely claiming savings that will pay for the bills. All of these "business taxes" will and must be passed on to the people, in all income categories.
Memo - Health Plan Deficit Reduction
(Fictional but true)
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The estimated deficit for our health reorganization plan is causing us trouble in the press. President Obama has promised not to raise taxes on the middle class, and not to increase the deficit. Unfortunately, we have to live with this until the plan passes Congress.
After passage, we will spend what it takes, just like the last times.
Now, this is how we will "pay for it". Assign whatever fees (not taxes!) you want against insurance companies, big businesses, and "private" doctors. Make the fees big enough to cover the entire added cost of the plan. Yes, even if you think we can't raise that much money from those fees.
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Andrew_M_Garland at November 27, 2009 1:17 PM
To Mr Big,
A good insight. Why price this bill over 10 years?
They don't want to use 10 years, because it makes the numbers bigger. They want them to appear smaller.
But, the yearly cost is estimated at about $130 billion. And, that is a lowball. Ten years of that would be $1.3 trillion.
So, how to get that yearly estimate down below the $100 billion/year psychological limit for the public?
Price it over 10 years, but only operate it for the last 6 years and ongoing. Voila! It "costs" 40% less over 10 years. That is, if you believe their estimates.
Medicare has cost 8 times what it was estimated. Massachusetts public healthcare is now ridiculously expensive.
Busting the Bay State: Hiding the cost of health reform
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RomneyCare is not cost-effective. The law covered an estimated 432,000 previously uninsured residents in 2009. That means Massachusetts is covering the uninsured at a cost of about $6,700 per person, or $27,000 for a family of four. The average nationwide cost of an individual policy ($2,600 in 2007) and an employer-sponsored family policy ($12,700 in 2008) are fractions of those figures.
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Andrew_M_Garland at November 27, 2009 1:39 PM
Always have liked Stossel. He doesn't mind pissing off the politically correct crowd with facts and figures.
David M. at November 27, 2009 5:56 PM
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