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Is the Deficit Being Used as a Distraction?

Jon Gabel had an important op-ed yesterday noting that the Congressional Budget Office has a fairly consistent record of underestimating the savings and overestimating the costs of changes to Medicare. In the 80s, the CBO estimated that payment changes would slow spending to $60 billion in 1986. The actual number was $49 billion. In the 90s, the CBO lowballed the savings from the Balanced Budget Act. In 1999 alone, the savings were 113 percent greater than CBO projected. Earlier in this decade, the CBO overestimated the costs of the Medicare drug benefit by a solid 40 percent.

That said, I'm not sure where this leaves us. The CBO is a cautious institution, but the people brandishing its estimates know that. The problem isn't the CBO. It's the Congress.

The Medicare Prescription Drug Benefit offers a nice example. At the time, the estimate was that it would cost $534 billion over 10 years. That money was borrowed -- it was not deficit neutral. And it passed atop Republican votes. The very same Republicans who championed that piece of legislation are now arguing that that Obama's bill -- which the White House promises will be deficit neutral, and which the CBO has broadly scored as such -- offers insufficient savings. Rep. Dave Camp, who said that the new deficit projections should kill Obama's health-care plan, voted for the Medicare expansion. Adding $534 billion to the deficit was evidently no biggie from a deficit-hawk perspective. Adding somewhere between negative $6 billion and $233 billion* over the next 10 years? Totally outrageous.

Nor are the deficit hawks arguing for more aggressive health-care reforms that could save money. The Wyden-Bennet Healthy Americans Act, which the CBO has scored as saving money, has fewer Republicans co-sponsors than it did a year ago. That's a pity. I would love to get behind a viable coalition for a much more radical bill that would substantially improve the fiscal outlook. But the people who are complaining about cost don't support that bill, and so it doesn't have enough support.

So I'm a bit skeptical about the practical utility of technical arguments about, say, whether the CBO underestimates the savings of changes to the health-care system. There's a whack-a-mole quality to all this. Knock back one set of charges and you're left with another. If the deficit argument doesn't work, maybe the government takeover gambit will do better. Or death panels. Or illegal immigrants. Or taxpayer-funded abortions. Or the need for bipartisanship. Meanwhile, the discussion is dominated by attacks and defenses, and supporters get distracted from discussing the virtues of the legislation.

*The House legislation includes a doctor's fix in Medicare that isn't really part of health-care reform, but costs $239 billion. Removing that wouldn't be good for Medicare, but it would leave you with a pure health-care reform that has a 6 billion surplus. Camp would argue that should be included in the analysis too, in which case the bill isn't deficit neutral, though it's much smaller than Medicare Part D. But Camp, of course, isn't arguing that Democrats should just delete the doctor's fix and pass the resulting bill that actually is deficit-neutral over the next 100 years.

By Ezra Klein  |  August 27, 2009; 6:11 PM ET
Categories:  Health Economics , Health Reform  
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Comments

Of course it is being used as a distraction. The goal here has nothing to do with anything other than handing a defeat to a Democratic President. Period. And any argument will do nicely, thank you very much.

Posted by: scott1959 | August 27, 2009 6:36 PM | Report abuse

Jon Gabel is my dad, Ezra. Thanks, Ezra, for posting the column.

By the way, Drew Altman has a great column (http://www.kff.org/pullingittogether/082409_altman.cfm) on where the debate could be headed -- the redistribution phase. He concludes well:

There are tradeoffs in all of this. Expanding subsidies and making coverage more comprehensive costs money, and deficit hawks are hesitant to sign on to a bill that increases government spending by too much, even if it leaves the deficit unchanged over 10 years. That’s the discussion we’ve been watching play out with the Blue Dog Democrats in the House and the negotiations with moderate Democrats and Republicans in the Senate Finance Committee. However, there are risks on the other side as well. People may start to look more closely at the benefits and subsidies that a bill costing $1 trillion or less over 10 years can buy. Regardless of how Congress and the Administration ultimately navigate this territory, it will be important to look not only at the financing of reform, but also at what people will get for the money. Once there is a bill in the House and in the Senate that can be scrutinized more closely, the benefits delivered for the money spent and whether or not it meets the public’s high expectations for help with their health care costs could be the next big issue in health reform.

Posted by: BradGabel2002 | August 27, 2009 8:16 PM | Report abuse

$9,000,000,000,000

A distraction??

No way. If we have 300 million americans we all would need to write a check for $30,000. Somehow i don't see that happening. Oh and that number above is BEFORE the healthcare plan. oh way wait, i'm sorry its defecit neutral. Kind of like original medicare was only going to cost $9 Billion in 1991 and instead it was 61 billion.

Can we please stop the silly premise that the government is fiscally conservative. NEITHER SIDE IS.

Posted by: visionbrkr | August 27, 2009 10:01 PM | Report abuse

Since there's no such thing as fiscal conservatism in politics, as visionbrkr suggests, and the healthcare bill will have no impact on the deficit, which Ezra correctly points out, how about we stop with the silly premise that the deficit now has anything to do with passing healthcare reform now that will take effect in 2013?

Posted by: etdean1 | August 28, 2009 9:47 AM | Report abuse

Ezra, maybe in a post like this you should at least mention the underestimated cost of Medicare itself when the cost estimates of the Medicare were done in 1964-1965. It seems you are being entirely selective in your discussion of Medicare cost projections.

Posted by: lancediverson | August 28, 2009 9:50 AM | Report abuse

visionbrkr....I did not say that we should not be concerned about the debt. It is an issue. The point I was making is that Republicans are using it as the reason du jour to stomp on any sort of reform. Take away that reason, and they'd come up with another one. Heck, if we had no debt they would argue this could create some.

Posted by: scott1959 | August 28, 2009 10:35 AM | Report abuse

scott,

i agree with you that they shouldn't use that as the reason and there's a lot that the republicans do that i personally don't agree with. I'd personally love to see the defense dept budget scaled back to levels that don't jepoardize our troops but also save us billions because while I'm no expert by any means I'm sure there's savings there to be had and I'm sure Republicans would balk at that which they shouldn't if they're true defecit hawks which as we both know they're not. This to me is a legitmate reason to do whatever reforms are less costly (whatever they may be) and once the economy improves do the rest. Also whatever reforms that are done now should address the uninsured first, the underinsured second as the two biggest priorities because they're the most vulnerable now.

Posted by: visionbrkr | August 28, 2009 11:06 AM | Report abuse

visionbrkr: you're going to have to explain how it is that we had an actual general fund surplus clinton's last two years if no one is fiscally responsible.

you're going to have to explain why john kerry (who, for his pains, got tarred with the "for it before i was against it" bs) attempted to get the iraq war paid for if no one is fiscally responsible.

it's simply not the case that cheap cynicism about everyone is true. we have two parties.

the democrats on the overall behave in a fiscally responsible manner.

the republican on the overall behave in a fiscally irresponsible manner.

the net has been fiscally irresponsible, but that doesn't mean both parties are equally culpable.

as far deficit concerns: when chuck grassley and all the rest of the lying thugs in the gop who suddenly are worried about the deficit want to show us all the votes they cast under bush in favor of fiscal responsibility, i'll care what they have to say.

Posted by: howard16 | August 28, 2009 11:39 AM | Report abuse

howard,

to me clinton is the exception to the rule and I applaud him for that. Generalities are tough to make but to me (and i'm an admitted novice here as I don't get paid to post on here (wink wink constans)) Democrats seem fiscally irresponsible on domestic agendas and social programs while Republicans seem fiscally irresponsible on tax cuts and defense spending. That's my ordinary American view.

Republicans are the worse of the two evils but that doesn't mean that Democrats reckless spending is good at least not in my opinion. They're spending for the right reasons so that's good but to me they could be more conservative about it.

Posted by: visionbrkr | August 28, 2009 12:02 PM | Report abuse

Wyden-Bennett has fewer GOP sponsors because there are fewer GOP Senators. Several of the GOP senators who supported it were either voted out or retired in '08, and Specter, a co-sponsor, switched parties for brazenly self-interested reasons. Nonetheless, 5 GOP senators are co-sponsors (5.5 if you count Lieberman as half GOP), and many more admirers among Republicans. Wyden-Bennett is the compromise bill that you repeatedly claim does not exist. Why not support a true centrist bill, rather than the far Left bills you constantly laud, and then strangely discredit all the worst arguments used to attack it?

Posted by: Dellis2 | August 28, 2009 1:07 PM | Report abuse

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