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The CBO puts $900 billion in perspective

At $900 billion over 10 years, health-care reform seems pretty expensive. In part, that's because people have a hard time breaking it down. If recent trends hold steady, the federal government will be spending about $4 trillion a year come 2019. Health-care reform, at $108 billion in 2019, will represent 2.7 percent of that. Compared with what the government spends, it's quite small. But compared with the sums individuals are used to thinking about, it's quite large -- and that dissonance can get confusing.

But don't believe me. Ask the CBO. Forecasting health-care reform's potential to reduce the deficit in the second 10 years, the Congressional Budget Office says "the collective effect of its provisions would probably be small reductions in federal budget deficits." Those collective effects would amount to "around one-quarter percent of GDP," or $650 billion over 10 years. In other words, the CBO says $650 billion over 10 years is "small" compared with the expected federal budget deficit -- not even the federal budget -- which implies that $900 billion is not the incredible expenditure some make it out to be.

By Ezra Klein  |  November 19, 2009; 10:15 AM ET
Categories:  Budget , Health Reform  
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Comments

Yet YOU want to consider "around one-quarter percent of GDP" to be a good "first step" at cost control because $650 billion sounds like a lot of money.

Goes both ways, Ezra.

Posted by: wisewon | November 19, 2009 10:21 AM | Report abuse

how high would a pile of 900 billion copies of Palin's book be?

Posted by: bdballard | November 19, 2009 10:27 AM | Report abuse

Thanks for the tax increase Obama. Nice campaign promise you made there. No vote for you next time.

Posted by: obrier2 | November 19, 2009 10:46 AM | Report abuse

The 2014 start date is a joke with a delayed punch line. Four years for the GOP/media/public to grouse about nothing happening before something does?

The law will likely be repealed before it even goes into effect.

Stupidity Legislated!

Posted by: JimPortlandOR | November 19, 2009 10:59 AM | Report abuse

(1) The Dems' failure to change the cost frame of the bill - to get people to think about the annual number - is a huge political failure. If they've been trying to get this idea across, I've missed it.

(2) Obrier, if you voted for Obama last time, or for Kerry or Gore before him, I'll eat my hat.

Posted by: Sophomore | November 19, 2009 11:42 AM | Report abuse

Health-care reform, at $108 billion in 2019, will represent 2.7 percent of that
********

unfortunately, this doesnt take into account the impact on state budgets and the hidden tax that will be imposed on people with private employer based insurance whos premiums will SKYROCKET like we've never seen due to gauranteed issue and the like.

also, 100 billion a year would be a 20% increase to the annual budget deficit when it was as its pre-messiah record level, or a 100% increase on the budget deficits in the mid 90's.

in other words, this is fiscally irresponsible even before you factor in the crippling burdens it will heap on state budgets and the 85% families who already have insurance.


sorry ezra, we're not that dumb.

Posted by: dummypants | November 19, 2009 1:31 PM | Report abuse

(1) The Dems' failure to change the cost frame of the bill - to get people to think about the annual number - is a huge political failure. If they've been trying to get this idea across, I've missed it.

(2) Obrier, if you voted for Obama last time, or for Kerry or Gore before him, I'll eat my hat.
**********

that was a non-starter from the begining. a year by year accoutning would have to clean about the face that its 900 billion over 7 years, not 10, since reform doesnt start until 3 years down the road. moderates would have been able to easily make the public realize that the true cost over the first 10 years (2013-2022), would be 1.3 trillion. in other words, and extra 400 billion than they want to admit, and 300 billion onto the deficit, above and beyond the opportunity cost of using the limited political capital for raising taxes and fees to pay for new government porgrams, as opposed to bringing the budget back from the brink.

also, am i included in that bet? if so, break out the bib, ill break out the camera.

i only voted for him becuase he was black (really).

Posted by: dummypants | November 19, 2009 1:37 PM | Report abuse

Here are some other ways to put this into perspective.

a) $100 billion per year represents about 5% of 2009 tax collections. The Bush 43 tax cuts were about $160 billion per year. So reversing them would more than pay for healthcare reform, affecting only the richest 47% of the population that pay income tax.

b) Our spending on Iraq & Afghanistan is now about $120 billion over and above our base defense budget. Stopping the wars would also allow us to pay for universal coverage.

c) $100 billion is about $333 per person in the U.S. or $1,000 per household. In contrast, we spend $850 billion per year on defense ($8,000 per household) and about $250 billion on interest on the national debt ($2,500 per household).

In other words, it isn't really very much at all compared to other big categories of spending.

Posted by: Factified | November 19, 2009 2:11 PM | Report abuse

affecting only the richest 47% of the population that pay income tax.
********

im assuming the family in the 53 percentile who vigorously dispute the notion that they are "rich".

so now making a few bucks over the average income is a crime? come to think of it, thats pretty much the definition of socialism, at least from the perspective of the lockean conception of the commons and universal positive rights therein.

this need to demagauge on the idea of anyone making more than the next person without taking a pound of flesh out of the them is quite a break from the american notion of aspiration and exceptional achievement.

Posted by: dummypants | November 19, 2009 2:32 PM | Report abuse

c) $100 billion is about $333 per person in the U.S. or $1,000 per household. In contrast, we spend $850 billion per year on defense ($8,000 per household) and about $250 billion on interest on the national debt ($2,500 per household).

In other words, it isn't really very much at all compared to other big categories of spending.
*********

yes, and for all we know kim kardashian spends very litte on shoes in comparison to luxury cars. but what does that matter?

a bank (be Bank of American or the Bank of China who we depend on for our unsustainable spending programs) doesnt care about one category of your spending in realtion to another. they care about what you spend in relation to what you bring in.

and try as you might to minimize the tax burden of $100 billion/year, your previous post explains why its really much larger. even if everybody worked, you concede that only half of workers pay income tax. that would bring the tax base down to 150 million. then you have the fact that there is a person of non-working age (children, students, retired people) for every person who works, so you have to cut the number in half again, down to 75 million. indeed, its smaller than that, but we'll go off 75 million for each of cimpuation.

http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LNS11300000&years_option=specific_years&include_graphs=true&to_year=2006&from_year=1948


so in the end, the tax burden on the avergae tax paying worker ends up being FOUR times larger than you present, i.e. $1,3000.

if you think tax paying workers are prepared to pay $1,300 in increased annual taxes to pay for someone else's health care, in addition to the crunch on state budgets and the hike in their private employer basied premiums that "gauranteed issue" will force, you are bat sh!t crazy.

and we havent even touched illegal immigration, abortion, and everything else which becomes fair game when the government tries to intervene in this way on something like health care.

Posted by: dummypants | November 19, 2009 2:44 PM | Report abuse

(2) Obrier, if you voted for Obama last time, or for Kerry or Gore before him, I'll eat my hat.
I hope it made of cotton because you loose. I voted for Clinton twice too. I only voted R once and it was for dubba's old man the first time he ran.

Posted by: obrier2 | November 19, 2009 3:11 PM | Report abuse

Ezra,

Today the CBO sent a letter to congress to CLARIFY misstatements by Congress. You may want to update your stance.

http://hotair.com/archives/2009/11/19/cbo-reid-plan-increases-deficits-89-billion-in-first-ten-years/

** winks -- always read the competition **

HR 3962 -- the health care plan SAVES about $109B.
HR 3961 -- the bailout for the medicare Doctors COSTS about $210B

The two passed together would COST about $89B not SAVE.

What would be the result of the Medicare Doctor Bailout being dropped?
Well since all the pain is at the front end ...
No benefits and Medicare Doctors going broke losing money and dropping Medicare patients left and right before then.

Which of course would make a bunch of Seniors chasing Cong Rostenkowski down the street waving signs in lynch mob style look tame.
The health care plan would be shut down before it even started over night.

Posted by: chromenhawk | November 19, 2009 5:01 PM | Report abuse

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