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The teeny-tiny, itsy-bitsy health-care bill


The graph above comes from Lori Montgomery's article arguing that health-care reform will not do much to cut the deficit. "While the package would not worsen the nation's record deficits, it would not significantly improve them, either now or in the future," writes Montgomery. "Reid's bill would shave less than 2 percent from deficits projected to top $9 trillion over the next decade."

Health-care reform needs to keep straight what is and is not a large number. In Montgomery's article, the $130 billion HCR will save in the first 10 years, and the $650 billion it will save in the second, are both presented as drops in the deficit bucket. And that's exactly right! They are drops in the bucket. But then, so too is health-care reform.

There are two ways of explaining $130 billion. The first is to stare, open-mouthed, at the giant number. The second is to put that number in context, as Montgomery correctly does. $130 billion is a lot of money, but it's not much money compared to the $9 trillion in deficits that we're facing.

Similarly, the bills we're calling health-care reform are not, in the scheme of things, a lot of money. It's a lot of money compared to the sum we talk about in everyday life, of course. Health-care reform is going to cost a lot more than my house did, even though my house felt like a pretty big purchase. But it's not going to cost a lot -- or save a lot -- compared to federal expenditures, the federal deficit, or projected GDP growth.

According to the CBO, nominal GDP is supposed to reach about $190 trillion over the same time period. Federal spending is projected to be $41 trillion. Total deficits are expected to reach $9 trillion. And all these numbers are, if anything, understated.

To give a sense of scale, a $900 billion HCR bill would represent 2.1 percent of projected federal spending over the next 10 years. And most of that isn't even new federal spending. It's money we're already spending, but redirecting to this purpose (i.e., by cutting Medicare Advantage payments, when we would otherwise leave them be). Another comparison: In 2016, total federal spending is projected to be $4.3 trillion. The deficit is projected to be $620 billion. Health-care reform will cost $57 billion.

There's been a tendency to both sell and criticize health-care reform as the be-all and end-all of federal policy-making. It isn't. It will help a lot of people. It will cut the deficit by a bit. It could do both things more effectively if Congress had the courage to put a bit more money into the bill and include somewhat stronger cost controls. But that's really it. It won't touch most Americans, either for good or for ill. It won't be transformative to the federal budget, at least in the near future. It's comprehensive incrementalism, but it's still incrementalism, and it can't be asked to do more unless we're willing to make it bigger.

By Ezra Klein  |  November 30, 2009; 4:40 PM ET
Categories:  Health Reform  
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$130 billion here, $130 billion there, and pretty soon ...

Posted by: ostap666 | November 30, 2009 5:51 PM | Report abuse

The financial damage is the least of our worries if this passes.

When was the last time you heard Pelosi or Reid or even Obama mention the word LIBERTY?

Posted by: WrongfulDeath | November 30, 2009 7:37 PM | Report abuse

The financial damage is the least of our worries if this passes.

When was the last time you heard Pelosi or Reid or even Obama mention the word LIBERTY?

Posted by: WrongfulDeath | November 30, 2009 7:37 PM | Report abuse

S*r*w those who criticize HCR as not 'reducing' deficit enough. That is not what is expected from HCR. Proposed HCR is NOT a deficit reduction policy. There are far different techniques for that.

What we want from HCR is 'iron clad' measures so that it DOES NOT increase the deficit on it's own. If that is achieved, that will be a phenomenal achievement for this country.

Done within fiscally balanced approach, the real advantages of HCR - healthy population, reduced mortality, reduced bankruptcy due to health care costs and even moderate bending of the cost curve - all these are real benefits which will flow to this country. These are not tangible or easily measurable and best is what it is now - be underwhelming in proclaiming those.

By examining 'how hard HCR reduces deficit'; we are barking the wrong tree - we need all of our attention on containing any possibility of HCR contributing to deficits. That is all and that will be more than enough for us.

Posted by: umesh409 | November 30, 2009 8:50 PM | Report abuse

This Ezra Klein is just another liberal idiot Democrat... or he writes for the Associated Press, or... nope - this is the WaPo.

Klein doesn't understand - these dollar numbers are cooked! They are intended to fool idiot liberal journalists, and anyone else foolish enough to believe them. To really get a feel for what the true numbers are, one should go back to the original Medicare estimates and calculate percentagewise just how far off they were... and then apply those percentages to these numbers.

When these numbers are adjusted to more likely cost, we're looking at several trillions of dollars... for six years worth of benefits based on 10 years worth of tax collection.

Pure plain stupidity. WaPo... be sure to spell the name of the Democrats that vote for this clearly and get the districts noted correctly.

2010 is going to be payback time - there will be a lot fewer Democrats in Washington, after 2010.

Posted by: wilsan | November 30, 2009 9:07 PM | Report abuse

I agree with my teabagger friends. You can't put a price on freedom. The government should not force citizens to buy a corporate product unless, at a minimum, it is regulated like a public utlity.

Posted by: bmull | December 1, 2009 1:23 AM | Report abuse

There is a difference between reducing the deficit and not increasing it quite as much.

Posted by: invention13 | December 1, 2009 9:05 AM | Report abuse

Is Ezra Klein's payments from the White House in the form of a check, or is propaganda reimbursement done by direct deposit?

Posted by: Cornell1984 | December 1, 2009 10:21 AM | Report abuse

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