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You can't cut the deficit without a bill that cuts the deficit

David Broder has a column today expressing skepticism that health-care reform will really cut the deficit. But he doesn't provide much evidence for the charge.

The specific budget gimmick mentioned in the column is that Reid has delayed the subsidies "from mid-2013 to January 2014 -- long after taxes and fees levied by the bill would have begun." But not that long. The excise tax, for instance, begins in 2013. More to the point, it's not clear what Broder's complaint is. Reid delayed the implementation of the subsidies in order to ensure the bill's deficit neutrality in the first 10 years, which is what Broder wants. Why attack him for it? Then we get this:

There is plenty in the CBO report to suggest that the promised budget savings may not materialize. If you read deep enough, you will find that under the Senate bill, "federal outlays for health care would increase during the 2010-2019 period" -- not decline. The gross increase would be almost $1 trillion -- $848 billion, to be exact, mainly to subsidize the uninsured. The net increase would be $160 billion.

Huh? The net increase of $160 billion in the first 10 years is part of CBO's analysis, not a caveat to it. It doesn't mean the bill doesn't cut the deficit, it just means that overall spending is larger before you add revenues into the equation. Moreover, the CBO continues: "during the decade following the 10-year budget window, the increases and decreases in the federal budgetary commitment to health care stemming from this legislation would roughly balance out."

In other words, the revenue and the savings grow more quickly than the costs. Extend that line out further and, yes, federal spending on health care falls as a result of this bill. In other words, the bill satisfies Broder's conditions. But he doesn't come out and say that.

Instead, he pivots to the now-traditional argument that Congress won't be able to stick to the savings and revenue measures in this bill. That, however, is another way of saying that Congress can't cut health-care costs and the American government will go bankrupt. For one thing, that's not a very good reason not to at least try and avert that outcome. But if Broder's position is that we face certain fiscal collapse, then the only real question is whether we would prefer that 30 million Americans had insurance in the meantime, or went uninsured over that period.

More broadly, I'm confused by the budget hawks who that take the line: "This bill needs to cut the deficit, and I don't believe Democrats will cut the deficit, but since the actual provisions of the bill unambiguously cut the deficit, then I guess Congress won't stick to it."

People who want to cut the deficit should support this bill, and support its implementation. The alternative is no bill that cuts the deficit, and thus no hope of cutting the deficit.

By Ezra Klein  |  November 21, 2009; 12:34 PM ET
Categories:  Budget , Health Economics , Health Reform  
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Comments

If a for-profit company had the same kind of accounting that the government has for this bill, the company's management would be in jail and the company would be indicted for accounting/securities fraud. "Not that long" isn't an accounting or legal term. The matching principle apparently doesn't apply to government or to Washington Post bloggers. Also, since the legislative framework involves a significant boost in the Medicaid program, this budget framework doesn't account for the spending states will have to take on, given the shared spending on Medicaid. What's the math on total government budgets (Federal and State) if required State spending was added?

Posted by: smpostal | November 21, 2009 3:10 PM | Report abuse

Thank you Mr. Klein. I guess it was a difficult decision to contract your August colleague - Mr Broder. But well done with your piece. You have done your country a real favour. The world needs a solvent and healthy America. Doing nothing about healthcare will not only bankrupt America but have bigger impacts on the world as - like it or not - America (at least the idea - everything is possible) does a lot of good for the world.

Posted by: William10 | November 21, 2009 3:59 PM | Report abuse

thank you mr. klein for some much needed common sense based on the facts, a great antidote to the fear-based hocus-pocus of those who will throw anything they can at this much needed effort in order to derail it.

note to smpostal's post: klein's use of the term "not that long" is in rebuttal to broder's false contention that an enormous lag exists between tax collection and subsidy implementation. to attack the column because the term is neither an accounting or legal term is pointless. it's a column, not an accountant's ledger or a legal document.

klein is simply explaining that the amount of time -- less than a year -- is not that long. he makes a statement of summation that's easy to understand and then follows it up with a specific fact, something that happens quite often when discussing accounting or legal issues, btw.

Posted by: johndog | November 21, 2009 4:05 PM | Report abuse

Ezra, I am a firm supporter of HCR, but I think you are not giving a fair account of the opponents argument. It goes something like this:

Bill-The-Democrat, a father of four and a notoriously bad money manager wants to buy his kids new computers for school. The family is currently on the brink of bankruptcy. His wife, Sally-The-Republican does not think the family can afford these new computers. Bill argues that the kids education would be substantially improved with these new computers. In order to pay for them Bill proposes he will get a second job. This second job will not only pay for the new computers in the short term, but will also improve the families financial situation in the long term. A win-win scenario!

Sally sees through Bill's proposal. Sally knows Bill through the benefit of 10 years of marriage and knows that Bill will not follow through. Sally correctly understands that if Bill follows through the family might not go bankrupt and things will improve. However, Sally also correctly understands that if Bill does not follow through the families financial situation will be that much worse with the added expenses of these computers.

So the analogy isn't perfect, but I think it gets closer to what Republicans are arguing.

Posted by: MyrtleParker | November 21, 2009 4:11 PM | Report abuse

"In other words, the revenue and the savings grow more quickly than the costs."

So Mr Klein which grows faster revenues or savings? My bet would be on revenues because the taxes are not linked to inflation are they? Just like the AMT.

Posted by: alangblake | November 21, 2009 5:48 PM | Report abuse

For those of you crazy enough to think that congress would fully implement the "savings" in the health care bill, then you shouldn't have any problem with delaying expanding coverage to the uninsured until those savings are realized. But you would never support a bill like that because you know the truth: that if experts come out and say that some medical treatment is unnecessary and wasteful, a few people who benefited from the treatment will testify before congress and they will vote to restore the funding. These are fantasy savings. You liberals have been smoking too much medical marijuana.

Posted by: cummije5 | November 21, 2009 7:52 PM | Report abuse

In other words, the revenue and the savings grow more quickly than the costs. Extend that line out further and, yes, federal spending on health care falls as a result of this bill. In other words, the bill satisfies Broder's conditions. But he doesn't come out and say that.

-----------

What a disingenuous argument. The key fiscal question is what does health care reform does to this:

http://www.cbo.gov/publications/collections/health.cfm

It is absolutely impossible from Klein's casual dismissal of Broder's concerns to obtain any answer to that simple question. Vague, broad bushed discussions that focus on whether the proposed legislation pays for itself do not address this central issue. So, back to you Ezra Klein: show us what the curve looks like for the next two decades, adjusted for the proposed legislation. If you expect people to buy into your argument, you have to be able to provide this much.

And regarding this:

"People who want to cut the deficit should support this bill, and support its implementation. The alternative is no bill that cuts the deficit, and thus no hope of cutting the deficit."

Absolutely not. The alternative is to get the legislation right now so, to use a term that was part of Obama's EARLY narrative, the curve is seriously bent downward.

Posted by: JamesSCameron | November 21, 2009 8:31 PM | Report abuse

We could fund another war with all this money. Which one would the Military-Industrial-Complex like next? Being our brother's keeper by providing health care-Humbug. The devout Christian, family values Republican Party drives another nail in Christ's body with each "No Vote" against humanity. They have no shame.

Posted by: allen11 | November 21, 2009 8:52 PM | Report abuse

Broder is mailing it in. The special-interest talking points out out in full-fax mode -- and Broder is #1 on the list, apparently.

Posted by: dpclark | November 21, 2009 8:54 PM | Report abuse

Kudos for criticizing the dean of the Washington Post Employees. That takes intellectual integrity and courage as it sure won't help your career.


My reading of part of the op-ed which I read before losing my temper is that Broder has made it clear that, to him, "deficit reduction" means "cutting social welfare spending." It has long been fairly obvious that this is what Broder (and Hiatt) mean. Broder has eliminated all doubt.

I quote

will add to the federal budget deficit?"

The answer: Less than one-fifth of the voters -- 19 percent of the sample -- think he will keep his word.

[skip]

the public has it right. These bills, as they stand, are budget-busters. ... "... . As of now, it's basically a big entitlement expansion, plus tax increases."

So tax increases have no effect on whether a bill is or isn't a budget buster. Broder is not talking about the deficit at all. When he says "fiscally responsible" he means "cuts social welfare spending." When he says "deficit" he doesn't mean spending minus tax revenues he means either spending or spending minus military spending.

Furthermore Broder dismisses as trivial the differences between the House and Senate bills "These bills." A hundred billion here a hundred billion there and no way will it amount to anything worthy of David Broder's attention.

No one who can read English can dispute this anymore. One can only ask if Broder doesn't know what "deficit" means or is he trying to trick his readers into thinking that tax increases can't reduce the deficit ?

I mean is he an idiot or a liar or both ?

He certainly has no place in responsible journalism and should be fired.


Posted by: rjw88 | November 22, 2009 1:09 AM | Report abuse

PERSONAL TO MR. KLEIN: When will you and my other naive and officially groomed colleagues get your head of the the sand? This post was taken down from your blog. I am re-posting this in the hope that you will read it again -- and think about it:

What Good Is Health Care Reform, When a...

SECRET MULTI-AGENCY FED PROGRAM SILENTLY TORTURES, IMPAIRS, PERSECUTES U.S. CITIZENS WITH MICROWAVE/LASER RADIATION WEAPONS AND LOCAL VIGILANTISM, SAYS VETERAN JOURNALIST

============================================
DID THIS ROGUE PROGRAM TARGET, INCITE FORT HOOD SHOOTER?
============================================

* Thousands of Americans, deemed to be "dissidents" or undesirables, targeted by Bush legacy program for debilitating microwave/laser assault, held hostage in their own homes to fed-supported vigilante "community policing" stalking units, equipped with warrantless GPS devices, who vandalize and terrorize as local police look the other way.

* "Directed energy weapons," portable units and a nationwide installation employing cell towers and satellites, induce weakness, exhaustion, head and body aches, physical and neurological impairment, strokes, aneurysms, cancer -- and many victims do not realize what is making them sick.

* Regional Homeland Security- administered "fusion centers" reportedly serve as command centers for covert electromagnetic radiation attacks, pervasive surveillance, financial sabotage of those identified as "dissidents," "trouble-makers" or slandered as threats to society.

* Use of microwave weaponry to torture and impair political opponents recently confirmed by deposed Honduras President Manuel Zelaya.

* Pleas for justice, to local police and FBI, go unanswered -- as do demands for a Department of Justice Civil Rights Division investigation and congressional hearings.

"These are crimes against humanity and the Constitution, being perpetrated under the cover of national security and 'safe streets' by multiple federal and local agencies and commands -- an American genocide hiding in plain sight, enabled by the naivete of those who think 'it can't happen here.'" -- Victor Livingston, former reporter for WTXF-TV Philadelphia, Phila. Bulletin, N.Y. Daily News, St. Petersburg Times; producer/host, MSG Network Sports Business Report; columnist, NowPublic.com/scrivener.

JOURNO TO FBI: TAKE CONTROL OF DHS-RUN FUSION CENTERS
TO STOP SILENT MICROWAVE / LASER ATTACKS ON U.S. CITIZENS

http://nowpublic.com/world/gestapo-usa-govt-funded-vigilante-network-terrorizes-america
http://nowpublic.com/world/govt-tortures-me-silent-microwave-weapons-ousted-s-prez
OR (if links are corrupted / disabled): http://NowPublic.com/scrivener RE: "GESTAPO USA"

Posted by: scrivener50 | November 22, 2009 10:16 AM | Report abuse

Broder's viewpoints aren't given prominence because they are well argued and informed views, but because his viewpoints are given prominence. It's a tautology of moronism.

Posted by: En_Buenora | November 22, 2009 12:26 PM | Report abuse

Hats off to you Ezra in challenging the "dean". Broder is the epitome of the feckless "main stream media" who can only spout conventional wisdom. You are showing yourself to be a real journalist. Illegitimi non carborundum - don't let them wear you down.

Posted by: rdfoley | November 22, 2009 12:32 PM | Report abuse

Amen Ezra,

The deficit hawk opposition, like Broder's basically boils down to pessimism. They oppose the bill because they don't believe that some future congress will be able to keep their promise. Well then oppose THAT congress. Honestly, if we listened to characters like Broder and Samuelson, we would never attempt anything in this country. Because in their view everything is impossible.

Posted by: bsherman1 | November 22, 2009 2:01 PM | Report abuse

First of all, thanks for posting scrivener50's response. It always helps my self-esteem whenever I can conclude my craziness is relative.

Anyway, I still believe Ezra is way too optmistic. Let's just take the hundred million pay out for Sen. Landreau's vote. What will that actually cost? Surely other states will demand and recieve equal treatment for future disasters. In order for the CBO to put a price on just that one item, they would have to predict the weather and earthquakes.

Posted by: bobsteph1234 | November 22, 2009 2:15 PM | Report abuse

Anything that begins with the concept "if a private company were run like the government..." usually ends up with foolishness. If a plane were engineered like a boat, it would never sink-- but it would never fly, either.

Governments in domocracies are run for reasons different from the way businesses are run-- different imperatives.

Politics has assembled the bills before us. The choice is something, or nothing.
It's an easy choice for me.

Posted by: nogoatee2 | November 22, 2009 3:30 PM | Report abuse

Ezra,

All this assumes the law of unintended consequences never applies.
That law states that for every action you take at least three consequences you did not intend will occur and at least one of those will be VERY painful.

Here we can already tell one of those unintended consequences.

** When Reid announced the inclusion of a Public Option, the Stock market dropped like a rock due to a sell off of Health insurance stock. **
** When Leiberman announced hi filibuster the stock market recovered. **

Those two facts are a preview. Upon announcement of the passage of the joint bill and it heading to the president's desk, the stock of helth Insurance companies will plummet.

The amount is unclear. BUT ... before it even crosses his desk President Obama can expect ...
*** The DOW and NASDAQ to drop by a significant percent.
*** Health Insurance companies to fold as their net worth no longer allows them to stay operational
*** Terrified customers in the millions around the country wondering what THEY will be doing when their company closes and blaming Pres Obama and the Dems for THEM not having health care.
*** Laid off and furloughed health insurance ( and affiliated service providers like payrolling companies for those insurance companies ) accountants, receptionists etc. to swell unemployment sending it to almost 12% and the WHOLE COUNTRY Blaming Obama.
*** The extra part of the Blame as that sudden 2% jump occurs is they will no longer Blame Bush for part of the unemployment. That jump will make Obama own EVERYTHING above 5%.

Need I say more? As in the political consequences for the Progressive Wing?
And the consequences ( armed insurrection is not unlikely ) if the Democrats use that sudden collapse of the Health Insurance Industry as justification for an emergency nationalization of health care.

Simply put ... any Health Care bill needs to make it illegal to seel off your stock within 3 days of voting and for the next 3 years ( basically let The President get re-elected THEN let the investor dump the stock ).
Oh .. wait that is unconstitutional? Well ... err ....

Posted by: chromenhawk | November 22, 2009 10:15 PM | Report abuse

wow
young dumb and willing to spout it off...

Erza - bubby - MyrtleParker said it best

on paper it works... but reality it doesn't because they had to BRIBE (BLACK LAW'S DICTIONARY DEFINITION OF BRIBARY APPLIES) MARY LANDREIU FOR HER VOTE WITH THE PROMISE OF AT LEAST 100 MILLION -

that type of math NEVER WORKS - IF YOU WERE OLD ENOUGH TO SHAVE - YOU WOULD HAVE MORE ACTUAL EXPERIENCE (I SUSPECT A COLLEGE BUDDY OR FAMILY FRIEND LET'S YOU WRITE FOR THE POST CAUSE YOUR ECONOMIC HISTORY EXPERIENCE (WITH CONGRESS) IS NON EXISTENT

Posted by: mrmacc69 | November 22, 2009 10:30 PM | Report abuse

"David Broder has a column today expressing skepticism that health-care reform will really cut the deficit. But he doesn't provide much evidence for the charge."

The burden of proof really isn't on those who are skeptical about purported cost savings. All of this works fine on paper, but those of us who have been around a little longer than you know that it won't work out that way.

Posted by: invention13 | November 22, 2009 11:16 PM | Report abuse

Broder has a point: when the GOP takes over congress in the future, they will do more spending. you can't trust the GOP. Look at what they have done in the last 8 years. Therefore, you cannot trust the dems either. I think this is broder's argument.

Posted by: JoeBridgeman | November 22, 2009 11:25 PM | Report abuse

The major fallacy in the Democratic bills are that no one has ever addressed the "access" to coverage issue because of different reimbursement rates for Government plans vs. private plans.
My orthopedic surgeon provided this example: For a broken arm, Blue Cross will pay him $1,300, Medicare $1,100 and Medicaid $200.
In Florida now, many doctors will not accept Medicare patients because of ever-declining reimbursement rates (before $500 Billion is cut in both the House and Senate versions).
Without substantially higher Reimbursement levels for Medicaid, the millions of new insureds will still be effectively uninsured because no doctor will accept their coverage.
The Dems know this, which is another reason why they have broken out the bill to increase Medicare funding by $242 Billion, in addition to giving the current bills the appearance of being revenue-neutral because of this.
But the real hidden cost for the "Government-option" bills on the table now are the Trillions in funding that will be required to raise Medicaid reimbursement-levels so that these newly-covered insureds will actually be able to see a doctor in other than the similar clinic/emergency room setting that is how the the uninsured are currently treated.

Posted by: erieeddy | November 23, 2009 10:36 AM | Report abuse

But Ezra you are forgetting the magical Future Utopia coming under Sarah Palin, when Republicans finally abolish Social Security and Medicare and we can allow wallow in our Liberty again...

Posted by: NS12345 | November 23, 2009 1:02 PM | Report abuse

that sounded a lot like an attorney arguing a loser of a case.

Posted by: dummypants | November 23, 2009 1:25 PM | Report abuse

Well said, Ezra. Conservatives are really starting to reach for justifications to not pass the bill; consistency or logic be damned.

The claims being made are fast becoming incoherent.

Posted by: zosima | November 23, 2009 11:22 PM | Report abuse

Actually, if the Obama election is any indication, the craziness of the conservative talking points will grow until a crescendo at the point of passage. As they get desperate at the realization of their impotence they'll be grasping at more and more distant straws.

Posted by: zosima | November 23, 2009 11:30 PM | Report abuse

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