The Economist's Cookbook

Recipes For A More Free Society

  • "The curious task of economics is to demonstrate to men how little they know about what they imagine they can design."

    - F.A. Hayek

NY times Op-Ed Link

I was astounded that this ran in the NYT at all, but it needs to be read by everyone. It needs to be read because of the budgetary garbage the current administration and its lackeys are feeding us. Now please understand that I am not trashing the CBO here. Largely these guys and gals do a pretty good job. But they have to operate under certain assumptions about government that we all know are fallacious. They make the fatal assumption that programs won't increase in spending in an effort to hold certain variables constant for the sake of calculation.

But like much of micro-economics, holding things constant that we know have a track record of NOT staying constant is ... slightly irresponsible. But anyway ... down to the nitty-gritty.

In reality, if you strip out all the gimmicks and budgetary games and rework the calculus, a wholly different picture emerges: The health care reform legislation would raise, not lower, federal deficits, by $562 billion.
Somehow I am not the least bit surprised that the math didn't work out.
Gimmick No. 1 is the way the bill front-loads revenues and back loads spending. That is, the taxes and fees it calls for are set to begin immediately, but its new subsidies would be deferred so that the first 10 years of revenue would be used to pay for only 6 years of spending.
But this makes perfect sense if you are a politician. You load down the tax burden and get on CNN and claim "this is a giant step forward to building a better society, a society where you won't be turned away at the hospital or at the doctor because you're not wealthy enough to blah blah blah." So yeah, pass the bill, tax the shit out of people, delay the benefits while claiming that you've solved a crisis.
This bit is especially interesting:
Finally, in perhaps the most amazing bit of unrealistic accounting, the legislation proposes to trim $463 billion from Medicare spending and use it to finance insurance subsidies. But Medicare is already bleeding red ink, and the health care bill has no reforms that would enable the program to operate more cheaply in the future.
Read the whole article ... now.

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