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CBO: Obamacare = at least $109 Billion in Deficit Spending Over 10 Years; UPDATE: Former CBO Director: Obamacare Deficit will be $562 Billion over 10 years

March 20th, 2010 by AHFF Geoff

The Establishment Media's Failure to Debunk or Even Question President Obama's False Claim of Deficit Savings from Obamacare Reminds Some of the Society Described by George Orwell in his Classic book, "1984"

In explicit contradiction to the establishment media’s reporting over the past two days, the CBO has in fact reported that the Obamacare bill will result in an increase in the deficit spending of the United States by at least $109 billion over the next 10 years. Instead of reporting this indisputable fact, the media has been pushing the Obama and Democrat line that Obamacare will “save” $138 billion over the next 10 years in deficit spending versus present projections as if it was the gospel truth.

The big problem with that reporting, and Obama’s claim that Obamacare will be “one of the biggest deficit-reduction plans in history” is that the CBO has explicitly reported that when the “doctor fix” is enacted, the $138 billion in paper “savings” disappear and a $59 billion dollar deficit over 10 years is created by Obamacare over 10 years:

You asked about the total budgetary impact of enacting the reconciliation proposal (the amendment to H.R. 4872), the Senate-passed health bill (H.R. 3590), and the Medicare Physicians Payment Reform Act of 2009 (H.R. 3961). CBO estimates that enacting all three pieces of legislation would add $59 billion to budget deficits over the 2010–2019 period.

House Speaker Nancy Pelosi and President Obama have promised to push through a “doctor fix” immediately after the passage of Obamacare. In fact, the promised “doctor fix” was used by President Obama and the Democrats to purchase the American Medical Association’s support for Obamacare as reported by Politico back in July 2009:

In the bill, Democrats provide $245 billion to eliminate an annual shortfall in payments to doctors under Medicare. Democrats resolved this annual headache, in large part, to win crucial support for the bill from the American Medical Association. That money currently counts against the overall costs of the bill, but Democrats have introduced legislation that would remove remove this obligation from federal deficit.

Obama and the Democrats then removed the “doctor fix” from Obamacare to game the CBO scoring shortly after the CBO released its initial scoring of the bill which  properly showed an increase in deficit spending. Removing the “doctor fix” meant that the present CBO scoring includes an unrealistic 21% immediate cut in doctor fees in its projections, hence resulting in the illusory CBO number of $138 billion in paper deficit “savings” that the establishment media and President Obama are so happy to falsely repeat ad nauseam. In reality, as noted by the CBO’s letter excerpted above, the real CBO score is a deficit of $59 Billion over 10 years.

In addition, the CBO also has explicitly stated that another $50 billion over 10 years in federal spending will be required to administer the massive new federal entitlement programs to be created by Obamacare:

In its March 11, 2010, cost estimate for H.R. 3590, the Patient Protection and Affordable Care Act (PPACA), as passed by the Senate, CBO indicated that it has identified at least $50 billion in specified and estimated authorizations of discretionary spending that might be involved in implementing that legislation. The authority to undertake such spending is not provided in H.R. 3590; it would require future action in appropriation bills.

As noted by the CBO above, the legislative language does not include authority to “undertake such spending” so the CBO did not score it in the recent releases. However, the CBO does clearly state above that “at least $50 billion” in federal spending will be required to implement Obamacare, meaning that combined with the inevitable “doctor fix”, the CBO’s own reporting holds that Obamacare will result in at least $109 billion in new deficit spending over the next 10 years.

Somehow it takes a tiny centrist blog like this one to clearly report these publicly available facts, and the establishment media, including the AP, CNN, MSNBC, CBS, USAToday, NYT, WaPo, ABC, and Politico all completely failed to report these facts when reporting on the illusory $138 billion in paper deficit savings reported by the CBO. In fact, all of those “news” organizations explicitly report that Obamacare will reduce the deficit as if it is fact while failing to even mention the “doctor fix” (which results in a $59 billion deficit) or the administrative costs (an additional cost of $50 billion) that the CBO itself has explicitly reported on.  Sadly, this $109 billion deficit over 10 years is just the tip of the iceberg, as President Obama and Congressional Democrats have, according to Obamaphile NYT columnist David Brooks, stuffed the legislation with gimmicks and dodges designed to get a good score from the Congressional Budget Office but don’t genuinely control runaway spending.”

Here is a list, from the NYT Brooks column, of the “dodges and gimmicks” which were used by Obama and Congressional Democrats to create the illusory $138 Billion in paper deficit savings from Obamacare:

There is the doc fix dodge. The legislation pretends that Congress is about to cut Medicare reimbursements by 21 percent. Everyone knows that will never happen, so over the next decade actual spending will be $300 billion higher than paper projections.

There is the long-term care dodge. The bill creates a $72 billion trust fund to pay for a new long-term care program. The sponsors count that money as cost-saving, even though it will eventually be paid back out when the program comes on line.

There is the subsidy dodge. Workers making $60,000 and in the health exchanges would receive $4,500 more in subsidies in 2016 than workers making $60,000 and not in the exchanges. There is no way future Congresses will allow that disparity to persist. Soon, everybody will get the subsidy.

There is the excise tax dodge. The primary cost-control mechanism and long-term revenue source for the program is the tax on high-cost plans. But Democrats aren’t willing to levy this tax for eight years. The fiscal sustainability of the whole bill rests on the naïve hope that a future Congress will have the guts to accept a trillion-dollar tax when the current Congress wouldn’t accept an increase of a few billion.

There is the 10-6 dodge. One of the reasons the bill appears deficit-neutral in the first decade is that it begins collecting revenue right away but doesn’t have to pay for most benefits until 2014. That’s 10 years of revenues to pay for 6 years of benefits, something unlikely to happen again unless the country agrees to go without health care for four years every decade.

There is the Social Security dodge. The bill uses $52 billion in higher Social Security taxes to pay for health care expansion. But if Social Security taxes pay for health care, what pays for Social Security?

There is the pilot program dodge. Admirably, the bill includes pilot programs designed to help find ways to control costs. But it’s not clear that the bill includes mechanisms to actually implement the results. This is exactly what happened to undermine previous pilot program efforts.

Sadly, none of the above-listed “dodges and gimmicks” are referenced anywhere in any of the establishment media reporting over the past few days regarding the explicitly false Obama claim that Obamacare is “one of the biggest deficit-reduction plans in history.” Instead of reporting these facts and challenging the President’s clearly false claims of deficit reduction from Obamacare, the media has abdicated its traditional watchdog role as the 4th estate in American society and wholly endorsed the explicitly false claims of President Obama.

As it stands right now, the vote in the House tomorrow appears to be very close and could go either way. One can only wonder if wavering Democrats would be reacting differently if the media was actually doing its job and acting as a watchdog instead of a lapdog for the powerful politicians who run the federal government. Americans can only hope that their elected congresspeople who will vote tomorrow on perhaps the most important bill in decades have this public information for their consideration as they decide whether to vote to pass Obamacare into law.

UPDATE: Former Congressional Budget Office Director Douglas Holtz-Eakin, director of the Congressional Budget Office from 2003 to 2005, confirms CentristNet’s claims last night in his NYT column outlining the dodges and gimmicks included by the Democrats to obtain the explicitly false claim of $138 billion in paper deficit “savings” and concluding that Obamacare will actually result in over a half a trillion of increased deficit spending over the next 10 years:

ON Thursday, the Congressional Budget Office reported that, if enacted, the latest health care reform legislation would, over the next 10 years, cost about $950 billion, but because it would raise some revenues and lower some costs, it would also lower federal deficits by $138 billion. In other words, a bill that would set up two new entitlement spending programs — health insurance subsidies and long-term health care benefits — would actually improve the nation’s bottom line.

Could this really be true? How can the budget office give a green light to a bill that commits the federal government to spending nearly $1 trillion more over the next 10 years?

The answer, unfortunately, is that the budget office is required to take written legislation at face value and not second-guess the plausibility of what it is handed. So fantasy in, fantasy out.

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.
….
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. Instead, Congress is likely to continue to regularly override scheduled cuts in payments to Medicare doctors and other providers.

Removing the unrealistic annual Medicare savings ($463 billion) and the stolen annual revenues from Social Security and long-term care insurance ($123 billion), and adding in the annual spending that so far is not accounted for ($114 billion) quickly generates additional deficits of $562 billion in the first 10 years. And the nation would be on the hook for two more entitlement programs rapidly expanding as far as the eye can see.

The bottom line is that Congress would spend a lot more; steal funds from education, Social Security and long-term care to cover the gap; and promise that future Congresses will make up for it by taxing more and spending less.

The stakes could not be higher. As documented in another recent budget office analysis, the federal deficit is already expected to exceed at least $700 billion every year over the next decade, doubling the national debt to more than $20 trillion. By 2020, the federal deficit — the amount the government must borrow to meet its expenses — is projected to be $1.2 trillion, $900 billion of which represents interest on previous debt.

The health care legislation would only increase this crushing debt. It is a clear indication that Congress does not realize the urgency of putting America’s fiscal house in order.

This is the sad truth of the Obamacare package that is due to be voted on by the House of Representatives just a few hours from now. Democrats continued to make the explicitly false claim that Obamacare will be a “historic” deficit reduction package on all the Sunday shows, and the establishment media continued to second their false claims and refuse to even mention any of the obvious gimmicks and dodges used to create the false paper deficit savings reported by the CBO last week. Should Obamacare pass, the intentional fraud engaged in by President Obama and Democrats regarding the deficit “savings” issue will be seen as one of the most egregious examples of explicit misrepresentations made by federal officials, and sanctioned by the American media, in the history of this country.

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31 Responses to “CBO: Obamacare = at least $109 Billion in Deficit Spending Over 10 Years; UPDATE: Former CBO Director: Obamacare Deficit will be $562 Billion over 10 years”

  1. Foucha says:

    Has any msm sites picked this up yet?

  2. Dr. Spank says:

    We’re running a 1.5 trillion deficit. The 1st 4 years of taxes aren’t going into a trust fund, they will be used to reduce the size of the deficit. Then what? Will the 5th year of health care taxes cover that year’s health care outlays? If not, the deficit will increase. I believe Barry is hoping the economy rebounds to cover the increased deficit effects of the bill. Be interesting to see if he’s still in office when the bills come due. (And I’m giving him the benefit of the doubt on all his supposed savings in his bill and the above dodges)

  3. partyof1 says:

    Great article Geoff. I was just about to post about the Op-Ed in NYT but you beat me to it.

    I know I’m preaching to the choir here but why can’t the media do some fact checking on these numbers? I just read “victory lap” story from the AP in which they STILL repeat the lie of 138 billion in deficit reduction.

    ???

  4. AHFF Geoff says:

    Yep, it is truly pathetic that the 4th estate is acting as a lapdog instead of a watchdog and completely ignoring the lies about deficit “savings”

  5. partyof1 says:

    Here’s another story on gaming the CBO from the CATO institute.

    http://www.cato.org/pub_display.php?pub_id=11591&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CatoRecentOpeds+(Cato+Recent+Op-eds)&utm_content=Twitter

    They say deficits = 59 billion

    True cost = nearly $3 trillion.

  6. AHFF Geoff says:

    Wow, that’s amazing stuff.

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  26. […] Over 10 Years; UPDATE: Former CBO Director: Obamacare Deficit will be $562 Billion over 10 years CBO: Obamacare = at least $109 Billion in Deficit Spending | CentristNet and this was BEFORE the CLASS act bit the dust too. and as well know and Sibelius admitted you […]

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