Yet. Another. Fraudulent. Cost Estimate.
House Democrats claim that a not-yet-released Congressional Budget Office report puts the cost of their revised health care overhaul at $940 billion over the next 10 years.
Though I have yet to see the CBO score, I’ll bet anyone a fancy lunch that it does not claim the legislation would cost the federal government just $940 billion from 2010 through 2019.
As former Congressional Budget Office director Donald Marron has explained over and over, the figure that Democrats consistently cite for the cost of their bills is only the CBO’s estimate of the cost of federal spending related to the expansion of health insurance coverage. It is not the full cost to the federal government, because each bill also spends taxpayer dollars on other items.
Marron examined the CBO’s March 11 score of the bill that passed the Senate on Christmas Eve, and found an additional $96 billion of spending over 10 years. If the most recent iteration of ObamaCare is similar, then new federal spending in that bill would be approximately $1.036 trillion — pushing the total over the president’s spending target.
Anyone care to take me up on that fancy-lunch wager?
Moreover, the on-budget costs of the legislation probably account for only 40 percent of the total costs. The other 60 percent come from the private-sector mandates. But Democrats have systematically suppressed any estimates of those hidden taxes, probably because such an estimate would reveal the full cost of the legislation to be closer to $2.5 trillion over the next 10 years.
It has been 272 days since Democrats introduced the first complete version of the president’s health plan. We still haven’t seen an honest cost estimate.
Higher Education Subsidies
A battle over higher education loans is coming to a head as Democrats consider including the ill-titled Student Aid and Fiscal Responsibility Act in reconciliation legislation. In one corner, we have private education loan lenders who enjoy the generous subsidies and loan guarantees provided by Uncle Sam. In the other, we have policymakers who want to cut out the middleman by having the Department of Education provide direct loans.
Critics of SAFRA correctly point out that the alleged savings of nationalizing student loan subsidies are a sham. The Congressional Budget Office has scored the nationalizing portion of the bill as saving $67 billion over ten years. However, in a letter to Sen. Judd Gregg (R-NH), the CBO acknowledged that when the cost of default risk is factored in, the alleged savings drop by $33 billion. Yet, taxpayers won’t realize any savings because the legislation adds $80 billion in additional spending for Pell grants and other programs.
For taxpayers, the unpalatable choice is nationalization or crony capitalism—subsidizing private businesses. The real answer is for the federal government to get out of the higher education subsidy business altogether, as a Cato essay argues.
The following are some key points from the essay:
- The effect of subsidy programs, in part, is to impose taxes on blue collar workers—who have not attended college—to pay for the tuition of future white-collar professionals. Why should the government subsidize future high earners at the expense of average working people?
- Federal student aid programs transfer wealth from taxpayers to academic institutions. That’s because the rise in student subsidies over the decades appears to have fueled inflation in education costs. Tuition and other college costs have soared as subsidies have risen. College cost inflation induced by federal aid probably hurts low-income families—the people that federal aid was supposed to target—more than others.
- Federal aid has probably helped increase student enrollment, but many of those additional students may not have been ready, or suited, for college. This is evidenced by the rising shares of college students who require remedial work, and the fact that institutions have lowered their standards to adapt to the rise in second-rate students.
- Increasing top-down control and subsidization of higher education from Washington is creating a threat to the strength of the American system. As we have seen in K-12 education, the growth in federal subsidies is usually accompanied by calls for more oversight, micromanagement, and rising levels of red tape imposed by Washington.
- Federal student loan and grant programs have been subject to waste and fraud for decades. The Pell grant program (which SAFRA would enlarge) costs taxpayers hundreds of millions of dollars per year in fraud. Another ongoing problem is the high default rate on student loan programs.
Reid Won’t Even Tell His Base What He’s Asking Them to Swallow
Here’s my answer to today’s “Big Question” on The Hill‘s Congress Blog:
Now that the “public option” is dead, both the Left and the Right should be able to agree: the Senate bill is nothing but a $450 billion bailout of the private insurance companies.
In fact, the bailout may be several multiples of that figure.
That $450 billion just represents checks that the Treasury would write to private insurance companies. The Reid bill would also force nearly every U.S. citizen to fork over cash to the private insurance companies — no matter how lousy a deal they offer. A recent CBO memo reveals that Reid has been meticulously working behind closed doors to conceal the full cost of his private-insurer bailout.
The Left and the Right should insist that Reid produce a complete CBO score that reveals the full cost of his bill’s private-insurer bailout — in particular, the cost of the individual and employer mandates.
Left-wing Democrats will follow their own consciences when deciding how to vote. But they should force Reid to be honest about what he’s asking them to swallow.
Recapping the Costs of the REAL ID Revival Bill
In late July, the Senate Homeland Security and Governmental Affairs Committee passed a new version of PASS ID, the REAL ID revival bill. I’ve posted about various dimensions of it: the national ID question, the politics of PASS ID, whether PASS ID protects privacy, a run-down of the Senate hearing on it, and the inexplicable support of the Center for Democracy and Technology for this national ID law.
Three months later, the committee still has not reported the bill, meaning that the public doesn’t get access to the version the committee passed. (A resolution in the House would require committees there to publish amendments to bills within 24 hours.) But the Congressional Budget Office scored the bill this week. That is often a signal that legislation is on the move.
So it’s a good time to look at costs again. The National Governors Association and the National Conference of State Legislatures both premised their support for PASS ID on the idea that it would reduce costs to states to just $2 billion.
But in July I examined the likely costs of PASS ID and NGA’s cost calculations. To save you a burdensome click, here are some highlights:
More Health Reform Budget Gimmickry
When the Senate Finance Committee released CBO scoring of its health care reform proposal last week, we warned that its claim of reducing future budget deficits was achieved only through dishonestly assuming that Congress will implement a 21% reduction in Medicare payments that is scheduled under current law. We pointed out that Congress has been supposed to make those reductions since 2003, and never has. Now—surprise, surprise—Democrats have introduced a bill to eliminate the scheduled cut, at a cost of $247 billion. But Democrats cleverly are putting the new spending in a separate bill, so it won’t change scoring of health care reform. Have they no shame?
What They Aren’t Telling You About the CBO Score
The CBO report that said the health care bill won’t raise deficits makes it clear that the Baucus bill’s reduction in future budget deficits comes not from controlling government spending or reducing health care costs, but because of a rapid escalation in tax revenues.
The bill imposes a 40 percent excise tax on health-insurance plans that offer benefits in excess of $8,000 for an individual plan and $21,000 for a family plan. Insurers would almost certainly pass this tax on to consumers via higher premiums. As inflation pushes insurance premiums higher in coming years, more and more middle-class families would find themselves caught up in the tax.
In fact, overall, the tax increases in the bill are more than double the amount of deficit reduction. This isn’t a health care efficiency bill or a cost containment bill. It is a tax and spend bill, pure and simple.
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