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.

Yet. Another. Fraudulent. Cost Estimate. is a post from Cato @ Liberty - Cato Institute Blog

Democrats are having difficulty corralling 218 votes for the Pelosi bill because Americans do not want government to be as big and as powerful as the House leadership does. Pro-life Democrats do not want a government so big that it can force taxpayers to fund abortions. Pro-choice Democrats do not want a government so big that it uses subsidies to restrict access to abortion coverage. Other Democrats don’t want a government so big that it turns the United States into a welfare magnet.

The American people don’t want the Democrats’ approach to health care generally. The more time the public has to digest ObamaCare, the more they dislike it:

And the Pelosi bill is the most expensive and extreme version of ObamaCare.  Opposition will climb higher when the public learns the bill costs some $1.5 trillion more than Democrats claim.

Even a majority vote would not necessarily indicate majority support for the Pelosi bill. Rep. Jim Cooper (TN) and other Democrats are voting aye only because they want to keep the process moving – i.e., because this isn’t the vote that counts.

Win or lose, tonight’s vote will be the high water mark for the Pelosi bill.

(Cross-posted at Politico‘s Health Care Arena.)

The Pelosi Bill’s High Water Mark is a post from Cato @ Liberty - Cato Institute Blog

A $600,000 federal grant is chump change compared to overall government spending, and I recognize that picking on individual awards generally isn’t worth the effort because there are bigger fish to fry.  But every once in a while I think it’s alright to highlight a particularly ridiculous grant award for the purpose of illustrating that the federal government’s ability to spend money on virtually anything it wants has broader negative implications.  So when I read this morning that the Institute of Museum and Library Services (an independent federal agency) gave UC Santa Cruz’s library $615,175 to archive Grateful Dead memorabilia online, I just couldn’t help myself.

The title of my post refers to a lyric from the Dead song “Uncle John’s Band.”  According to the lyrics, Uncle John’s Band’s motto is “don’t tread on me.”  “Don’t tread on me” was a motto of the American patriots during the Revolutionary War and was prominently featured below a coiled rattlesnake on the famous Gadsden flag.

The Gadsden flag, which I proudly own and used to hang in my Senate office, has regained popularity and can now be seen at TEA Party protests around the country.  While some would like to dismiss the TEA partiers as racists, the resurgence of the Gadsden flag indicates to me that a healthy number of folks simply recognize the American tradition of being leery of an all-powerful centralized authority.  It’s safe to say that those patriots of yesterday could have never imagined that the small, limited federal government they created would turn into the overbearing $3.7 trillion Leviathan it is today.  What a long, strange trip it’s been indeed.

Come Hear Uncle Sam’s Band, Playing to the Rising Tide of Debt is a post from Cato @ Liberty - Cato Institute Blog

A front-page Washington Post story today notes that the cost of Obama-style health care reform will fall disproportionately on young adults.

Younger workers are typically more healthy than the population at large, and a significant share of them quite rationally choose not to buy health insurance, as my colleague Mike Tanner explains in a recent op-ed. The major health care plans on the table in Washington would force them to buy coverage. As the Post story explains:

Drafting young adults into any health-care reform package is crucial to paying for it. As low-cost additions to insurance pools, young adults would help dilute the expense of covering older, sicker people. Depending on how Congress requires insurers to price their policies, this group could even wind up paying disproportionately hefty premiums—effectively subsidizing coverage for their parents.

I’m beginning to see a pattern. Those same young workers will be forced to pay the bills for soaring Social Security and Medicare expenditures when the Baby Boomers begin retiring en masse a decade from now. And of course, they will be the ones paying off the $9 trillion in additional federal debt expected to be wracked up from the current explosion in federal spending.

I always thought parents were supposed to support their kids, not saddle them with bigger bills and huge debts.

20-somethings Will Pay for Big Government is a post from Cato @ Liberty - Cato Institute Blog

Getting into Iraq was easy.  Fighting the war was expensive in lives and money.  Getting out will cost more cash.

In fact, the Pentagon figures that taxpayers will have to spend tens of billions of dollars to bring home or transfer the equipment strewn about Iraq.  According to Jason Ditz:

A lot of the cost is going to depend on what the military decides to do with the various items it required to occupy the nation and then fight an insurgency for several years with well over 100,000 US troops. Some of the gear will be shipped back to the US, others will be sent to Afghanistan for the ongoing war there. Still others will just be given to the Iraqi government so they don’t have to deal with the other two options.

The US has spent over two thirds of a trillion dollars on the war in Iraq so far (and this is only figuring the direct costs), but while President Obama has already started projecting dramatically lower costs in the near future as the war “winds down” (which so far hasn’t translated to actually removing serious numbers of troops from the nation), the costs just of hauling “mountains of equipment” out of Iraq show that nothing the military does is done on the cheap, not even ending a war.

So much for the occupation that was supposed to pay for itself!

The Cost of Getting Out of Iraq is a post from Cato @ Liberty - Cato Institute Blog

ABC News reports:

“The total potential federal government support could reach up to $23.7 trillion,” says Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, in a new report obtained Monday by ABC News on the government’s efforts to fix the financial system.

Yes, $23.7 trillion.

“The potential financial commitment the American taxpayers could be responsible for is of a size and scope that isn’t even imaginable,” said Rep. Darrell Issa, R-Calif., ranking member on the House Oversight and Government Reform Committee. “If you spent a million dollars a day going back to the birth of Christ, that wouldn’t even come close to just $1 trillion — $23.7 trillion is a staggering figure.”

Granted, Barofsky is not saying that the government will definitely spend that much money. He is saying that potentially, it could.

At present, the government has about 50 different programs to fight the current recession, including programs to bail out ailing banks and automakers, boost lending and beat back the housing crisis.

We used to complain that George W. Bush had increased spending by ONE TRILLION DOLLARS in seven years. Who could have even imagined new government commitments of $24 trillion in mere months? These promises could make the implosion of Fannie Mae and Freddie Mac look like a lemonade stand closing.

Bailouts Could Hit $24 Trillion? is a post from Cato @ Liberty - Cato Institute Blog

The U.S. is not yet out of Iraq, but American forces have pulled back from Iraqi cities.  Iraq’s future increasingly is in the hands of Iraqis.  And most Iraqis appear to be celebrating.

Reports the Washington Post:

This is no longer America’s war.

Iraqis danced in the streets and set off fireworks Monday in impromptu celebrations of a pivotal moment in their nation’s troubled history: Six years and three months after the March 2003 invasion, the United States on Tuesday is withdrawing its remaining combat troops from Iraq’s cities and turning over security to Iraqi police and soldiers.

While more than 130,000 U.S. troops remain in the country, patrols by heavily armed soldiers in hulking vehicles as of Wednesday will largely disappear from Baghdad, Mosul and Iraq’s other urban centers.

“The Army of the U.S. is out of my country,” said Ibrahim Algurabi, 34, a dual U.S.-Iraqi citizen now living in Arizona who attended a concert of celebration in Baghdad’s Zawra Park. “People are ready for this change. There are a lot of opportunities to rebuild our country, to forget the past and think about the future.”

On Monday, as the withdrawal deadline loomed, four U.S. troops were killed in the Iraqi capital, the military announced Tuesday. No details about the deaths were provided. Another soldier was killed Sunday in a separate attack.

The Bush administration never should have invaded Iraq.  The costs have been high: more than 4,000 dead American military personnel.  Tens of thousands more have been injured, many maimed for life.  Hundreds more military contractors and coalition soldiers have died.  And tens of thousands of Iraqis — certainly more than 100,000, though estimates above that diverge wildly. 

The U.S. has squandered hundreds of billions of dollars and the ultimate cost is likely to run $2 trillion or more, as the government cares for seriously injured veterans for the rest of their lives.  America’s fine fighting men and women have been stretched thin and America’s adversaries, most notably Iran, have been strengthened.  Yet another cause has been added to the recruiting pitch of hateful extremists seeking to do Americans and others harm.

Nevertheless, let us hope that Iraqis take advantage of the opportunity they now enjoy.  It will take enormous statesmanship and restraint to accommodate those of different faiths and ethnicities, forgive past crimes committed by Sunni and Shia forces, eschew violence for retaliation and revenge, resolve even bitter disagreements peacefully, and accept political defeat without resort to arms.

Other peoples who have suffered less have failed to surmount similar difficulties.  But it is no one’s interest, and especially that of the Iraqis, to lapse back into sectarian conflict and political tyranny.  Let us hope — and dare I suggest, pray? — that they prove up to the challenge.

Iraq’s Future Is Up to Iraqis is a post from Cato @ Liberty - Cato Institute Blog

Senate Finance Committee chairman Max Baucus (D-MT) has announced that he has reached agreement on scoring a series of options that will reduce the cost of his health care reform bill to just $1 trillion over the next 10 years. Whew. Now we can all rest easy.

Still, no agreement on the tax increases needed to pay that $1 trillion though.

Remember When $1 Trillion Was Real Money? is a post from Cato @ Liberty - Cato Institute Blog

Shocking, I know.  But while the public likes President Barack Obama personally, they are just a bit more skeptical when it comes to his policies.  Such as deficit reduction. 

Reports the New York Times:

A substantial majority of Americans say President Obama has not developed a strategy to deal with the budget deficit, according to the latest New York Times/CBS News poll, which also found that support for his plans to overhaul health care, rescue the auto industry and close the prison at Guantánamo Bay, Cuba, falls well below his job approval ratings.

This shows that the public is paying attention to what is going on in Washington.  In fact, the president’s policy is debt inflation rather than reduction.  You know — $13 trillion in bail-outs (so far; who knows what new financial disasters await!), nearly $1 trillion in “stimulus” spending, proposed budget deficits of nearly $10 trillion over the next decade, health care “reform” which will run trillions (the only argument is how many) over the same period, and more, much more.

Yes, I’d say that the president has no strategy to deal with the budget deficit, other than to increase it at every opportunity.

Hold the Presses! Public Doesn’t Believe Obama on Deficits! is a post from Cato @ Liberty - Cato Institute Blog

If you’re Barack Obama, money is no object. The national debt exceeds $11 trillion. We’ve had about $13 trillion worth of bail-outs over the last year. The deficit this year will run nearly $2 trillion. The Congressional Budget Office warns of a cumulative deficit of some $10 trillion over the next decade.

Now Obama-style health care “reform” will add another $1 trillion in increased spending over the same period. And the ultimate cost likely would be higher, perhaps much higher. Reports the Congressional Budget Office:

According to our preliminary assessment, enacting the proposal would result in a net increase in federal budget deficits of about $1.0 trillion over the 2010-2019 period. When fully implemented, about 39 million individuals would obtain coverage through the new insurance exchanges. At the same time, the number of people who had coverage through an employer would decline by about 15 million (or roughly 10 percent), and coverage from other sources would fall by about 8 million, so the net decrease in the number of people uninsured would be about 16 million or 17 million.

These new figures do not represent a formal or complete cost estimate for the draft legislation, for several reasons. The estimates provided do not address the entire bill—only the major provisions related to health insurance coverage. Some details have not been estimated yet, and the draft legislation has not been fully reviewed. Also, because expanded eligibility for the Medicaid program may be added at a later date, those figures are not likely to represent the impact that more comprehensive proposals—which might include a significant expansion of Medicaid or other options for subsidizing coverage for those with income below 150 percent of the federal poverty level—would have both on the federal budget and on the extent of insurance coverage.

Then there is the more than $100 trillion in unfunded Medicare and Social Security benefits.

Just who is going to pay all these bills?

Don’t worry, be happy.

What’s a Trillion Dollars Among Friends? is a post from Cato @ Liberty - Cato Institute Blog

President Barack Obama has declared that his goal in health care reform is “expanding coverage to all Americans.”  So what’s the price tag on universal coverage?

Some reformers are throwing around numbers like $1 trillion or $1.5 trillion.  But according to the Urban Institute, the cost would be closer to $2 trillion.

Jack Hadley and his colleagues estimate, “If all uninsured people were fully covered [in 2008], their medical spending would increase by $122.6 billion.”  If we assume that the cost of covering the uninsured will grow at the same rate the federal government assumes for all health spending growth (6.2 percent), then from 2010 through 2019, the cost of covering the uninsured would be $1.8 trillion.

That’s at a minimum.  According to Hadley et al., their estimate “is neither the cost of a specific plan nor necessarily the same as the government’s costs, which could be higher, depending on plans’ financing structures and the extent of crowd-out.”  Crowd-out is like collateral damange.  When you’re dropping money from the sky, some will inevitably strike innocent bystanders (i.e., the insured).  To ensure you hit the uninsured with $122.6 billion, you need to drop a lot more than that amount.

Thus the full cost of covering the uninsured would be closer to — and possibly well over — $2 trillion.

How Much Will Universal Coverage Cost? is a post from Cato @ Liberty - Cato Institute Blog

The administration’s presumption that America can borrow its way to prosperity has taken a couple of big hits over the last couple days.

First, just as the Third World debt crisis destroyed the belief among international bankers that countries don’t go bankrupt, so is the West’s borrowing binge ending the belief among international investors that the U.S. and other Western nations are safe economic bets.

Reports the Wall Street Journal:

Britain was warned by Standard & Poor’s Ratings Service that it may lose its coveted triple-A credit rating, triggering a drop in U.K. bonds and sparking global fears about the consequences of massive debts being incurred by the U.S. and other major nations as they try to dig out from the economic crisis.

…

The announcement quickly sent waves across the Atlantic. Investors initially dumped U.K. bonds and the pound, heading for the relative safety of U.S. Treasurys. But within hours, worries about an onslaught of new U.S. bond sales and the security of America’s own triple-A rating drove down the prices of U.S. Treasurys.

The yield of the benchmark U.S. 10-year bond, which moves in the opposite direction to the price, rose by 0.15 percentage point from Wednesday to 3.355%, its highest level in six months.

The relative gloom about the U.K. and the U.S. was apparent Thursday in the market for credit-default swaps, where investors can buy and sell insurance against sovereign defaults. Five years of insurance on $10 million in U.K. debt jumped to around $81,000 a year, from $72,000 earlier in the day. U.S. debt insurance cost the equivalent of $37,500 — in the same range as France at $38,000, and Germany at $35,000.

A shot across the bow of the American ship of state, some analysts have called it.

But shots also were being fired from another direction:  East Asia.  The Chinese are starting to have doubts about Uncle Sam’s creditworthiness.  Reports the New York Times:

Leaders in both Washington and Beijing have been fretting openly about the mutual dependence — some would say codependence — created by China’s vast holdings of United States bonds. But beyond the talk, the relationship is already changing with surprising speed.

China is growing more picky about which American debt it is willing to finance, and is changing laws to make it easier for Chinese companies to invest abroad the billions of dollars they take in each year by exporting to America. For its part, the United States is becoming relatively less dependent on Chinese financing.

…

Financial statistics released by both countries in recent days show that China paradoxically stepped up its lending to the American government over the winter even as it virtually stopped putting fresh money into dollars.

This combination is possible because China has been exchanging one dollar-denominated asset for another — selling the debt of government-sponsored enterprises like Fannie Mae and Freddie Mac in a hurry to buy Treasuries. While this has been clear for months, new data shows that China is also trading long-term Treasuries for short-term notes, highlighting Beijing’s concerns that inflation will erode the dollar’s value in the long run as America amasses record debt.

The national debt is over $11 trillion.  This year’s deficit will run nearly $2 trillion.  Next year the deficit is projected to be $1.2 trillion, but it undoubtedly will run more.  The administration projects an extra $10 trillion in red ink over the coming decade.

Fannie Mae and Freddie Mac need more money.  The Pension Benefit Guaranty Corporation is in trouble.  The FDIC will need more cash to clean up failed banks.  The effectively nationalized auto companies will soak up more funds.  Then there’s the more than $70 trillion in unfunded Social Security and Medicare liabilities.

But don’t worry, be happy!

Who’s Going to Buy Your Debt, Mr. President? is a post from Cato @ Liberty - Cato Institute Blog

With the economy in a deep recession and policymakers turning to massive government intervention in an attempt to create jobs and bolster the financial system—it feels like the 1930s all over again.  Today’s new New Deal is rapidly unfolding, with the Obama administration and many lawmakers making it clear that any question of the success of FDR’s New Deal policies was resolved long ago: government intervention worked, and history bears repeating.  

However, there are deep disagreements about the New Deal, and whether Roosevelt’s policies deepened the depression and delayed recovery. 

Join us at the Cato Institute on June 1 to be a part of a highly informative half-day conference. Recognized national experts will discuss the economic and legal impact of the New Deal, and how its legacy is being used and misused to shape policy responses to current economic hardships.

Brother, Can You Spare A Trillion? is a post from Cato @ Liberty - Cato Institute Blog