Fox News promotes GOP comparison of Senate health plan to a "Ponzi scheme"
Research ››› ››› DIANNA PARKER
The Fox Nation and FoxNews.com advanced the suggestion that Democrats' health care plans are, in Fox Nation's words, a "Ponzi scheme," a charge presumably based on Sen. Jon Kyl's (R-AZ) claim that "[w]hen they claim a savings ... in the first 10 years, that's because they start collecting taxes in 2010 they don't start spending money till 2014." In fact, contrary to Kyl's suggestion that savings would not extend past the first 10 years, the Congressional Budget Office (CBO) projected that the Senate health care bill would continue to reduce the deficit beyond the first 10 years by as much as $650 billion in the decade beginning after 2019.
FoxNews.com, Fox Nation echo Kyl's assertion that health care reform is a Ponzi scheme
FoxNews.com quoted Kyl calling the bill a Ponzi scheme that "Bernie Madoff would really envy" and advanced his false suggestion that savings would not extend past first 10 years. A November 22 FoxNews.com article about senators' views on the health care bill said: "Calling the Senate health care bill a package that Ponzi schemer 'Bernie Madoff would really envy,' Republican Sen. Jon Kyl said Sunday that the legislation to be debated in December is long on promises but short on accounting." It then quoted Kyl as saying, "When they claim a savings ... in the first 10 years, that's because they start collecting taxes in 2010 they don't start spending money till 2014."
Fox Nation: "Is Obamacare A Ponzi Scheme?" Fox Nation linked to the FoxNews.com article with the headline, "Is Obamacare A Ponzi Scheme?" under a side-by-side picture of President Obama and Madoff. From the Fox Nation:
But CBO projected that deficit reductions would continue after the first 10 years
CBO: Bill yields "a net reduction in federal deficits of $130 billion" over 10 years. From CBO's November 18 cost estimate:
CBO and JCT estimate that, on balance, the direct spending and revenue effects of enacting the Patient Protection and Affordable Care Act would yield a net reduction in federal deficits of $130 billion over the 2010-2019 period (see Table 1). Approximately $77 billion of that reduction would be on-budget (other effects related to Social Security revenues and spending as well as spending by the U.S. Postal Service are classified as off-budget). CBO has not completed an estimate of all of the legislation's potential impact on spending that would be subject to future appropriation action.
CBO expects bill to reduce deficit by as much as $650 billion during decade after 2019. Contrary to Kyl's suggestion, CBO estimated that the bill will continue to reduce the deficit beyond the 10-year budget window that ends in 2019 by "around one-quarter percent of GDP." As FoxNews.com itself reported in a different article, this reduction amounts to "as much as $650 billion." CBO also noted that it "has not extrapolated estimates further into the future, because the uncertainties surrounding them are magnified even more," but it said that "the legislation would probably continue to reduce budget deficits." From CBO's cost estimate:
In the decade after 2019, the gross cost of the coverage expansion would probably exceed 1 percent of gross domestic product (GDP), but the added revenues and cost savings would probably be greater. Consequently, CBO expects that the bill, if enacted, would reduce federal budget deficits over the ensuing decade relative to those projected under current law -- with a total effect during that decade that is in a broad range around one-quarter percent of GDP.
CBO has not extrapolated estimates further into the future, because the uncertainties surrounding them are magnified even more. However, in view of the projected net savings during the decade following the 10-year budget window, CBO anticipates that the legislation would probably continue to reduce budget deficits relative to those under current law in subsequent decades, assuming that all of its provisions would continue to be fully implemented. Pursuant to section 311 of S. Con. Res. 70, CBO estimates that enacting the legislation would not cause a net increase in deficits in excess of $5 billion in any of the four 10-year periods beginning after 2019.
CBO: After 2019, "no significant change" in "federal budgetary commitment to health care." CBO estimated that the net increase in federal health care spending from 2010-19 is $160 billion. However, CBO estimated that "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, so that there would be no significant change in that commitment." Washington Post blogger Ezra Klein noted that according to CBO, in the decade after 2019 the bill "leaves the government spending no more on health care than it otherwise planned to. That's impressive stuff given that some 94 percent of the country has health insurance [under the Senate bill]." From Klein:
One actual surprise is that the Senate bill doesn't just pay for itself. It balances itself out. That is to say, the bill is not deficit neutral because it costs a billion dollars and then the government raises a billion more dollars in taxes. In that scenario, the government is spending more, but paying for it. Rather, "CBO expects that, 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, so that there would be no significant change in that commitment."
In the first 10 years, in other words, the bill improves the deficit a bit, but the government is spending $160 billion more on health care than it otherwise would have. In the second decade, however, that ends: The savings from Medicare and Medicaid, paired with the excise tax (which CBO says "is effectively a reduction in the existing tax expenditure for health insurance premiums") and a handful of other changes, leaves the government spending no more on health care than it otherwise planned to. That's impressive stuff given that some 94 percent of the country has health insurance. And it implies, of course, that in the third decade, the federal commitment actually goes down relative to expectations. The curve, as they say, is bent.