WSJ: Dems “Counted 10 Years Of Revenue But Only Six Years Of Spending To Make Obamacare Appear To Cut The Deficit”

WSJ Claims Dems “Counted 10 Years Of Revenue But Only Six Years Of Spending To Make Obamacare Appear To Cut The Deficit.” In a January 4 editorial, The Wall Street Journal stated:

Another new rule will make it harder to hide deficit spending by gaming the so-called budget window. The cost of spending bills are scored over periods of one, five and 10 years, and Democrats have routinely disguised the true cost of such bills by pushing the spending into the “out years” beyond a decade. Famously, they also counted 10 years of revenue but only six years of spending to make ObamaCare appear to cut the deficit.

The new House rules require budget projections for four additional 10-year windows. And if mandatory spending increases the deficit by more than $5 billion in any of those 10-year windows, the bill will be subject to a House point of order, forcing Members to vote in favor of increasing deficits. [The Wall Street Journal, 1/4/11]

FACT: CBO Found That Health Care Reform Would Reduce The Deficit Beyond 2019

Krugman: Claim That The Bill “Front-Loads Revenues And Backloads Spending” Is A “Lie.” In a March 27 New York Times blog post, Paul Krugman responded to former Congressional Budget Officer (CBO) director Douglas Holtz-Eakin's claim that health care reform legislation is filled with “gimmicks” designed to make the legislation appear to reduce the deficit. Krugman wrote:

OK, I finally got around to reading Douglas Holtz-Eakin's op-ed on health care reform. It's much worse than I thought; time to scratch Holtz-Eakin off my shrinking list of reasonable, reasonably honest conservatives.

How bad is it? Holtz-Eakin declares that

Gimmick No. 1 is the way the bill front-loads revenues and backloads 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.

I think that's what is technically known as a “lie”. Holtz-Eakin, of all people, knows how to read a CBO report. So he's perfectly capable of looking at the actual report (pdf) and seeing that the revenues, like the costs, are minimal for the first four years. Here's the chart:

[...]

His implication that there's funny business going on is totally false, and he knows it.

Wait, it gets worse: Holtz-Eakin implies that there are hidden, delayed costs:

Consider, too, the fate of the $70 billion in premiums expected to be raised in the first 10 years for the legislation's new long-term health care insurance program. This money is counted as deficit reduction, but the benefits it is intended to finance are assumed not to materialize in the first 10 years, so they appear nowhere in the cost of the legislation.

Claims that the plan is window-dressed to look good in its first decade only to go sour later might sound plausible -- except for the fact that the CBO projects bigger deficit-reduction in the second decade of the reform than in the first decade, something that wouldn't happen if lots of costs were being hidden by being pushed off into the future.

That said, we do learn something important from Holtz-Eakin's article. If this is the best critique a conservative budget wonk can come up with -- if deliberately misrepresenting how the legislation works is the only way to make it seem irresponsible -- then the bill must be pretty sound in fiscal terms. [The New York Times, 3/27/10]

CBO Director Tells Deficit Commission That Health Care Reform Slightly Improves Budget Outlook. As The Washington Post noted on July 1, CBO director Doug Elmendorf said during a June 30 presentation that the health care reform bill “did not substantially diminish” the long-term deficit problem, but that it “made a dent”:

“Growth in spending on health-care programs remains the central fiscal challenge,” CBO Director Douglas W. Elmendorf said in a presentation to Obama's bipartisan deficit commission. “In CBO's judgment, the health-care legislation enacted earlier this year made a dent in the problem, but did not substantially diminish that challenge.”

Although more starkly stated, CBO's position has not changed since the health-care legislation was approved. The new forecast simply incorporates CBO's cost estimates from that time, which predicted that the plan to expand coverage, raise taxes and cut Medicare spending would reduce deficits by about $140 billion over the next decade and by more than $1 trillion in the decade after.

“Slowing the rate of health care cost growth is the single most important action we can take to reduce our long-term fiscal shortfall,” White House budget director Peter Orszag said in a statement. “The report confirms that the enactment and successful implementation of the Affordable Care Act is a key step toward a healthier fiscal future.” [The Washington Post, 7/1/10]

CBO Budget Outlook Says Health Care Reform Law Will “Reduce Budget Deficits Over The 2010-2019 Period And In Subsequent Years.” CBO's June 30 long-term budget outlook states that the health care reform law “is expected to increase federal spending in the next 10 years and for most of the following decade. By 2030, however, that legislation will slightly reduce federal spending for health care if all of its provisions are fully implemented, CBO projects.” CBO noted in a footnote that although the law -- which will reduce the number of uninsured by 32 million by 2019 -- will increase federal spending on health care in the next two decades, it will still reduce budget deficits:

If all of its provisions are carried out, the legislation will also increase federal revenues and reduce budget deficits over the 2010-2019 period and in subsequent years, according to estimates by CBO and the staff of the Joint Committee on Taxation. [CBO, 6/30/10]

CBO: In Long-Term, Health Care Reform “Slow[s] The Accumulation Of Debt Considerably.” While cautioning that long-term estimates of health care spending are uncertain, the CBO budget outlook stated that if the health care reform bill is implemented as written, it “increase[s] projected revenues, particularly in the 2030s and beyond, thus slowing the accumulation of debt considerably.” [CBO, 6/30/10]