CBO

I hate to say we told you so. Really…we hate it. The first comprehensive report of the recently passed health care law was unveiled today. The study, done by the Center for Medicare and Medicaid Services (CMS), shows that many Republican criticisms of the health care law are likely to become reality.

We told you so. Representative Paul Ryan said

“Cost containment underpins the entire argument for reform. You’ve all been assuring us: ‘This plan will slow the growth of health care costs for our families, our businesses, and our government.’ Here again – the substance falls short of the rhetoric.”

The public agreed with Ryan. A Rasmussen poll taken directly before the health care reform vote found that 57% of voters believed that the costs of health care would go up while only 17% believe costs would go down if Democrats’ reform passed.

The CMS report showed these fears were not unfounded. The economic experts at the Health and Human Services Department found that the new reforms will do little to curb the runaway health care costs. In fact, they argue that it will bend the cost curve up, raising baseline spending by 1% over 10 years. The report states that,

“In aggregate, we estimate that for calendar years 2010 through 2019, [national health expenditures] would increase by $311 billion, or 0.9 percent, over the updates baselines projection that was released on June 29, 2009.”

CMS admits that even this figure may be more generous than the reality due to some unrealistic cuts being made to Medicare. Again, we told ya so. Senate Minority Leader Mitch McConnell repeatedly said that

“Medicare is already in trouble. The program needs to be fixed, not raided to create another new government program.”

According to the new report we were right. CMS says that cuts to Medicare could drive 15% of hospitals into the red and thus possibly lower the quality of care for Medicare beneficiaries.

“Over time, a sustained reduction in payment updates…would cause Medicare payment rates to grow more slowly than…the provides cost of furnishing services to beneficiaries. Thus, providers…could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries.”

Cutting access to Medicare would be political suicide. The government will be unwilling to accept this reality and will be forced to act to restore Medicare payment rates. But by doing so the Democrats’ claim that the reforms actually reduce the deficit would fall by the wayside.

The question everyone should be asking is why we are only hearing about this now. Before the bill was passed Democrats knew that the CMS was going to release a report analyzing the costs of the bill. At the time the CMS lamented that under the “very tight time frame” and due to the “complexity” of the reform legislation they would not be able to analyze the costs before the House voted on the legislation.

Instead, Democrats touted the score by the nonpartisan Congressional Budget Office as showing everything they needed to know before a vote was taken. Unfortunately for democracy, the CBO score was gamed. Unlike the CMS report the CBO is not a neutral calculator of costs. The CBO was forced to use unrealistic assumptions in determining the cost of the legislation, a constraint not shared by the CMS. It is little wonder then that today’s report provides a much less flattering picture; one that actually increases health care costs and decreases the quality of care.

We told you so. But we take no satisfaction in saying it. The sad reality is that this bill was sold to America based on faulty numbers. It was forced upon taxpayers without a full understanding of what it would truly cost. Democrats could have delayed the vote. With trillions of dollars in taxpayer money at stake they should have delayed the vote. Whether they didn’t do so because they wanted the debate to be over, or worse, because they expected the CMS report would show their savings claims were false, the victim is the American people. Regardless of whether Democrats’ motivations were naïve or insidious they must pay the price in November. We may be stuck with an overpriced health care reform package, but we aren’t stuck with Democratic majorities.

by Brandon Greife, Political Director of the College Republican National Commitee

Read more: www.collegerepublicans.org

Shhh. Be vewy, vewy quiet. I’m hunting refowm.

Perhaps you haven’t heard of the new student loan plan. It was a mere footnote tacked onto the health care bill in order to make the overall CBO score more palatable. Just because little was said does not mean little was done. In fact it represents a complete overhaul of the student loan industry – removing private and nonprofit lenders and replacing them with a sole originator and servicer – the federal government.

In theory student loan reform makes sense. The current system makes an adulterated mess out of free market principles. The problem began in 1993 when the federal government first got involved in offering student loans by creating the Direct Loan program to “compete” with private lenders. Unsurprisingly, when competing with someone who doesn’t face the same market pressures, private lender profit margins suffered and they raised their interest rates to compensate. The federal government, who deserves praise for their desire to keep loans affordable for students, stepped in and mandated a low interest rate.  The government, realizing that it may have just killed an industry, they began subsidizing private lenders so that they could maintain affordable loans without going under.

The Frankenstein-ish system doesn’t make much sense. Subsidizing businesses should not be the business of government. That said, is originating student loans really the business of government either? Senator Mitch McConnell recently lamented the government’s expansion into traditionally private sectors saying,

“we have the government running banks, insurance companies, car companies, health care and now the student loan business.”

Certainly there are some positives for young adults. The law allows for lower monthly caps on student loan payments – down to 10% of discretionary income. It also shortens the forgiveness period to 20 years after which the balance may be forgiven.

That said the bill is not all rainbows and butterflies. The initial CBO projection that the student loan reform bill would save $62 billion was recently downgraded after a more “comprehensive” assessment. The new CBO score explains that the original figure was determined using a procedure specified by the Federal Credit Reform Act of 1990. However, “estimates made under the FCRA do not provide a comprehensive measure of the cost to taxpayers of the federal student loan program” because it doesn’t include factor in “certain risks involved in lending” or “administrative expenses.” When scored under this “fair value basis” the CBOconcludes that:

“CBO recently estimated that whereas loans issued in the direct loan program between 2010 and 2020 would reduce the deficit by a total of $68 billion under FCRA accounting, those loans would increase the deficit by $52 billion on a fair value basis . . . The savings from implements the President’s proposals . . . decline from a total of $62 billion . . . to $40 billion.”

Moreover, the debate on savings has overshadowed the fact that the planned reforms still add to the deficit. As the CBO explains,

“Whereas on average over the 2010-2020 period a representative loan issues in the direct loan program has a negative subsidy rate of 9 percent under FCRA (meaning that it reduces the deficit), the same loan has a positive subsidy rate of 12 percent on a fair value basis.”

So while the reform may (if many of the CBOs assumptions prove true) reduce the deficit compared to the current broken system of a private-public hybrid, that is not the same thing as saying it will actually end up in the black. In other words, we’re just making something less awful…maybe. I say maybe because the government’s track record on staying on budget is shaky at best. Fannie Mae and Freddie Mac, as government-sponsored housing finance giants, may be the closest analogue to the government’s involvement in ensuring affordable student loans. Together these two firms have burned through $125 billion in taxpayer money and the CBO now predicts that the final price tag may exceed $380 billion.

Students will one day be taxpayers. As taxpayers they will be required to fund the liabilities of their government. So while a lower cap on payments sounds great in the short term we may be asked to make up for that plus interest in taxes to pay down our national debt. Perhaps this is why a new Rasmussen poll shows that only 35% like the new student loan plan while 49% think it is a bad idea.

True reform would have removed the government from the process, not gotten them more deeply involved. As with health care reform, we should have worked to make the student loan market more like a free market in that it is price sensitive. When government first got involved, by creating the Direct Loan program, it distorted the market, eliminated competition, and hid the price of an education from consumers. The new reforms will only worsen these problems with the likely effect being that colleges will capitalize through higher tuition and costs. After all, if the student, having been removed from the responsibility of costs, is not concerned with tuition price in their college decisions, there is very little incentive for colleges to compete for lower tuition.

The government snuck one by the American public. While health care reform was on the main stage nobody bothered to see what else was behind the curtain. The few words that were spoken made it seem impossible to like – after all who doesn’t want to save hard-working, Ramen-eating, college students some money. But this covers up the scary reality…we’ll be paying for this one way or another.

by Brandon Greife, Political Director of the College Republican National Committee

by Brandon Greife

Some things don’t deserve a response. They are just so wrongheaded that it doesn’t make sense to legitimize them with an answer. A recent article by Steve Benen called “Rewarding Idiocy” is one of those things. It doesn’t deserve a response, but it’s going to get one from me, if for no other reason than it really frustrated me. Actually I’ll drop the decorum and political correctness, it didn’t frustrate me…it pissed me off.

Benen begins by saying,

By most measures, Republicans have spent the last year acting like children — reckless, disturbed children who fiddle with matches and take pleasure in playing in traffic.

For nearly 13 months, GOP officials on the Hill have engaged in unprecedented abuse of the political process, blocking good legislation, offering insane ideas in response to major national challenges, rejecting their own ideas when embraced by Democrats, and generally being an embarrassment to themselves and the country.

Believe it or not, this is the part I can accept. A liberal pundit insulting Republicans is neither new nor unprecedented. I will quibble with a few things that he said. First, the “unprecedented abuse” that Mr. Benen speaks of isn’t really all that unprecedented. If we rewind 6 years, when Democrats were the minority, they were lauding the praises of the filibuster. In fact, Democrats who are now threatening to unilaterally end the long standing practice took up arms when Republicans threatened to do the same. As Harry Reid so eloquently put it,

“If they, for whatever reason, decide to [eliminate the filibuster], it’s not only wrong, they will rue the day they did it, because we will do whatever we can do to strike back. . .I will, for lack of a better word, screw things up.”

My how times have changed.

Second, Republicans have not blocked anything close to what could be deemed “good legislation.”  The Democratic health care reform bill was a catastrophe. It simultaneously forced health insurance coverage on everyone while doing nothing to rein in costs. Making low income people, including young adults, sign up for coverage which they will be unable to afford is what I like to call “bad legislation”

Third, I’m not sure how he can characterize any of the Republican solutions presented thus far as “insane.” The health care alternative presented by Republicans, when scored by the CBO, was found to reduce premiums through increased private sector competition while also reducing the national debt. Moreover, the GOP budget proposal was found to “lower budget deficits,” “result in much less federal debt” and create “a much more favorable macroeconomic outlook.” I know the idea of efficiency and lower spending is ”insane” to many liberals, fortunately Americans disagree. As a recent Rasmussen polls shows, voters now trust Republicans more than Democrats on nine out of ten key issues, and have a double digit lead on health care.

Now for the part that infuriates me. Not content to continue with the usual diatribe against Republicans, Mr. Benen turns his wrath on the public. Sarcastically he says,

“Naturally, then Republicans are making major gains in the polls.”

That little line was enough to set me off. It insinuates that Americans are too stupid to realize how awesome the Democrats are. It is a situation best described by Gerard Alexander, who recently wrote in the Washington Post

“American liberals, to a degree far surpassing conservatives, appear committed to the proposition that their views are correct, self-evident, and based on fact and reason, while conservative positions are not just wrong but illegitimate, ideological and unworthy of serious consideration.”

However, I’ll take Alexander’s insight one logical step further. Many Liberals (because I refuse to fall into the same trap of overgeneralization) don’t merely view conservative positions as stupid – they view the holders of those opinions as stupid. There is no other conclusion from how dumbfounded and ultimately dismissive many Democrats are that the people are not flocking to their ideas and the polls are not going in their favor. They attempt to cast us as a movement of uneducated, gun-toting, redneck, birthers. Influential liberal blogger Markos Moulitsas of DailyKos, went as far as to say:

“Can we cram them all into the Texas Panhandle, create the state of Dumbfuckistan, and build a wall around them to keep them from coming into America illegally.”

We’re going to need a bigger place than the panhandle because he, like others who attempt to equate the conservative movement with morons, ignores the fact that the majority of people, smart and stupid alike, are unhappy with the direction that President Obama and the Democratic leadership are taking us.

Call Congressional Republicans dumb all you want. It’s probably not good politics in a nation that is tired of partisanship, but it’s your right. But lay off Americans. Perhaps if you took some time to reflect, you’d find it is not a majority of citizens who are stupid, it’s the majority of your ideas.

We now have a pattern on our hands. When the math behind Barack Obama's health care plans doesn't work, Obama attacks math. Now, he doesn't do it directly. He gets Peter Orzsag to debase his intellect for Obama's political ends. First, he did it with the IMF score. Then this week he pressured the CBO scorers early this week after their math provided defeat after defeat to his healthcare dreams. And then this weekend, Orzsag has attacked Doug Elmendorf, the CBO director.

Case 1: The IMF. At a G-20 meeting earlier this year, Barack Obama came away empty-handed. The only success was to send money to the IMF. $100b. This wasn't going to pass on its own, so they attached it to the Supplemental that paid for our troops. And claimed that $100b leaving the treasury costs nothing. According to the Politico, Orzsag had a totally unprecedented meeting with the OMB scorers putting political pressure on them to cook the books. Only a little comment at the time. Oh ... and no one bought Orzsag's nonsense, and the amount became a focus of attention as a bailout of European banks.

Case 2: CBO Whitehouse meeting. Earlier this week, the President meant with the Director of the CBO. According to Jake Tapper, there was a lot of pushback against the unprecedented nature of the meeting:

Said Senate Minority Leader Mitch McConnell, R-Kentucky: "I noticed that the CBO director was sort of called down to the White House yesterday. It strikes me as somewhat akin as the owner of the team asking the umpires to come up to the owner's box."

McConnell said that "if the CBO is to have credibility, they're the umpire. They're not players in this game."

CBO is tasked with providing “objective, nonpartisan, and timely analyses to aid in economic and budgetary decisions on the wide array of programs covered by the federal budget.”

Case 3: Keith Hennessey puts it nicely, "CBO Kills the President's Medicare Comission Proposal". You see, the CBO found that Obama's great plan to limit costs was to create a commission only saved $2b. One half of one percent of the total cost. So what happens? Orzsag goes after Elmendorff in all but name:

A final note is worth underscoring. As a former CBO director, I can attest that CBO is sometimes accused of a bias toward exaggerating costs and underestimating savings. Unfortunately, parts of today’s analysis from CBO could feed that perception. For example, and without specifying precisely how the various modifications would work, CBO somehow concluded that the council could "eventually achieve annual savings equal to several percent of Medicare spending...[which] would amount to tens of billions of dollars per year after 2019." Such savings are welcome (and rare!), but it is also the case that (for good reason) CBO has restricted itself to qualitative, not quantitative, analyses of long-term effects from legislative proposals.  In providing a quantitative estimate of long-term effects without any analytical basis for doing so, CBO seems to have overstepped.

What is going on is crystal clear. The CBO is not caving to extended political pressure. After weeks of Pelosi "scolding" and Baucus aides "expressing frustration" it has come to open attacks on the CBO, its director, and the institution's integrity.

Well. I have to say, finally Barack Obama is bringing change I can believe in. Chicago-style change.

The latest Congressional Budget Office (CBO) report recently reported their findings on the cost of the Senator Ted Kennedy’s health care bill that would cover 16 million of the 46-47 million uninsured.  Before going into the nitty-gritty of the report, the uninsured count includes illegal immigrants, those who are eligible for federal programs but have not signed up, and those who have the ability to pay for insurance but choose not to do so.

Back to the costs: The CBO has estimated that $1.3 trillion would be required over 10 years to cover just 16 million of the uninsured. This does not include the public option, the deal that President Barack Obama wants. The reality is that the public option would ultimately lead to a government-run, single-payer health care plan for America.

Based on these numbers, the cost to cover one of the uninsured is $8,125 per person per year. If the estimated population of the United States was put at 307 million, the end cost per year of ObamaCare would be just over $2.49 trillion per year.

Considering that there are over $77 trillion coming in liabilities in Medicare, Medicaid, Social Security, interest on the debt, and the debt itself, adding this will ultimately break the bank and kill any hope of economic freedom for Americans who will be enslaved by the government to cover the debt either by confiscation taxes on all Americans or by massive hyperinflation.

Congratulations, America. You’ve been had (for electing these weasels in Washington) and now you, your children, and your children's children are going to pay the consequences.

A week ago the AP reported on a leaked analysis by the Congressional Budget Office saying that it would take YEARS for the money from the stimulus plan to reach the economy. The media pounced on it and in the last week this analysis was cited 81 times in the MSM, usually calling it a "CBO Report".

Problem is, no such report ever existed. You can see the entire non-report here.

It is based on a very early version of the plan, and only a portion of it at that - $300 million of the $825 million (that which is headed for the Appropriations Committee,  not that for  the Ways and Means or Energy and Commerce Committees). And, it is based on the standard model is spending, it makes no allowance for the ability to accelerate in response to the current crisis.

So much for that famous MSM liberal bias.

The actual CBO Report is now available.

Assuming enactment in mid-February, CBO estimates that the bill would increase outlays by $92 billion during the remaining several months of fiscal year 2009, by $225 billion in fiscal year 2010 (which begins on October 1), by $159 billion in 2011, and by a total of $604 billion over the 2009-2019 period.

In other words, two-thirds in the first 18 months.

And lest you think I made the first part of this post up, I quote the report:

This is the first cost estimate that CBO has prepared for H.R. 1 in its entirety. A previous preliminary estimate that has been widely cited addressed only the budgetary impacts of an earlier version of the provisions contained in Division A, at the request of the House Committee on Appropriations.

I wish I could remember where I first heard this mentioned (so I could give credit where credit is due), but there is another thing to remember about letting the Dems run a $1T+ deficit and it has nothing to do with "economic stimulus":