congressional budget office

Obama Administration Understated Deficits by $2.3 Trillion; Resists Spending Cuts Needed to Stem Deficits

by Hans Bader on March 25, 2011

in Economy, Employment, Energy, Environment, Stimulus to Nowhere

The Congressional Budget Office reported last week that the Obama administration understated budget deficits “by more than $2.3 trillion over the upcoming decade,” and that “if Obama’s February budget submission is enacted into law it would produce deficits totaling $9.5 trillion over 10 years — an average of almost $1 trillion a year.” President Obama objects to even a tiny two percent cut in the federal budget, submitting a self-indulgent, smoke-and-mirrors budget that would actually increase spending even faster than previously proposed for 2012.

Obama’s record deficit spending is based on the notion — contrary to all evidence — that if the government increases spending, that spending will more than pay for itself through increased economic growth. (Never mind that Canada’s economy boomed after it slashed government spending in the 1990’s, and America experienced an “economic boom” after our government slashed spending in 1946.)

For example, even though “federal education spending has gone through the roof” in recent years, Obama has called for big increases in education spending, saying that “the best economic policy is one that produces more college graduates.” But dumping more money on colleges won’t spur economic growth.

Jacking up college attendance rates further just results in the presence of bored, unmotivated students who are not interested in learning, and only go to college to get a diploma, while spawning an economically-destructive “arms race” over who can acquire the most unnecessary credentials. Already, “36%” of “the nation’s undergraduates” learn “little” or nothing after four years of college, according to a study cited by USA Today. Many of their professors didn’t even try to teach them much: “32% never took a course in a typical semester where they read more than 40 pages per week.”

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Unemployment Benefits Keep People from Working

by Hans Bader on December 14, 2010 · 1 comment

in Economy, Employment, Stimulus to Nowhere

Wintery Knight has an interesting discussion of how unemployment benefits keep people from working, drawing on coverage from The New York Times and academic studies. As he notes, this undermines the methodology used by the Congressional Budget Office (CBO) in concluding that the stimulus package would increase the size of the economy in the short run. (Even the CBO admitted that the stimulus would shrink the economy in the long run.)

We recently discussed other ways that the stimulus package discourages work and cuts the size of the economy. The recent deal between Obama and Congressional leaders will extend these harmful provisions, as well as the unemployment benefits that discourage work. (The job-destroying $800 billion stimulus package also gutted welfare reform.)

Earlier, we discussed how the stimulus wiped out American jobs, and Harvard economist Jeffrey Miron’s conclusion that the stimulus was not only a failure at creating jobs, but also was intended to push left-wing ideological goals, rather than to revive the economy.

Obamacare to Wipe Out 800,000 Jobs Through Work Disincentives

by Hans Bader on October 29, 2010

in Deregulate to Stimulate, Economy, Employment, Healthcare, Regulation

Obamacare is going to wipe out 800,000 jobs through its disincentives to work.  That contrasts sharply with false claims by House Speaker Nancy Pelosi (D-Calif.) that the new health care law would create jobs,  ”400,000 of them almost immediately.” That 800,000 lost jobs “is 50% more than all the people who work for GM, Ford, and Chrysler combined,” yet the Congressional Budget Office regards it as a “small amount” compared to the overall labor force.  To some people, the glass is always half full.

As we discussed earlier, it was the Congressional Budget Office’s own report that showed that Obamacare discourages work and thus shrinks the economy.  Obamacare was so poorly drafted that some people are massively punished for working and earning more.  One hypothetical 62-year old lost $7,836 in tax credits for a $22 increase in income, resulting in a 35,618 percent marginal tax rate on that additional income.  Who would work longer hours, or seek to earn more, if they end up with less take-home pay at an income of $55,000 than $46,000 — as is true for some people under Obamacare?

As noted earlier, the new healthcare law raises taxes on the middle-class and investors,  reduces lifesaving medical innovation, and drives up health insurance premiums.  It also will bankrupt many “small to midsize” medical-device manufacturers, driving up unemployment.

CBO: Obamacare Discourages Work

by Hans Bader on October 28, 2010 · 1 comment

in Economy, Employment, Healthcare, Regulation

Even the Congressional Budget Office, which allowed supporters of Obamacare to hide its costs through gimmicks and dodges, admitted last “Friday that Obamacare includes work disincentives likely to shrink the amount of labor used in the economy.”  For example, it effectively creates a 35,618 percent marginal tax rate for one hypothetical 62-year-old whose income rises by $22, by triggering the sudden loss of $7,836 in government tax credits (as Ted Frank explains below).

As a newspaper columnist notes,

The new health law will give some older households without access to employer care a big incentive not to earn too much. That’s because earning more than 400% of the poverty level would make them ineligible for subsidies that may be well in excess of $10,000 for couples.  Consider this example of a single individual age 62 in a high-cost area and no access to employer care. According to the Kaiser Family Foundation’s Health Reform Subsidy Calculator … [a]t 400% of the poverty level, or $46,000, an individual would get $7,830 in premium subsidies.  And at 401% of the poverty level, an individual would get no government support.

Or, as legal commentator Ted Frank notes, under Obamacare,

[A] 62-year-old in a high-cost area earning $46,000 a year without health insurance is entitled to a $7,836 government tax credit. Leaving aside how our strapped government can afford that, here’s what’s interesting: if the same person makes a mistake and earns an extra $22 in income, he loses the entire $7,836 credit. (The cutoff, according to Kaiser, is between $46,021 and $46,022.) That’s a 35,618% marginal tax rate. Indeed, the problem is so severe that our 62-year-old subject will have more take-home pay if he earns $46,000 than if he earns $55,000. And even at lower income levels, there is as much as a 16% surcharge on income at the margin.

This penalty for working and earning more is the result of really lousy drafting on the part of the authors of Obamacare. They could easily have avoided this problem by gradually phasing out the premium subsidies and tax credits, the way the tax code gradually phases out personal exemptions and itemized deductions for people who make well over $100,000 a year.  But they were too arrogant to learn anything from existing provisions that worked.

As noted earlier, the healthcare law imposes many middle-class tax increases, such as on cosmetic surgery and medical devices, and it increases taxes in future years on investors.  Obamacare will also reduce lifesaving medical innovation, break many campaign promises, and increase state budget deficits. It is driving up health insurance premiums, and it imposes restrictions that failed when tried at the state level. It ignores advice from doctors and federal experts, and lessons from countries with universal health care, about how to reduce costs.

Stimulus Package to Cost $75 Billion More Than Predicted; Plus, Government-Employee Bailout Sought

by Hans Bader on June 23, 2010

in Bailout Watch, Deregulate to Stimulate, Economy, Employment, Energy, Environment, International, Labor, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

The stimulus package is going to cost at least $75 billion more than the $787 billion the Obama administration claimed, according to the Congressional Budget Office.  President Obama and congressional leaders kept its projected tab beneath $800 billion to keep the support of wavering lawmakers like the senators from Maine, who worried that earlier stimulus proposals were too costly.   The Congressional Budget Office admitted last year that the stimulus package actually would shrink the economy “in the long run.”

Undaunted, Obama is now backing a $50 billion bailout for state government employees.

Obama claimed the stimulus package was needed to prevent the economy from suffering from “irreversible decline,” although the CBO predicted the economy would eventually recover with or without the stimulus (the CBO said the stimulus would increase the economy in the short run, while shrinking it in the long run).  The stimulus ended up being useless even in the short run, since its regulations destroyed thousands of jobs by triggering trade wars with other countries that killed jobs in America’s export sector (the stimulus package barred a measley 97 Mexican truckers from U.S. roads, a minor NAFTA violation that led to massive Mexican retaliation against U.S. exports of 40 farm products and kitchen goods worth $2.4 billion).  The stimulus also replaced American jobs with foreign “green” jobs through its expensive green-jobs program,which gave 79 percent of its money to foreign firms.  And it wasted money on welfare at the expense of badly-needed investments in roads and bridges.

Unemployment is much higher now than Obama said it would be if the stimulus passed.  As the Washington Examiner notes, “If his stimulus program was approved, Obama promised, unemployment would not go above 8 percent,” but it’s now close to 10 percent.  Unemployment is higher than the Administration predicted it would be even without the stimulus.

Obama fired an inspector general who uncovered fraud by a supporter who misused federal funds, thereby hindering the supporter’s ability to spend federal stimulus money.

ObamaCare Deeply Unpopular: Democratic Congressman Who Voted for Health Care Bill Loses Primary Election

by Hans Bader on May 12, 2010 · 1 comment

in Deregulate to Stimulate, Economy, Health and Illness, Healthcare, Insurance, Legal, Nanny State, Personal Liberty, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Zeitgeist

ObamaCare is so unpopular in West Virginia that veteran Democratic Congressman Alan Mollohan lost reelection in yesterday’s Democratic primary to a state senator who opposes the health care legislation backed by President Obama.  Mollohan lost by a decisive 56-to-44 percent margin to Mike Oliverio, “a conservative Democrat,” amidst record turnout for a primary.   In November, Oliverio will face the Republican nominee, David McKinley, who called Mollohan’s defeat a referendum on President Barack Obama.  Mollohan had easily won reelection in past races ever since being elected in 1982, despite corruption allegations.

The Congressional Budget Office now admits that ObamaCare will cost at least $115 billion more than previously estimated.  An Atlanta newspaper column says that the healthcare legislation will “bury businesses under a blizzard of costly new paperwork,” requiring them to spent vast amounts “collecting data, filling out forms, reprogramming computers, hiring accountants and wrestling with the IRS bureaucracy.”

“Economic experts from President Obama’s own Health and Human Services Department have released a devastating report noting that ObamaCare ‘will increase national health care spending by $311 billion from 2010-2019,’ according to the Associated Press. Even worse, ‘Medicare cuts may be unrealistic and unsustainable, driving about 15 percent of hospitals into the red and ‘possibly jeopardizing access’ to care for seniors.’”  This contradicts Obama’s claims that the health care law would “bend the cost curve down” and cut the cost of health insurance.  Starting in 2013, the health care legislation will also dramatically increase the taxes of “15 million very sick people” with “major medical expenses.”

“The administration’s own actuary reported on Thursday that millions of people could lose their health insurance, that health-care costs will rise faster than they would have if the law hadn’t passed, and that the overhaul will mean that people will have a harder and harder time finding physicians to see them.”

“Billions of more documents” will be have to be filled out by small businesses for the IRS so that a “spendthrift Congress can shake a few extra bucks out of” them to pay for ObamaCare. They will have to spend countless hours to “gather information,” such as about the person they buy a used car from, and the mom-and-pop landlords who lease space to them, even if the small business has to spend more money gathering the information than the IRS will collect in taxes as a result.  (The new health care law will raise far more revenue by taking away medical tax-deductions of “15 million very sick people” with “major medical expenses” starting in 2013.)

The health care bill vastly expands the power of the IRS.  The Washington Examiner says that “16,500 more IRS agents” will be “needed to enforce Obamacare.”  That’s “the biggest expansion of the IRS since World War II.”

ObamaCare is also costing major employers who provide health coverage for retirees billions of dollars.  “When companies started reporting the write-downs they’d take as a result of the passage of ObamaCare,” congressional Democrats “reacted with outrage at the announcements, and scheduled hearings to demand answers . . . from AT&T, Caterpillar, Deere, and Verizon.”  But now, the massive costs of ObamaCare are so obvious and undeniable that even congressional Democrats have “admitted that CEOs who reported billions in losses due to ObamaCare were required to state those losses after all,” and that their “companies acted properly and in accordance with” federal “accounting standards.”

To try to offset and hide the increased cost of health care resulting from their ill-conceived health care law, the Obama administration and congressional leaders are now proposing a new bill to “impose price controls on insurance,” even though similar legislation is already backfiring in Massachusetts, where health care costs spiraled upwards after the state government adopted a prototype of ObamaCare several years ago, resulting in “explosive costs.”

The health care legislation backed by Obama contains many penny-wise, pound-foolish provisions.  It spends money on frills like “cultural competency,” while cutting spending on crucial things like anesthesia.

14 attorneys general are challenging provisions of the new health care law in court.  Their lawsuits argue that forcing people to buy health insurance is not a valid exercise of Congress’s power to regulate interstate commerce.

The new law imposes many middle-class tax increases, such as taxes on uninsured individuals, on cosmetic surgery, on medical devices, and on certain health care plans.  It also increases taxes on many investors and imposes marriage penalties.

The new health care law will reduce lifesaving medical innovation, raise taxes, drive up insurance premiums, break many campaign promises, and increase state budget deficits.  It  will jeopardize the quality of medical care, while imposing restrictions that failed when tried at the state level.  It ignores advice from doctors and federal experts, and lessons from countries with universal health care, about how to keep costs down.

While the CBO deceptively scored the health care bill as not increasing the federal deficit, thanks to the many tax increases in the bill, it did so only because it was required to accept many accounting gimmicks that even pro-administration journalists have admitted conceal the bill’s enormous cost and the fact that it will massively increase the deficit.  The New York Times‘ David Brooks, once a staunch supporter of President Obama, recently said that the bill’s drafters were “corrupted by power” and called arguments for the law “unbelievable” and “insane.”  The Atlantic’s Megan McArdle, who also voted for Obama, wrote that the law “is a fiscal disaster waiting to happen.”

Health Care Bill Would Vastly Expand IRS Power; CBO Ordered to Base Cost Estimate on False Assumptions

by Hans Bader on March 19, 2010

in Deregulate to Stimulate, Economy, Employment, Health and Illness, Healthcare, Insurance, Legal, Politics as Usual, Regulation, Sanctimony

“House health care bill dangerously expands IRS power,” say a tax law professor and GOP leaders.   The Washington Examiner says that “16,500 more IRS agents” will be “needed to enforce Obamacare.”  That’s “the biggest expansion of the IRS since World War II,” needed to “to collect, examine and audit new tax information mandated on families and small businesses.”

Governors of both political parties assail the health care bill as a job-killer that will drive up state deficits, increase taxes, and harm the economy.  The governors of New York and California warned that “their states will be crushed by billions in new costs.”

The most recent version of the health care bill contains additional tax increases and Medicare cuts.  It dramatically increases taxes on investors by adding a new 3.8 percent tax on investment income (much higher than the 2.9 percent previously proposed by Obama), but few newspapers have reported that.

The Washington Post falsely claims that the CBO says the health care bill will save $1.2 trillion over its second decade, but the CBO says the figure is not from it (it’s from congressional Democrats).  Amazingly, the CBO, under orders from Democratic leaders, has understated the bill’s cost for the first decade by including the present fiscal year — in which ObamaCare is not yet law and thus has no costs — while excluding its last year from cost calculations.  The result was to reduce the projected price tag for the bill from $1.2 trillion to $940 billion.

While the CBO has scored the health care bill as not increasing the federal deficit, thanks to the many tax increases in the bill, it has done so only by accepting many accounting gimmicks that even pro-Obama journalists have admitted are deceptive and conceal the bill’s enormous cost and the fact that it will massively increase the deficit.  The New York Times‘ David Brooks, once a staunch Obama supporter, now says the bill’s drafters were “corrupted by power” and calls arguments for the bill “unbelievable” and “insane.”

Earlier, health care cost expert James C. Capretta explained how “Obamacare Is A Budgetary Disaster” that will cost at least $1.4 trillion more than promised.

The Congressional Budget Office, which refused to question Obama’s gimmicks to lowball the cost of his health care plan, nevertheless admits that “President Obama’s policies would add more than $9.7 trillion to the national debt over the next decade.”

There are $3,000,000,000,000 in tax increases in Obama’s budget.  But he’s spending money at such a furious pace that the deficit will skyrocket anyway: “The president’s budget would borrow 42 cents for each dollar spent in 2010,” and “double the national debt over the next decade.”  Obama recently ran up the largest budget deficit in history, by a huge margin.

The revised health-care bill would add a new 3.8 percent tax on investment income for individuals who make $200,000 or more, and households making $250,000 or more.  More importantly, it would also impose many middle-class tax increases, such as taxes on uninsured individuals, on cosmetic surgery, on medical devices, and on certain health care plans.

ObamaCare would reduce medical innovation, raise taxes, drive up insurance premiums, and break campaign promises.  It  would cut the quality of  care, while imposing restrictions that failed when tried at the state level.  It ignores advice from experts about how to cut costs.

A retired federal judge says that the tactic congressional leaders are using to rush Obamacare into law violates Supreme Court rulings and the Constitution.

ObamaCare’s Enormous Cost Is Hidden by Dishonest Gimmicks, Says New York Times Columnist Who Supported Obama in 2008

by Hans Bader on March 14, 2010 · 6 comments

in Health and Illness, Healthcare, Insurance, Politics as Usual, Precaution & Risk, Regulation, Sanctimony

New York Times columnist David Brooks, like other columnists at that staunchly liberal newspaper, supported Obama in the 2008 election. But even he can now see that Obama’s health care plan is full of dishonest gimmicks that hide its enormous cost and the fact that it will drive up the deficit and health-care costs:

They’ve stuffed the legislation with gimmicks and dodges designed to get a good score from the Congressional Budget Office but don’t genuinely control runaway spending.

There is the doc fix dodge. The legislation pretends that Congress is about to cut Medicare reimbursements by 21 percent. Everyone knows that will never happen, so over the next decade actual spending will be $300 billion higher than paper projections.

There is the long-term care dodge. The bill creates a $72 billion trust fund to pay for a new long-term care program. The sponsors count that money as cost-saving, even though it will eventually be paid back out when the program comes on line.

There is the subsidy dodge. Workers making $60,000 and in the health exchanges would receive $4,500 more in subsidies in 2016 than workers making $60,000 and not in the exchanges. There is no way future Congresses will allow that disparity to persist. Soon, everybody will get the subsidy.

There is the excise tax dodge. The primary cost-control mechanism and long-term revenue source for the program is the tax on high-cost plans. But Democrats aren’t willing to levy this tax for eight years. The fiscal sustainability of the whole bill rests on the naïve hope that a future Congress will have the guts to accept a trillion-dollar tax when the current Congress wouldn’t accept an increase of a few billion.

There is the 10-6 dodge. One of the reasons the bill appears deficit-neutral in the first decade is that it begins collecting revenue right away but doesn’t have to pay for most benefits until 2014. That’s 10 years of revenues to pay for 6 years of benefits, something unlikely to happen again unless the country agrees to go without health care for four years every decade.

There is the Social Security dodge. The bill uses $52 billion in higher Social Security taxes to pay for health care expansion. But if Social Security taxes pay for health care, what pays for Social Security?

Earlier, health care cost expert James C. Capretta explained how “Obamacare Is A Budgetary Disaster” that will cost at least $1.4 trillion more than promised.

The Congressional Budget Office, which refused to question Obama’s gimmicks to lowball the cost of his health care plan, nevertheless admits that “President Obama’s policies would add more than $9.7 trillion to the national debt over the next decade.”

There are $3,000,000,000,000 in tax increases in Obama’s budget.  But he’s spending money at such a furious pace that the deficit will skyrocket anyway: “The president’s budget would borrow 42 cents for each dollar spent in 2010,” and “double the national debt over the next decade.”

Obama’s healthcare plan will further increase deficits, as even Democrats have admitted.   ObamaCare would reduce medical innovation, raise taxes, drive up insurance premiums, break campaign promises, and increase state deficits.  It  would cut the quality of  care, while imposing restrictions that failed when tried at the state level.  It ignores advice from experts about how to cut costs.

Obama recently ran up the largest budget deficit in history, by a huge margin.

$3,000,000,000,000 in Tax Increases in President Obama’s Budget

by Hans Bader on March 13, 2010 · 1 comment

in Deregulate to Stimulate, Economy, Employment, Health and Illness, Healthcare, Insurance, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

The president’s proposed budget raises taxes by three trillion dollars over the next ten years, notes Washington fiscal analyst Brian Riedl in the Wall Street Journal.  Yet, in spite of that, “The president’s budget would borrow 42 cents for each dollar spent in 2010,” and “double the national debt over the next decade.”

The Obama administration recently ran up the largest budget deficit in history — so big that the monthly deficit was much bigger than George Bush’s entire annual deficit in 2007.

The president wants a new $267 billion stimulus package, on top of the $800 billion one that passed earlier.  Obama claimed the stimulus package was needed to avert “irreversible decline.” But the Congressional Budget Office concluded that the stimulus package will actually cut the size of the economy in the long run.

Unemployment has skyrocketed past European levels, as big-spending countries have fared worse than thrifty ones.  As the Examiner notes, “If his stimulus program was approved, Obama promised, unemployment would not go above 8 percent this year. The reality is that it passed 10.3 percent.”

The stimulus package destroyed thousands of real world jobs in America’s export sector.  Meanwhile, the administration claimed credit for creating thousands of imaginary jobs in non-existent congressional districts.  The stimulus is full of wasteful spending.

“President Obama’s policies would add more than $9.7 trillion to the national debt,” the Congressional Budget Office said.   That’s roughly fifteen times the cost of the Iraq and Afghanistan Wars combined.

The president’s health care proposals will add still more to the national debt, through budget gimmicks.  Even Democrats have expressed alarm about their unaffordable cost.   Their true cost, experts say, is at least $2.3 trillion, dramatically increasing the budget deficit.   ObamaCare would reduce medical innovation, raise taxes, drive up insurance premiums, break campaign promises, and increase state deficits.  It  would cut the quality of  care, while imposing restrictions that failed when tried at the state level.  It ignores advice from experts about how to cut costs.

In the 2008 campaign, Obama promised a “net spending cut,” but as soon as he was elected, he proposed massive spending increases.

The Hidden Costs of Health Care Reform: “Obamacare Is A Budgetary Disaster”

by Hans Bader on March 8, 2010 · 2 comments

in Health and Illness, Healthcare, Insurance, International, Legal, Nanny State, Personal Liberty, Politics as Usual, Precaution & Risk, Regulation, Sanctimony

The health care bills backed by President Obama will cost $2.3 trillion, not the $900 billion Obama claims, and will be a “budgetary disaster” that drives up the national debt, explains health care expert James C. Capretta.  The Obama administration managed to hide $1.4 trillion in costs generated by the health care reform bill though a series of budgetary “gimmicks” that the Congressional Budget Office (CBO) is required to treat as valid in scoring the bill’s enormous cost.

Although the CBO is low-balling the costs of ObamaCare, even it concedes that as a whole, “President Obama’s policies would add more than $9.7 trillion to the national debt over the next decade.”

ObamaCare spends money on frills like “cultural competency,” while cutting spending on crucial things like anesthesia.

Most Americans oppose the health care legislation backed by the president. It would reduce lifesaving medical innovation, raise taxes, drive up insurance premiums, break many campaign promises, and increase state budget deficits.  It  would jeopardize the quality of medical care, while imposing restrictions that failed when tried at the state level.  It ignores advice from doctors and federal experts, and lessons from countries with universal health care, about how to keep costs down.

Fact-checkers say Obama is lying about health care. Obama often contradicts himself. In the very same speech, Obama claimed that Medicare is “unsustainable” and “running out of money,” then contradicted himself by claiming that “Medicare is a government program that works really well,” making it a model for national health care.  The bill does nothing to curb massive waste and fraud in Medicare and Medicaid, even though it proposes to make massive cuts in Medicare (cuts so painful that most of them will never happen: year after year, Congress waives “the annual cut in fees paid by Medicare to physicians” mandated by an earlier law).

A CNN commentary noted that Obama’s plan would take away “5 freedoms,” contradicting Obama’s claim that the bill will leave you free to choose your doctor and keep your health care plan without government interference.

ObamaCare has also attracted criticism from groups like the Civil Rights Commission for containing both racial preferences and lower standards for treatment in predominantly-minority institutions, potentially harming both white applicants and minority patients.  This racial discrimination appears to violate court rulings like the Supreme Court’s Adarand decision, and the Rothe ruling by the Federal Circuit Court of Appeals.

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