I think most folks were shocked that the CBO scored the Baucus bill as deficit-neutral. Well, we are starting to understand why (by the way, these are not criticisms of the CBO, but of the Senate). So far, three major budget tricks have been identified:
1. Now-you-see-it-now-you-don't Medicare cuts. Via Michael Tanner of Cato:
When the Senate Finance Committee released CBO scoring of its health care reform proposal last week, we warned that its claim of reducing future budget deficits was achieved only through dishonestly assuming that Congress will implement a 21% reduction in Medicare payments that is scheduled under current law. We pointed out that Congress has been supposed to make those reductions since 2003, and never has. Now"”surprise, surprise"”Democrats have introduced a bill to eliminate the scheduled cut, at a cost of $247 billion. But Democrats cleverly are putting the new spending in a separate bill, so it won't change scoring of health care reform. Have they no shame?
2. Transfer of costs off the Federal budget to the states (which the CBO does not score). Via Glen Reynolds
Gov. Phil Bredesen warned Tuesday that pending federal health care legislation could cost Tennessee far more than the $735 million "best estimate" his administration previously has cited.
The $735 million would stretch over five years, but "in addition, there are huge unknowns for the states in this reform," Gov. Bredesen said, estimating that those costs, if realized, could exceed another $3 billion from 2014 to 2019. . . . "I'm glad they're trying to do it without increasing the federal deficit, that certainly is important," said Gov. Bredesen, a Democrat who has been critical of the plan's impact on states. "But to turn around and increase the state deficits as the way to handle it that does not seem a very appropriate way to do that."
3. Match 7 years of expenses with 10 years of revenues. From an earlier post:
Bruce McQuain points out something I think has not gotten enough attention in the health care bill. The new taxes being proposed start in 2010, but the benefits don't begin until 2013 and are phased in through something like 2018. That means for any 10-year budget look, there are 10 years of taxes but only 6-7 years of benefits. And even with this trick, the plan STILL adds a trillion dollars to the deficit, even before the certainly more pessimistic CBO numbers come in.