A.J. DiCintio
Beware CBO healthcare estimates
By A.J. DiCintio
Given all the hullabaloo directed at Senator Max Baucus as he and his Democratic allies anticipated cost estimates of his healthcare bill with the nervous agitation exhibited by actors who fidget all night as they await reviews of a hopelessly bad play, Americans are now aware of the Congressional Budget Office.
In fact, there was so much hullabalooing that the public has also come to know that Washington's politicians regard the CBO as the "gold standard" when it comes to letting everyone know how much the Federal Government will take in or how deeply one of its programs will dig into taxpayers' pockets or add to the debt already breaking taxpayers' backs.
Problem is, anyone who believes the gold standard stuff suffers from a severe disturbance of the mind that, for some crazy reason, still remains absent from the American Psychiatric Association's Manual of Mental Disorders.
So, what is the truth about an agency Congress has not only saddled with the task of predicting the future but also with the requirement that it complete its tasks with numbers and assumptions provided by the "honorable members" who perform their dirty labors under the dome of the U.S. Capitol?
To answer that question, you first must know why, in 1974, Congress was all in a sweat to get out of the cost prediction business. The reason is this: By that year, its members realized they needed a fall guy to take the hit for their Medicare predictions.
You see, when the Medicare bill passed in '65, the House Ways and Means Committee told the public that by 1990, the hospital insurance portion of Medicare (Part A) would cost about $9 billion annually.
Then, in '67, when Medicare went into effect, Ways and Means announced that by 1990, the entire Medicare program would cost about $12 billion a year.
But Members of Congress were aware of the relevant data regarding Medicare. And therefore they huffed and puffed Fall Guy into life.
And sure enough, in 1990, it was the CBO that had the pleasure of announcing Part A of Medicare cost $67 billion for the year and the entire Medicare program $110 billion. (Data thanks to the Heritage Foundation.)
So, too, according to the Heritage Foundation, in 1992 it was the CBO that had to tell the public the amount states paid to hospitals that served large numbers of Medicaid and uninsured patients was $17 billion, instead of the $1 billion Congress had estimated just five years earlier.
Moreover, through the nineties, it was the CBO chief sweating in the limelight as he explained the lowball miscalculations (actually, "congressional lies") involving changes to Medicare's home care benefit, the addition of a catastrophic coverage benefit to Medicare, and the institution of the SCHIP program.
But has the gold standard agency done better in the new millennium?
You can decide for yourself after reading the following facts, beginning with a quote that appeared on the CBO website in January, 2001:
". . . the total [Federal] surplus will reach $281 billion in 2001. Such surpluses are projected to rise in the future, approaching $889 billion in 2011 and accumulating to $5.6 trillion over the 2002-2011 period."
How accurate was the CBO's prediction?
Well, during his tenure, Bush accumulated not surpluses but deficits totaling $4.9 trillion, thereby increasing the total national debt from $5.7 trillion to $10.6 trillion.
Moreover, Obama has made Bush look like a deficit piker, having run up a shortfall of $1.4 trillion in his first year in office (on his way to adding $10 trillion to the debt over the next decade).
As a result, if Obama runs up deficits of a trillion/year in FY's 2010 and 2011, the following exclamation will be in order:
"Mamma mia, CBO! From a prediction of $5.6 trillion in surpluses to a reality of $8.3 trillion of debt! The old folks used to describe that kind of a blunder as stupefacente!"
Some, of course, will argue that 2001 was an anomaly for the CBO. However, such people are well advised to eat their words instead of speaking them because 2003 brought more ugly guesswork.
The CBO got off to a very bad start that year when it was sucked into making a prediction that once again reveals how right Sherman was when he warned, "Every attempt to make war easy . . . will result in humiliation and disaster."
To grasp the tragic, embarrassing nature of the estimate as it pertains to the moral and intellectual monstrosity that is "limited war," you need only read the following question and answer found in a 1/19/03 transcript that appears on the website of the U.S. Department of Defense, Office of the Assistant Secretary of Defense (Public Affairs).
Q: Mr. Secretary, on Iraq, how much money do you think the Department of Defense would need to pay for a war with Iraq?
Rumsfeld: Well, the Office of Management and Budget, has come up come up with a number that's something under $50 billion for the cost. How much of that would be the U.S. burden, and how much would be other countries, is an open question.
It was also in '03 that the Bush Medicare drug benefit was enacted, with the CBO agreeing with the administration that over ten years, the program would cost about $400 billion.
However, by February, 2005, eleven months before the plan would go into effect, the administrator of Medicare was acknowledging "that the cumulative cost of the program between 2006 and 2015 will reach $1.2 trillion" or, perhaps, just "$720 billion." (Quotations from Ceci Connolly and Mike Allen, Washington Post.)
Yes, as the augurs of the Roman Forum or Stonehenge would tell us if they could, trying to predict the future is a nasty, mostly uncertain, unforgiving business.
They would also tell us that when the swill of politics is dumped into the mix, the augur's job becomes impossible.
That's why common sense folks didn't lose a wink of sleep last week waiting for the CBO's Baucus bill estimate.
But they are likely to lose a whole lot of sleep if the most liberal president and Congress in the nation's history pass into law their version of healthcare reform.
That sleeplessness will occur in part because political garbage will turn CBO cost estimates into a very unfunny joke.
Most of it, however, will arise from a realization that the political creatures who populate the level of government most remote from the people have completely wrapped their rapacious tentacles around an industry that literally deals with issues of life and death.
© A.J. DiCintio
October 17, 2009
Given all the hullabaloo directed at Senator Max Baucus as he and his Democratic allies anticipated cost estimates of his healthcare bill with the nervous agitation exhibited by actors who fidget all night as they await reviews of a hopelessly bad play, Americans are now aware of the Congressional Budget Office.
In fact, there was so much hullabalooing that the public has also come to know that Washington's politicians regard the CBO as the "gold standard" when it comes to letting everyone know how much the Federal Government will take in or how deeply one of its programs will dig into taxpayers' pockets or add to the debt already breaking taxpayers' backs.
Problem is, anyone who believes the gold standard stuff suffers from a severe disturbance of the mind that, for some crazy reason, still remains absent from the American Psychiatric Association's Manual of Mental Disorders.
So, what is the truth about an agency Congress has not only saddled with the task of predicting the future but also with the requirement that it complete its tasks with numbers and assumptions provided by the "honorable members" who perform their dirty labors under the dome of the U.S. Capitol?
To answer that question, you first must know why, in 1974, Congress was all in a sweat to get out of the cost prediction business. The reason is this: By that year, its members realized they needed a fall guy to take the hit for their Medicare predictions.
You see, when the Medicare bill passed in '65, the House Ways and Means Committee told the public that by 1990, the hospital insurance portion of Medicare (Part A) would cost about $9 billion annually.
Then, in '67, when Medicare went into effect, Ways and Means announced that by 1990, the entire Medicare program would cost about $12 billion a year.
But Members of Congress were aware of the relevant data regarding Medicare. And therefore they huffed and puffed Fall Guy into life.
And sure enough, in 1990, it was the CBO that had the pleasure of announcing Part A of Medicare cost $67 billion for the year and the entire Medicare program $110 billion. (Data thanks to the Heritage Foundation.)
So, too, according to the Heritage Foundation, in 1992 it was the CBO that had to tell the public the amount states paid to hospitals that served large numbers of Medicaid and uninsured patients was $17 billion, instead of the $1 billion Congress had estimated just five years earlier.
Moreover, through the nineties, it was the CBO chief sweating in the limelight as he explained the lowball miscalculations (actually, "congressional lies") involving changes to Medicare's home care benefit, the addition of a catastrophic coverage benefit to Medicare, and the institution of the SCHIP program.
But has the gold standard agency done better in the new millennium?
You can decide for yourself after reading the following facts, beginning with a quote that appeared on the CBO website in January, 2001:
". . . the total [Federal] surplus will reach $281 billion in 2001. Such surpluses are projected to rise in the future, approaching $889 billion in 2011 and accumulating to $5.6 trillion over the 2002-2011 period."
How accurate was the CBO's prediction?
Well, during his tenure, Bush accumulated not surpluses but deficits totaling $4.9 trillion, thereby increasing the total national debt from $5.7 trillion to $10.6 trillion.
Moreover, Obama has made Bush look like a deficit piker, having run up a shortfall of $1.4 trillion in his first year in office (on his way to adding $10 trillion to the debt over the next decade).
As a result, if Obama runs up deficits of a trillion/year in FY's 2010 and 2011, the following exclamation will be in order:
"Mamma mia, CBO! From a prediction of $5.6 trillion in surpluses to a reality of $8.3 trillion of debt! The old folks used to describe that kind of a blunder as stupefacente!"
Some, of course, will argue that 2001 was an anomaly for the CBO. However, such people are well advised to eat their words instead of speaking them because 2003 brought more ugly guesswork.
The CBO got off to a very bad start that year when it was sucked into making a prediction that once again reveals how right Sherman was when he warned, "Every attempt to make war easy . . . will result in humiliation and disaster."
To grasp the tragic, embarrassing nature of the estimate as it pertains to the moral and intellectual monstrosity that is "limited war," you need only read the following question and answer found in a 1/19/03 transcript that appears on the website of the U.S. Department of Defense, Office of the Assistant Secretary of Defense (Public Affairs).
Q: Mr. Secretary, on Iraq, how much money do you think the Department of Defense would need to pay for a war with Iraq?
Rumsfeld: Well, the Office of Management and Budget, has come up come up with a number that's something under $50 billion for the cost. How much of that would be the U.S. burden, and how much would be other countries, is an open question.
It was also in '03 that the Bush Medicare drug benefit was enacted, with the CBO agreeing with the administration that over ten years, the program would cost about $400 billion.
However, by February, 2005, eleven months before the plan would go into effect, the administrator of Medicare was acknowledging "that the cumulative cost of the program between 2006 and 2015 will reach $1.2 trillion" or, perhaps, just "$720 billion." (Quotations from Ceci Connolly and Mike Allen, Washington Post.)
Yes, as the augurs of the Roman Forum or Stonehenge would tell us if they could, trying to predict the future is a nasty, mostly uncertain, unforgiving business.
They would also tell us that when the swill of politics is dumped into the mix, the augur's job becomes impossible.
That's why common sense folks didn't lose a wink of sleep last week waiting for the CBO's Baucus bill estimate.
But they are likely to lose a whole lot of sleep if the most liberal president and Congress in the nation's history pass into law their version of healthcare reform.
That sleeplessness will occur in part because political garbage will turn CBO cost estimates into a very unfunny joke.
Most of it, however, will arise from a realization that the political creatures who populate the level of government most remote from the people have completely wrapped their rapacious tentacles around an industry that literally deals with issues of life and death.
© A.J. DiCintio
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