So the CBO says Obamacare reduces the deficit. Democrats are crowing about that, as they twist arms and scour through their bag legislative tricks to pass their thousand page bill this weekend, However, Fortune Magazine's Shawn Tully notes something new from the CBO's latest score: in real life, the health care bill will add to the national debt.
That forecast, however, doesn't mean that what the CBO counts as lower deficits will lead to less debt, as taxpayers might expect. In fact, it appears that it would require the Treasury to borrow almost 40 cents of every dollar in new spending the bill requires.
How can a bill reduce the deficit ... yet add to our debt? Because the CBO is required by law to count only the revenue and spending specified in the bill. If revenues claimed in a bill exceed its spending, then it is deemed to "reduce the deficit."
Unfortunately, the CBO doesn't count the "Doc Fix" because Democrats introduced it as a separate bill. But that’s absurd. In the future, the docs are definitely going to get “fixed.” If that cost were included in the CBO’s estimate, Obamacare would add $89 Billion to the deficit.
A bigger problem is that Democrats claim new tax revenues in the bill that won't actually pay for Obamacare. For example, a big source of revenue comes from new Social Security and Medicare taxes. The CBO counts that revenue as if it would pay for Obamacare, but in fact, that money cannot legally be used to pay for Obamacare—it’s required by law to pay for Social Security and Medicare benefits.
But the CBO's hands are tied. Megan McArdle, an admirer of the objective role the CBO plays, says "the CBO process has now been so thoroughly gamed that it's useless."
HT: Peter Suderman.