Streetwise Professor

October 9, 2009

It’s the Spending That Matters

Filed under: Economics,Politics — The Professor @ 2:46 pm

Beltway hearts are all aflutter that the CBO has established that the Baucus health care plan is   deficit neutral–or even reduces the deficit.

But, the important thing is that the total cost of the bill–almost certainly underestimated–of $1 (or maybe $2) trillion.   The bill is budget neutral (again, taking the numbers on faith, which would be wholly foolish IMHO) only because it imposes substantial taxes (including taxes on doctors in the form of substantial cuts in Medicare reimbursement) and shoves many of the costs off-budget through the mandate.   All of this is is not considered a tax increase only the Washington Wonderland.

(I should note that the budget analysis is almost certainly flawed, as (1) it presumes that Congress will implement Medicare cuts that it has consciously declined to pass in the past, and (2) it doesn’t take into account that the “Cadillac plan” tax will almost certainly not raise the amount of money projected as these plans will shrink dramatically when subject to such a large tax.)

The relevant question is: does the total cost imposed on the citizens of the US provides a larger benefit?

That is, the question is NOT, as in the old Fram Oil Filter commercials: “Do you want to pay me now, or pay me later?” (That’s the deficit question.)   The correct question is: “Do you want to pay me at all?”

And to me, the answer to that question is a resounding No!

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1 Comment »

  1. Obama wins Nobel…. the dude had something up his sleeve after all..may be unwittingly! Whats next – Pulitzer for Paris Hilton?

    Comment by Surya — October 9, 2009 @ 7:49 pm

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