CBO: You can’t spend the same dollars twice
posted at 12:15 pm on December 23, 2009 by Ed Morrissey
The new bill from Harry Reid on ObamaCare asserts that the $500 billion in cuts to Medicare can simultaneously be counted as savings for future Medicare outlays while funding all of the expenses of covering millions of uninsured immediately. Sen. Jeff Sessions asked the CBO if Reid could actually use the same dollars twice for two separate purposes at two separate times. The answer is, unsurprisingly, no (via Yid with Lid, emphasis mine):
CBO has been asked for additional information about the projected effects of the Patient Protection and Affordable Care Act (PPACA), incorporating the manager’s amendment, on the federal budget and on the balance in the Hospital Insurance (HI) trust fund, from which Medicare Part A benefits are paid. Specifically, CBO has been asked whether the reductions in projected Part A outlays and increases in projected HI revenues under the legislation can provide additional resources to pay future Medicare benefits while simultaneously providing resources to pay for new programs outside of Medicare. …
The key point is that the savings to the HI trust fund under the PPACA would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs. Trust fund accounting shows the magnitude of the savings within the trust fund, and those savings indeed improve the solvency of that fund; however, that accounting ignores the burden that would be faced by the rest of the government later in redeeming the bonds held by the trust fund. Unified budget accounting shows that the majority of the HI trust fund savings would be used to pay for other spending under the PPACA and would not enhance the ability of the government to redeem the bonds credited to the trust fund to pay for future Medicare benefits. To describe the full amount of HI trust fund savings as both improving the government’s ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the government’s fiscal position.
This punches a huge hole in two arguments from Democrats. First, they have assured people that cutting $500 billion from Medicare will only cut “waste, fraud, and abuse,” which certainly could have been addressed without overhauling the nation’s health-care market. They insist that people will not see a reduction in benefits in the future in Medicare, and that these cuts strengthen the system for the future. The CBO’s letter shows that cuts to the budget will have to result in cuts to the system and benefits if Congress intends on using the money to pay for other efforts.
The second argument to die on this report is the supposed deficit neutrality of ObamaCare. When people start seeing their benefits reduced, Congress will almost certainly start rescinding the cuts — which is why Reid tried pre-empting that option by putting IMAB decisions out of reach. Congress will wind up spending money on both restoring the cuts and the coverage that got funded by them, which will create a deficit-spending explosion, and that assumes that the bill wouldn’t have created that anyway.
It’s nothing more than a shell game. Harry Reid hoped that his attempt to use the same money in two different applications would sneak past the CBO, but Sessions made sure that Reid’s flim-flam got exposed.
Here’s the video of the press conference, once again via YWL: