Tuesday, April 10, 2012

For the Last Time, Obamacare Does Not Increase the Deficit

Ah, here we are again, ladies and gentlemen. Yet another Republican making some spurious claim that Obamacare increases the deficit and poses a dire threat to our nation's finances. You'd think they would stop trying after the first and second times were proven wrong. But no, I guess not. In his column a few weeks ago, Paul Krugman said the following:
"It’s said that you can judge a man by the quality of his enemies. If the same principle applies to legislation, the Affordable Care Act — which was signed into law two years ago, but for the most part has yet to take effect — sits in a place of high honor."
He was spot-on then, and even more so now. Yesterday, on the front page of the Washington Post, there was an article about a "study" done by the Republican trustee for Medicare. Traditionally, the trustees are divided evenly by party, so that the President appoints equal numbers of both. Anyways, the Post made it seem like this is a government study, but in reality, Charles Blahous did this on his own for the Mercatus Center, which is a conservative think-tank. In any case, his study claims that Obamacare will add $340 billion to the deficit. He got this number by changing the baseline of his study. The baseline is basically the current law that any proposal is compared to, but this study changes the baseline to something wildly different from other cost estimates. I'm outsourcing to Ezra Klein to do the explaining, because he does a better job than I really could:
"Blahous’s argument is this: There’s a trust fund for Medicare. That trust fund, prior to the Affordable Care Act, was expected to run out in 2016. But the Affordable Care Act partially pays for itself through $500 billion in Medicare cuts. That’s delayed Medicare’s looming bankruptcy.
This is where things get a bit tricky: Blahous believes that you should treat Medicare’s insolvency as a kind of guaranteed spending cut. After all, Medicare isn’t allowed to spend beyond its trust fund. So, under his baseline, Medicare doesn’t begin running deficits in 2016. It either cuts benefits or some other solution is found. Under that theory, the Affordable Care Act, by cutting Medicare spending, is cutting spending that would never have happened. Or, as Blahous puts it, Obamacare’s Medicare cuts are “substitutions for spending reductions that would have occurred by law in the absence of the ACA.” 
The implication of Blahous’s baseline is that we don’t have a deficit problem. Anywhere. Medicare won’t contribute to deficits because it can’t spend beyond the trust fund. Social Security, similarly, can’t contribute to deficits because it can’t spend beyond its trust fund."
So basically Blahous just changed the scoring in such a way so as to make Obamacare look worse than it actually does. He's basically making the same claim that the cost estimates are "double-counting" the savings from Medicare that Republicans have been making for the past two years. If this scoring method was used on everything, Paul Ryan's budgets would be double-counting, too, but you don't see such methods being used on it, do you? Let me ask, though: Does the Congressional Budget Office, an agency that specializes in making cost estimates, and is by all accounts very good at making them, sound like it would somehow make the elementary mistake of double-counting?