CBO and Democrats’ Fuzzy Health Care Math
As you may have seen, CBO released their updated January 2010 budgetary baseline, which can be found here. Of particular note for health analysts is Appendix A, in which CBO revised its estimate for the total cost of the “stimulus” upward by $75 billion – from an estimated $787 billion (exclusive of interest costs) at the time of its February enactment to $862 billion today. That’s a nearly 10% increase in estimated federal spending in just eleven short months, based on a few changes in economic assumptions. The updates serve as a reminder that the long-term costs of the Democrats’ permanent new entitlements – currently estimated at a “mere” $2.5 trillion, based on the cost of the Senate health care bill when fully implemented – could be just as under-stated as Democrats’ claims of “deficit neutrality” are over-stated.
It’s also worth noting that Table D-1 (page 134) of the document confirms that for the first time last year, the Medicare Part A Trust Fund ran a $9 billion deficit, forcing the Treasury to begin the process of liquidating the bonds in the Trust Fund to meet Medicare’s funding obligations. Both CBO and the Medicare actuaries have confirmed that the various Medicare savings proposals in the Democrat bills “cannot be simultaneously used to finance other federal outlays [i.e. new coverage expansions] and to extend the [Medicare] trust fund.” Thus sustaining both Medicare and Democrats’ proposed new entitlements will involve massive new government borrowing – at a time when the CBO report confirms that China is about to become the largest holder of Treasury bonds, exceeding the government debt held by all American individuals combined. Many may wonder: How is borrowing more money from China to finance new entitlements “reform?”