Posts Tagged ‘CBO’
February 21st, 2014 at 5:24 pm
Contra Sebelius, ObamaCare Already Killed at Least 33,000 Jobs

“There is absolutely no evidence – and every economist will tell you this – that there is any job loss related to the Affordable Care Act [i.e. Obamacare],” Kathleen Sebelius said earlier this week.

The Health and Human Services Secretary was responding in part to a report by the Congressional Budget Office estimating that President Barack Obama’s signature domestic policy will result in 2.5 million job losses by 2024.

The only explanation that renders Sebelius’ statement (barely) plausible is her phrasing in the present tense: “no evidence… that there is any job loss related to” Obamacare. Sebelius is talking about the present, while the economists at the CBO are projecting into the future.

But even this generous reading won’t survive the fact that Obamacare has already killed 33,000 jobs in the medical device industry, according to the Advanced Medical Technology Association.

Thanks to a 2.3 percent excise tax on each medical device sold since January 2013, industry members report shedding 14,000 jobs, with an additional 19,000 openings left vacant.

The biggest losers were research and development branches, and manufacturing. Regarding the latter, 10 percent of companies surveyed said they moved their plants overseas.

These numbers show just how democratic is Obamacare’s impact on jobs. R&D positions are some of the highest paid in a firm, while manufacturing jobs can range from low- to middle-income.

On the bright side, to date the medical device tax has netted the federal government a cool $3.8 billion, so at least Secretary Sebelius has some extra money to funnel through Medicaid and Obamacare exchange subsidies.

Somehow though, decreasing the number of jobs and increasing the amount of tax revenue doesn’t seem like a long-term formula for success.

Maybe an economist should tell Madame Secretary.

February 4th, 2014 at 1:59 pm
CBO: ObamaCare Incentivizes More Welfare, Less Work

A new report by the non-partisan Congressional Budget Office predicts the Affordable Care Act (i.e. Obamacare) will cause up to 2 million lower-income workers to leave the labor force over the next decade because they will make more in government benefits than as a private employee.

“CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor – given the new taxes and other incentives they will face and the financial benefits some will receive,” the agency says in Appendix C, Labor Market Effects of the Affordable Care Act: Updated Estimates (pdf).

The incentive to drop out of the workforce is one’s eligibility for a government subsidy to help pay for an insurance plan bought through an Obamacare exchange. Since eligibility for a subsidy phases out as a person’s income rises, people who will receive subsidies will have to factor in whether to take a job that makes more money, but will likely reduce or eliminate eligibility. In this scenario, taking the job may actually result in a net loss of income as the person must now pay for the full cost of health insurance.

The disincentive to work also applies to those hanging between Medicaid and Obamacare subsidies. Eligibility for Medicaid means the cost to the beneficiary is nothing (at least not directly). In this scenario, qualifying for a subsidy increases one’s out-of-pocket expenses, making it financially smart (for the individual) to work less and stay on Medicaid.

It’s important to emphasize that deciding to work less to receive more in government benefits is a financially rational decision for individuals to make, and one that any economist would readily predict. My hunch is that at least some of Obamacare’s architects knew this and designed their programs accordingly.

The problem, of course, is that convincing millions of people not to work is not financially sustainable for the country as a whole.

June 27th, 2012 at 3:49 pm
More Headaches for Obamites if Mandate Goes Down

Congressional staffers are buzzing about a terrifically insightful National Journal piece from a week ago that has still attracted too little mainstream notice, explaining how if any part of ObamaCare is thrown out by the Supreme Court, the budgetary “scoring” problems that would be caused (for the Congressional Budget Office) are so complicated that they could hamstring implementation of what’s left of the law — but also hamstring efforts to fix any holes caused by the law’s unraveling. Basically, CBO could be looking at a law whose budgetary effects are essentially “unestimatable.”

My sources say the administration’s own argument — that if the mandate is struck down, so should the rest of Title 1 of the Affordable Care Act, but none of the rest of it — could effectively put itself (the administration itself) into a box, paint it into a corner, or whatever other cliche you want to use. As Margot Sanger-Katz and Meghan McCarthy of National Journal reported:

Washington’s top health economists, including those at the Congressional Budget Office, say that position could lead to an even more complex breakdown of the law’s interlocking provisions than just losing the mandate. CBO declined to comment for this story, and the White House also declined to comment on whether it is worried about complications that might result from its position.

But several congressional staffers said that CBO has been asked to score the scenario, and the office demurred, saying it’s too difficult to game out the consequences. According to economists, the scenario is not just complicated, but also potentially expensive—and could lead the estimated $461 billion in insurance tax credits through 2021 to balloon.

This all gets very complicated, and it goes even  beyond what National Journal so well described, but this bears serious watching. Stay tuned. The administration really could be in for “heap big trouble.”

June 28th, 2011 at 10:24 am
CBO On Obama Budget: “We Don’t Estimate Speeches”
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In February, President Obama unveiled his irresponsible deficit-inflating 2012 proposed budget.  By April, Obama hastily said “never mind,” scrapped that proposal and offered a vague Budget 2.0 speech after Congressman Paul Ryan (R – Wisconsin) embarrassed him by unveiling his debt-cutting budget roadmap.

The problem is that the so-called leader of the Free World was too afraid to offer any specificity whatsoever, focusing on his reelection instead of the nation’s intensifying fiscal emergency.  At a House Budget Committee hearing last week, Rep. Ryan asked Congressional Budget Office (CBO) chief Douglas Elmendorf whether the CBO had yet been able to estimate Obama’s latest “budget.”  Elmendorf’s not-so-subtle reply:

We don’t estimate speeches.  We need much more specificity than was provided in that speech for us to do our analysis.”

Come to think of it, a lot of voters probably think back to the 2008 presidential campaign and say the same thing.

March 27th, 2010 at 5:51 pm
Federal Debt to be 90% of GDP by 2020

So says the Congressional Budget Office:

President Obama’s fiscal 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next 10 years, $1.2 trillion more than the administration projected, and raise the federal debt to 90 percent of the nation’s economic output by 2020, the Congressional Budget Office reported Thursday.

Ready to buy gold?

January 8th, 2010 at 11:32 am
CBO Paints Grim Budget Picture
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The Congressional Budget Office (CBO) has released its monthly budget review, and once again, the results are not pretty for taxpayers.

For the first quarter of Fiscal Year 2010 alone, CBO estimates a $390 billion budget deficit, or $56 billion more than the record shortfall last year.  This year is scheduled to be the largest budget deficit in history, but you wouldn’t know it the way Congress is spending.

The November and December results were actually worse than CBO had originally predicted.  The U.S. ended November with a $120 billion shortfall, or $5 billion more than original projections.  In December, CBO estimates a $92 billion deficit but that figure is likely to grow larger when the actual numbers are released next month.

The response from Congress and the White House?  Crickets.  It appears that accelerating our national debt and printing more money is still the raison d’être in our nation’s capital.

December 17th, 2009 at 10:36 am
CBO: Cap-and-Trade Will Cost Taxpayers
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The Congressional Budget Office (CBO) forecasts that current climate change legislation in the Senate will increase spending by $833 billion.

According to the budget office, not only would Cap-and-Trade legislation effectively tax and regulate all carbon emissions in the country, but it would also add $854 billion to federal coffers.

The cost estimate concluded, “CBO estimates that the annual cost of [cap-and-trade] would amount to tens of billions of dollars for private-sector entities and hundreds of millions of dollars for public entities… Public and private entities would also be required to report information on greenhouse gases to a federal registry.”

In short, the bill is an unmitigated disaster and must be defeated.

Click here for the CBO study.  More of CFIF on climate change here and here.

December 11th, 2009 at 5:13 pm
Bad News from the House Floor
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In the never ending succession of bad legislation coming out of Congress, the Democrats added another one to the list today.

By a 223-202 vote, the House passed the “Wall Street Reform and Consumer Protection Act of 2009.”  Twenty-seven Democrats joined every single Republican to oppose the legislation.

The bill is a hodgepodge of more regulations, higher taxes and new government.  After Sarbanes-Oxley, Congress thought it had effectively ended the debate over financial regulations.  For Congress, it’s never too late to re-regulate.

You can read the Congressional Research Service summary of the legislation here.

Here is the CBO’s cost estimate of the bill.

December 9th, 2009 at 6:01 pm
The CBO & Fuzzy Economic Forecasting

As this piece from Reason explains, the Congressional Budget Office (CBO) is pretty much the final word on whether a bill is perceived as saving money, costing money, or having no fiscal effect. By most accounts, the CBO is staffed by competent people making the most objective calculations possible. The problem is, what’s possible?

The question goes to the heart of the dispute between central planners and free market types. While the former thinks that the intricacies of human behavior can be predicted (and influenced) with the right data and formulas, the latter can’t help but see the endeavor as nothing more than chasing after an economic Bigfoot. For all its sophistication, the CBO is still bedeviled by the criticism that it simply doesn’t know enough information to render any kind of economic certainty.

These days, CBO analysts are scoring bills using intricate computer simulations based in large part on survey data. The raw information is interpreted through academic research on how human beings respond to various economic assumptions. In an interview with The Washington Post, the CBO’s chief health care analyst, Phil Ellis, compared the process to playing Sim City, a computer game that simulates urban development. But even the best model is still only as good as its input data. And for policies that have no real-world antecedent, it’s extremely difficult to come up with accurate input data.

In fact, it may be impossible. But that doesn’t really matter to the Democrats pushing health care “reform.” As long as they can get the non-partisan CBO to score their proposals as saving money – no matter how unreliable the data – their primary purpose of expanding coverage is served. Make no mistake; liberals are pushing universal – not cost effective – health care. Like their Soviet-era predecessors, today’s central planners can’t predict the future, no matter how much survey data they throw at the forecasters working at the CBO. That certainly won’t stop them from trying though.

December 7th, 2009 at 4:00 pm
$5 Million for Sharks?
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In a time of record deficits, most taxpayers would assume that sharks wouldn’t be on the radar of most U.S. Senators.

Well, meet Senator John Kerry (D-MA), who has introduced S. 580, The Shark Conservation Act of 2009.  Not that we don’t all love Shark Week, but the Congressional Budget Office (CBO) has just estimated that the cost of S. 580 is a cool $5 million over the next five years alone.

To be fair to Senator Kerry, the bill does have several GOP cosponsors, but apparently they are all happy to continue Washington’s merry spending frenzy at a time when the nation is still mired in record deficits and high unemployment.

December 4th, 2009 at 5:22 pm
CBO: U.S. is Still Broke
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No surprises here … the U.S. spends more money than it collects.  The Congressional Budget Office (CBO) just released its monthly budget review and it’s not pretty.

Through the first two months of FY 2010, the federal deficit is already $292 billion.  For perspective (based on my shoddy math skills), if you placed that money ($1 bills) end-to-end, it would stretch from the Earth to the Moon 115 times (placed end-to-end the deficit is over 27 million miles and the distance from the Earth to the Moon is only 238,857 miles).

That’s a long sad debt train.  In addition, that debt train could also carry you to Venus, which is only 23.7 million miles from Earth (at its closest).

This would be a big deficit for a single year, but unfortunately the government has ten more months of taxing and spending left.  Year-to-date, this deficit figure is $11 billion more than the shortfall from last year.  Not good.

The deficit from the month of October alone was $176 billion.  The CBO projects another $115 billion deficit for December.

As the report noted, “Excluding outlays for the TARP and net cash infusions for Fannie Mae and Freddie Mac, however, spending in 2010 rose by $51 billion (or 10 percent).”

Sooner or later, 269 people (218 in the House and 51 in the Senate) will be elected to Congress who actually care about reducing spending and cutting the deficit.

December 2nd, 2009 at 12:39 pm
Democrat Admits Health Bill Costs $2.5 Trillion
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Senator Max Baucus caught some of Joe Biden’s foot-in-mouth disease today when he admitted the Senate health care bill would cost $2.5 trillion, far more than what CBO estimated and propoents of the legislation have been touting.  Taxpayers should be thankful for Baucus’ loose lips.

The CBO cost estimate priced the Senate legislation at $848 billion, but that figure does not represent the full cost of the mandates on individuals and employers.  In addition, the bill masks the true cost of the legislation because it doesn’t begin to subsidize health care until 2014.

As Senator Baucus reveals, the true cost of the legislation over a 10-year period is much higher.

Just for a second … health care reform, whether you use a ten-year number or when you start in 2010 or start in 2014, whenever you start at, so it is still either $1 trillion or it’s $2.5 trillion, depending on where you start…

November 19th, 2009 at 3:30 pm
Health Care Taxes as the New AMT?
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The recently passed House health care bill contains a plethora of tax hikes that would make any nanny-state liberal smile with appreciation.

Perhaps the biggest tax hike, in terms of revenue generation, is the new surtax on “high-income” earners.  However, even most Democrats realize that any new tax on income (amounts over $500,000 and $1 million) must be indexed for inflation to avoid hitting middle-class taxpayers.

If not, taxpayers could experience “bracket creep” similar to the Alternative Minimum Tax (AMT), the inception of which was meant to target literally a few dozen millionaires, but could soon affect over 30 million taxpayers.  If income thresholds don’t change, in the year 2060 a $500,000 annual income won’t be rich but taxpayers will still have to pay both the AMT and the health care surtax.

For example, without changes, the CBO now estimates that “three-quarters of households would pay the AMT.”  The math for the potential surtax is just as frightening.

BlackBook Legal’s Sam Greenberg does the math on the new health care surtax and it’s not pretty.  Eventually, the 5.4% surtax could end up hitting millions of households.  Even if wages grow at the same rate as inflation (unlikely unless the economy continues to stagnate), the surtax will end up hitting at least 5 times as many households as was intended by House leaders.  Greenberg concludes, “A non-inflation linked tax is a convenient way to pass future tax hikes without any legislative action.”

This is just another unintended consequence of federal tax policy.  For those who remain confident that the surtax will eventually be indexed to avoid middle-class taxpayers, just look at the AMT.  Of course, when tax time arrives, you won’t have to look for it; the AMT will find you.

November 5th, 2009 at 11:37 am
CBO Skeptical of Medicare “Savings”
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Part of the so-called “cost savings” in the House version of health care reform are premised on large cuts to Medicare, a typical sore spot for senior citizens.

One area that is scheduled to be on the chopping block is reimbursement payments to physicians participating in the Medicare program.  Current reimbursement rates are insultingly low, and as a result, some doctors refuse to even participate in Medicare.

The House health care bill calls for an additional 21 percent reduction in payments to physicians, to begin in 2010. Judging from this CBO statement, even the green eyeshade folks don’t believe Congress will allow doctors to take another hit to reimbursement rates:

The bill would put into effect (or leave in effect) a number of procedures that might be difficult to maintain over a long period of time. It would leave in place the 21 percent reduction in the payment rates for physicians currently scheduled for 2010. At the same time, the bill includes a number of provisions that would constrain payment rates for other providers of Medicare services.”

Any failure to contain Medicare costs, despite the surge of new beneficiaries over the next decade, will surely turn health care reform into another budget-breaker.