Freedom Line Blog

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.

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.

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…

Taxes, higher premiums and rationing.  That’s what consumers will face if the Senate’s version of health care reform becomes law.

According to a new report released by the Congressional Budget Office (CBO), some self-insured individuals could see a jump in premiums if the Senate bill becomes law.   In some instances, the hike in premiums could be upwards of 13%.  As CBO Director Doug Elmendorf wrote on his blog yesterday, “The average, unsubsidized premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law.”

And for those of you who have employer-based “platinum” health insurance?  Expect new taxes on you and your employer.  The CBO projects that 1 in 5 people with employer-based coverage will be subject to the new 40% excise tax on health insurance.

With projected costs of the Senate bill reaching $6 trillion over ten years, it’s no wonder that 53% of the nation opposes this sordid version of “reform.”

Much has been made about the proposed federal mandate that all individuals purchase health insurance.  Some have called this mandate unconstitutional since the only constitutional justification could be the interstate commerce clause in Article I.

Since standing around and not purchasing health care is hardly an act of interstate commerce, critics make a good point.  The Congressional Budget Office (CBO) went one step further in its criticism of the mandate in 1994 when it noted that the individual mandate was “an unprecedented form of federal action.  The government has never required people to buy any good or service as a condition of lawful residence in the United States.”

This year, Greg Dattilo and Dave Racer conducted a study of state and federal mandates.  The results aren’t too surprising when you consider that most government action fails to achieve the desired result, or leads to unintended consequences that harm other sectors of the economy.

For example, auto insurance is mandatory in 47 states but the uninsured rate has held steady at 14.6 percent.  In addition, the federal income tax is of course mandatory, but the non-compliance rate is still 14.7 percent.  These individuals are all law breakers, to be sure, but mandating something doesn’t make it so.

I would propose a government mandate on happiness, prosperity and full employment.  That could solve a lot of problems.  Perhaps a government mandate on earning at least $30,000 a year?  The way the FED is printing money, that should be no problem.  Maybe a government mandate for universal chocolate chip cookie access and subsequent ban on diabetes?

Racer and Dattilo conclude:

If the goals of health reform are to reduce the uninsured rate, increase access to health care, and improve quality, forcing more people to sign up for health plans is not the answer.  The CBO makes it very clear; people who are forced to own health insurance will, as a result, use more health services.  That will increase overall health spending, put stress on the supply of health care services (reducing access) and not make a dent in quality.

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.

Late last night, Senate Majority Leader Harry Reid released the newest iteration of health care “reform.”  Seeking to outdo Speaker Pelosi’s 1,990 page bill, Reid’s version measures in at 2,074 pages, longer than War and Peace.  You can read and search through the full version here.

The Congressional Budget Office and the Joint Committee on Taxation have released cost estimates of the bill.  Don’t let Senate Democrats fool you, however.  The actual cost of the bill is not $849 billion, mainly because federal subsidies don’t even kick in until 2014.

When fully implemented, the actual cost of Harry Reid’s bill is over $2.5 trillion, from 2014 to 2023.

If you like tax increases, you’ll love the new bill.  It contains over $500 billion in new taxes.  The bill taxes health insurance, Botox, Health Savings Accounts, drug devices, and some employers and employees.  No one escapes Uncle Sam’s scalpel in Harry Reid’s version of “reform.”  Click here for a full list of tax hikes.

More analysis later.

With the Congressional Budget Office set to release its cost estimate of the Senate’s version of health care “reform” sometime this week, taxpayers continue to speculate over the whip count and the prospects for ObamaCare.

Congress.org has set up a virtual prediction market for the health care bill in the Senate.  Click here to make your predictions of ObamaCare’s future.  (Sorry, you can’t make any money off of your predictions.)

Let’s all hope that President Obama and leaders in Congress have a sudden change of heart and decide that more massive government won’t bring down health costs or reduce the federal deficit.

My prediction was 55-45 for final passage, but that doesn’t mean the bill will survive a filibuster attempt.

HT: Political Wire

Well, not yet.  But this week Congressional Budget Office (CBO) Director Doug Elmendorf issued a sobering report on the state of the nation’s finances.

The largest problem by far?  Entitlements … those “popular” little nuggets of government largesse that everyone enjoys receiving but no one (maybe some liberals) enjoys paying for out of their paycheck.  For example, Medicare and Medicaid are projected to grow by 80% over the next 25 years, while Social Security will only grow 20%.

As Elmendorf notes, the nation simply can’t continue to run up the national debt, currently at almost $12 trillion.  He alludes to possible crises down the road: a drastic drop in the dollar, an increase in interest rates and massive tax hikes.

His conclusion:

[F]iscal policy is on an unsustainable path to an extent that cannot be solved by minor tinkering. The country faces a fundamental disconnect between the services the people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services. That fundamental disconnect will have to be addressed in some way if the budget is to be placed on a sustainable course.

“A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action…  The government has never required people to buy any good or service as a condition of lawful residence in the United States.”

From a 1994 Congressional Budget Office report on the Clinton health care plan.

In the past two weeks, Senators Harry Reid and Max Baucus, White House Chief of Staff Rahm Emanuel and other higher-ups in the administration have been behind closed doors crafting a government takeover of health care.

Senator Reid has been the chief architect of a plan to “meld” bills from the Health Education and Labor Committee and the Finance Committee.  Today, Reid emerged from his smoke-filled room with legislation that includes a so-called public option and a health care co-op.

This compromise between liberal Democrats and uber-liberal Democrats now heads to the Congressional Budget Office (CBO), which will attempt to put a price tag on the rag-tag, budget-busting piece of … legislation. The White House hopes this version of ObamaCare will be enough to garner at least 60 votes in the Senate.

Call Congress at 202-224-3121 and tell them to vote “No” on Senator Reid’s health care “compromise.” Click here for more details on the legislation.  Click here for CFIF’s coverage of the health care debate.

The individual health care mandate contained in the so-called Baucus Bill will hit low-income taxpayers, according to the Congressional Budget Office (CBO).

The CBO recently released a chart to the public which illustrated that those making $30,000 to $40,000 (100% to 200% of the federal poverty level) would pay over $200 million in fines for failing to obtain government-approved health care.  This $200 million projection represents 26% of all fines to be paid to the federal government.

In contrast, individuals making close to $100,000 would pay around $100 million in fines, or only about 9% of all fines.

Click here for the chart.

No surprise here.  According to CBO chief Doug Elmendorf, “The net effect of that [climate change legislation] we think would likely be some decline in employment….  The fact that jobs turn up somewhere else for some people does not mean there aren’t substantial costs borne by people, communities, firms and affected industries.”

To think that drastically increasing the cost of carbon without any impact to labor in the energy sector is absurd.  Thankfully, the CBO agrees and is finally cautioning Congress against cap-and-trade proposals.  Click here for the full article.

There has been a great deal of debate over the relationship between tort reform (capping non-economic damages in lawsuits) and health care.

Well, the Congressional Budget Office (CBO) has provided some research to support the notion that tort reform would actually cut health care costs and reduce the budget deficit.

According to the CBO:

[I]mplementing a typical package of tort reform proposals nationwide would reduce total U.S. health care spending by about 0.5 percent (about $11 billion in 2009). That figure is the sum of a direct reduction in spending of 0.2 percent from lower medical liability premiums and an additional indirect reduction of 0.3 percent from slightly less utilization of health care services….  Enacting a typical set of proposals would reduce federal budget deficits by roughly $54 billion over the next 10 years, according to estimates by CBO and the staff of the Joint Committee of Taxation.”

“Health Care Bill Gets Green Light in Cost Analysis”

That is the gift proponents of government-run health care received this morning in the form of a New York Times headline.  That headline, however, along with its accompanying story about the Congressional Budget Office’s preliminary cost analysis of the Baucus bill, is about as deceptive as the ObamaCare sales job Washington politicians have been employing for months.

CBO’s preliminary cost analysis is just that – a preliminary estimate based on a theoretical framework of ideas approved by the Senate Finance Committee.  It’s preliminary because the actual bill hasn’t been written yet, much less been combined with at least five other, more expensive versions of “reform” circulating in the House and Senate.  As Chris Frates of Politico.com noted yesterday:

While the media and lawmakers often shorthand a CBO letter as a ‘score’ or ‘cost estimate,’ today’s CBO letter is neither. Because the bill is still in ‘conceptual,’ or layman’s terms, CBO’s letter today was a ‘preliminary analysis.’  For it to be an official cost estimate, the bill has to be translated into legislative language.

“And CBO goes to great pains in its letter to make the distinction:

“‘CBO and JCT’s analysis is preliminary in large part because the Chairman’s mark, as amended, has not yet been embodied in legislative language,’ the letter says.”

In other words, is anyone prepared to believe that the most recent CBO cost estimate will even come close to resembling reality once the Baucus bill is combined with the budget-busting provisions of the various other versions of ObamaCare?  After Reid and Pelosi are through with their parliamentary tricks outlined here and here?

Yet liberals and the mainstream media today are giddy with excitement.  Why?  Because regardless of the fact that the CBO letter means nothing in the grand scheme of things, something at which the CBO itself hints, for the first time in this debate they have something – anything – that supports their dream of government-run health care.   Reality be damned. 

Our guess is that the large majority of Americans are still not ready to join their party.  Even taken at face value, CBO’s preliminary claim that the Baucus bill will actually reduce the budget deficit by $81 billion over 10 years simply means that the legislation raises taxes on businesses and individuals and cuts benefits only slightly more than it increases spending, while still leaving 25 million people uninsured.  And the more expensive the final bill gets – don’t believe for a moment that it won’t get more expensive – the greater the tax increases and benefit cuts will become in order to square with the President’s pledge to not sign a bill that adds “one dime” to the deficit.

Isn’t “change” grand?

The Congressional Budget Office has released its preliminary cost estimate for the Baucus Bill.  Here is the link.  The CBO estimates the total cost over ten years will be $829 billion.

UPDATE:

Most of the actual expenditures and mandates do not take effect until 2013-14.  In other words, CBO’s 10-year preliminary cost estimate only accounts for six or seven years worth of the expensive provisions.

As much as the White House would like to claim that they are the sole source of facts about health care, President Obama recently made some comments that have little factual support in the actual House bill.

For example:

• The White House claims that if you like your health care plan then you can keep it. However, no one agrees.  Even non-partisan estimates agree that up to 100 million Americans could lose their health coverage. The White House can’t guarantee everyone will keep their current plan, despite the President’s political posturing.
• The White House claims that government control won’t break the budget. False. The Congressional Budget Office even noted that the current version of the bill would increase the federal deficit by at least $239 billion.
• President Obama: “I don’t believe anyone should be in charge of your health care decisions but you and your doctor.” But, even the current House bill establishes a Health Benefits Advisory Committee to make decisions, including cost sharing and benefits.

The White House might claim that  it has a monopoly on the truth, but gap between rhetoric and reality on health care reform is about as large as America’s distrust with government-run health care.