Five Months Later - Taxes and Health Care Reform
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Keith Hennessey looks at the CBO's annual summer baseline update:
On page 6 (page 24 of the PDF) is a box titled “The Effects of Major Health Care Legislation on CBO’s Baseline.” It provides an important new data point that was absent when the legislation was being debated...Unlike with other major legislation, CBO’s scoring of the health laws blended spending increases and tax cuts into a single measure of deficit effects...Only now does CBO tell us in a parenthetical:
Taking into account all of the provisions related to health care and revenues, the two pieces of legislation were estimated to increase mandatory outlays by $401 billion and raise revenues by $525 billion.
...Deficits matter. So do spending and revenues. If they remain in place, these laws will make government spending $401 B larger this decade. By reducing the budget deficit through tax increases, these bills will shift some of the fiscal burden from the future to the present. By increasing government spending, these bills will increase the cost of government on the private sector that pays for it. That latter point is an important piece of information that Congress should have had when they voted. I am generally a fan of CBO, and please don’t group me with the bashers who say they did everything wrong. This, however, was a failure.