March 21, 2010
ObamaCare Cost Estimates Are Even Worse If You Use Dynamic Scoring

Economist Gregory Mankiw explains.

There has been a lot of talk lately about the CBO scoring of the health bill.   Here is one thing people should understand about their numbers: When they estimate the budget impact of a bill like this, they assume the path of GDP is unchanged.

Recall that the bill raises taxes substantially.  Some of these tax hikes are the explicit tax increases on capital income to pay for the insurance subsidies.  Some of these tax hikes are the implicit marginal rate increases from the phase-out of the insurance subsidies as a person's income rises.  Both of these would be expected to reduce GDP growth.

And there are other reasons to assume that ObamaCare will slow economic growth, notably its mandates on businesses.

Cross posted at Jim Miller on Politics.

Posted by Jim Miller at March 21, 2010 02:30 PM | Email This
Comments
1. A GRATUITOUS INSULT - THE HOUSE MAJORITY TAKES A SHOT AT VETS
Their budget numbers are not the only Alice in Wonderland / Wizard of Oz aspect of today's proceedings.
Today the U S House of Representatives passed a resolution honoring "Cold War" Veterans.
I served two years in the United States Army in the Cold War years from 1967 to 1969. This included time in Southern Germany when that place was the frontline in the Cold War.
Today's House resolution was an insult.
The resolution was sandwiched into business on the day when the House was wreaking the most violence done to the U S Constitution in the last 70 years. That it was done during a Lenten Sunday -- a day of the week and a time of the year which is holy to the majority of Americans -- cannot be taken as a coincidence. So the message of the resolution process is very different from the words contained in it.
Instead, the message of these two facts in combination is clearly a sneering "up yours" to Americans who follow both faith and the Constitution, especially those who have done so in uniform. This insult was deliberately timed by those presently in power in the House to chide those who oppose both their despotic and unConstitutional grab for power and their arrogant bigotry towards those of us in the community of faith.
We can all hope that this insult by process and context will over time dissolve as the words of the resolution itself bring growing recognition and honor to the endurance and valor of America's Cold Warriors. All, while we continue to pray and to work so that the damage done to our Constitution today is soon reversed.
P / P

Posted by: P / P on March 21, 2010 04:40 PM
2. Maybe we should just skip the whole process of using a non-partisan scoring office, and just let the Heritage Foundation score the bill.

Posted by: John Jensen on March 21, 2010 04:43 PM
3. Ezra Klein,Notes on CBO skepticism

What we can say about the CBO score the Democrats got is that it could be overestimating or underestimating the savings that health-care reform will deliver, but in any case, this is the best guess from the town's most rigorous guesser. And it's a more promising prediction than was offered for the Medicare Prescription Drug Benefit or the Bush tax cuts or really any piece of legislation passed in the last 10 years. Democrats have done the best they can to make this bill fiscally responsible, and CBO has done the best it could to make that a tough test to pass. Dismissing that works for the GOP's short-term agenda, but that shouldn't be confused with a serious methodological critique that they mean to sustain.
Posted by: MikeBoyScout on March 21, 2010 05:09 PM
4. And there are other reasons to assume that ObamaCare will slow economic growth, notably its mandates on businesses.

So, it'll be like going from the Clinton Administration to the Bush Administration, only we'll get more healthcare. Sounds good!

...the most violence done to the U S Constitution in the last 70 years.

They passed a resolution opening prison camps in foreign lands, allowed rendition of innocent persons thereto, and approved illegal wiretapping? Did they declare anyone to be an "enemy combatant", or approve torture of such persons?

Posted by: tensor on March 21, 2010 05:46 PM
5. These evil democrats have set in motion the ruin of American medicine. Costs will NOT come down. There's no evidence that health insurance premiums will come down. They will, in fact, go up. You lie, Obama. Obama has already tipped his hand and admitted that he desires the destruction of private health care. He wants single-payer, which is government-run medicine. Employers will be given incentives to fob employees off onto government run programs. That is quite intentional. We will have to pay once for Obamacare, and then again for private care in order to not have to wait for care. This will not end well. These people have pushed the ball of destruction further down the road. Heaven help us. The marxists are destroying America with their takeover of medicine. There will be less innovation now, long lines, and doctors who will not be motivated to perform. Evil marxists.

And Glenn Beck made a good point this past week: He played audio of Obama complaining that we should not have to pay for people's bad health habits. Beck pointed out that --guess what? Obama smokes. He's not willing to change his bad health habits; just yours. He is "more equal" than you, dontcha know? This is only the beginning.

Posted by: Michele on March 21, 2010 08:20 PM
6. Here's another thing: Our founding fathers spoke of rights that are God-given. And the cool thing is, nobody has to be robbed of anything for us to have them. Notice that the rights democrats talk about ("health care is a right!") involve forcibly taking from someone to give to someone else. That's not right. It's evil.

Posted by: Michele on March 21, 2010 08:23 PM
7. ...he desires the destruction of private health care. He wants single-payer...

As does Rep. McDermott, who routinely receives 75% of the vote. I do find it amusing you believe private health-care companies do something useful, especially encouraging "innovation." The profits of a private health insurer ARE the difference between the amount of healthcare for which the policyholders pay, and the amount they receive. These companies certainly don't encourage medical innovations; they deny coverage for exactly such attempts!

They are middlemen, skimmers, who produce nothing except paperwork and grief. (And private yachts for their CEOs, if the company can deny sufficient value to the policyholders.)

Posted by: tensor on March 21, 2010 08:31 PM
8. ...he desires the destruction of private health care. He wants single-payer...

As does Rep. McDermott, who routinely receives 75% of the vote. I do find it amusing you believe private health-care companies do something useful, especially encouraging "innovation." The profits of a private health insurer ARE the difference between the amount of healthcare for which the policyholders pay, and the amount they receive. These companies certainly don't encourage medical innovations; they deny coverage for exactly such attempts!

They are middlemen, skimmers, who produce nothing except paperwork and grief. (And private yachts for their CEOs, if the company can deny sufficient value to the policyholders.)

Posted by: tensor on March 21, 2010 08:31 PM
9. tensor, canadians come down here when they can't get the care they need in Canada, which is quite often. In fact, their government sends them down here quite regularly because they don't have the medical infrastructure needed to serve their country. they don't have the clinics; they lack adequate medical technology for diagnostics and treatment. Why you think that's a good thing is beyond anyone here. Thank goodness they have us to come to. But when we become like them, they won't be able to come here. And where will Americans go to get the care they need? There will be nowhere to run.

and what about that Canadian leader who announced he was coming to the states for a procedure that would be way less hard on the body than the archaic junk being done up in Canada? We have innovation here; and Canada is stuck with less. Now we will be more like them. Obama is putting America on the road to second-class very quickly. His record-busting deficits are also putting us there very quickly. He is an evil president.

Posted by: Michele on March 21, 2010 10:05 PM
10. "They are middlemen, skimmers,..."
And now the IRS will be used to force ALL of us to contribute to health insurance middlemen and skimmers, both public or private.

Posted by: Mom on March 21, 2010 11:06 PM
11.
Once again, at the risk of being pilloried at the next meeting of the Republicans, my party, I would like to argue in favor of this Asset Tax...I mean health care bill.

Here is what it does:

"For people at those income levels [people earning more than $200,000 and couples starting at $250,000] , all their investment earnings will be taxed 3.8%, marking the first time the hospital insurance tax has hit non-wage income."

I think this is fairest way to tax people.

I would like to see us reduce:

-Income Tax
-Capital Gains Tax
-Business Tax
-Sales Tax

However -- I have no problem at all with asset taxes on interest and dividends.

While investment drives business, dividends and interest on idle money, really doesn't do much (often for both investors and the economy).

True business is about flow, creation, products, jobs.

Asset taxes release capital back into the market in the fastest way possible, tend to reward the doers and penalize the idlers.

I say, Republicans should take a second look at this Asset Tax (Health Bill) and reconsider!

Posted by: John Bailo on March 22, 2010 09:54 PM
12. John,

You do realize that capital gains taxes are taxes on capital gains, the profits on investments that you so dearly want to support. I think you really don't understand what is investment earnings, especially among the rich. It's not your grandmother's savings account at the bank; it's a structured investment vehicle or shares in venture capital firm or LLC that returns passive income.

The very capital you want to free up to drive business. It's the dividends and interest paid back that creates the desire to make the investment in the first place!

Posted by: Shanghai Dan on March 24, 2010 09:28 PM
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