Hillarysworld

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After the Blair House Summit, a bunch of you e-mailed to ask what I thought of Rep. Paul Ryan's argument that the bill "does not control costs" and it "does not reduce deficits." There's a lot going on in Ryan's remarks (which you can read here), so this might take awhile. But before we dive so deep into the weeds that we're seeing earthworms, here's the basic conclusion: Ryan's critique scores some clean points and also deploys a couple of dirty tricks, but it doesn't damage the bill's claim to reduce deficits and doesn't even engage whether the bill controls costs.

But let's begin at the beginning. Ryan says that "the true 10-year cost of this bill in 10 years" is $2.3 trillion. On this, Ryan is right, but misleading. In Ryan's favor, Democrats have artificially lowered the cost of the bill by pushing its start date back to 2014, even as its 10-year budget window begins in 2010. The 10-year cost of the bill is really only counting six years of operation. This was a deceptive effort to keep the bill's price tag under $1 trillion, even as the bill's price tag was really quite a bit more. Point for Ryan.

Ryan gets the $2.3 trillion by looking at what health-care reform will spend in 2019 and extrapolating that number out across the next 10 years. I'll trust that he did the calculation correctly. The problem is that Ryan uses the classic “This Is A Big Number" technique to imply that the bill is financially irresponsible, when putting the number in context would show just the opposite.

According to the Congressional Budget Office, the bill cuts the deficit far faster in the second decade than in the first. That's because the revenues and savings grow much faster than the spending. The bill might cost $2.3 trillion, but it either raises or saves $2.95 trillion, for a net deficit impact of negative $650 billion. So although Ryan uses the price tag to imply that the bill's spending is somehow worse in the second decade than in the first decade, he omits the information that's actually relevant for his presentation on cost control and deficit reduction.

I imagine the congressman would respond to my previous point by saying that he doesn't buy the CBO's estimates. His argument here has to do with how the federal budget is structured, or what's called "double-counting." And it's complicated, so bear with me.

[SNIP]

Wherever you fall on double-counting, $124 billion isn't much money in the scheme of this thing. Ryan gets his big money a few paragraphs later, when he makes a much more dishonest argument. The play here is simple, and it's beneath a politician of Ryan's reputation: He attaches the cost of fixing the Medicare Sustainable Growth Rate to the health-care reform bill.

For a longer explanation of this issue, head to this post. The short version: In 1997, Republicans passed the Medicare Sustainable Growth Rate into law. The provision created a simple equation meant to hold down Medicare costs and cut doctor payments when they rose. But the provision was passed when Medicare's costs were uncommonly low. Suddenly, SGR was forcing huge cuts rather than the modest adjustments that had been intended. So legislators began voting to delay implementation rather than cut doctor payments.

[SNIP]

To sum up, then, Ryan makes some good points about the true cost of the bill and realities of the federal budget. But he purposefully omits any mention of the bill's expected savings, disingenuously attaches the price tag of a broken Republican policy onto the health-care reform bill, and selectively stops extrapolating trends when they don't fit his points. It's a presentation designed to make the bill look less fiscally responsible than it really is.

But don't listen to me. Robert Reischauer is the head of the Urban Institute. He's also one of the CBO's most revered former directors, in no small part because his relentlessly honest cost estimates helped doom Bill Clinton's bill in 1994. I reached him earlier today and asked whether he thought this bill made fiscal sense. "Were I in Congress and asked to vote on this," he replied, "I'd vote in favor." The bill isn't perfect, he continued, "but it at least has the prospect for creating a platform over which more significant and far-reaching cost containment can be enacted."

The same cannot be said for the status quo.

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Full article @ Washington Post Voices blog

Ezra Klein has presented a good fair assessment of Rep.Paul Ryan's critique of the bill on the table.

Robert Reischauer is a strong voice and worth listening to.