Sunday, January 9, 2011

The Cost of Repeal: "In the neighborhood of a trillion dollars"

Yesterday, Washington Post columnist Ezra Klein took a look at the financial cost of repeal. In the process, he dismantled Republican Majority Leader Eric Cantor's argument that health reform increases the deficit. The explanation—though complex—is not complicated, as shown in the chart below:



The take-away?
"Roughly speaking, new spending is what counts as "benefits." Those are the lines shooting up. New taxes are the lighter blue part of bars pointing down. In years one, two, and three, new benefits are larger than or matched with new taxes. In year four, that's not true, but the difference is fairly small. And in the six years after that, even Cantor admits the benefits match or overwhelm the taxes.
...As for the period "beyond the 10-year window," the Congressional Budget Office -- which is now comparing "apples to apples," as the law is delivering full benefits for all 10 of the next 10 years -- says the law saves vastly more money in its second decade: "The legislation will reduce federal deficits during the decade beyond the 10-year budget window relative to those projected under current law—with a total effect in a broad range around one-half percent of GDP." That's in the neighborhood of a trillion dollars."
Klein also addressed why this part of the debate is so important:
"If, in the repeal fight, it becomes widely understood that the bill reduces the deficit, it will become more popular. So it's crucial, as the repeal effort goes forward, for Republicans to become much more brazen in falsely asserting that the bill doesn't really reduce the deficit, and that even if the CBO does say it reduces the deficit, that they're saying that because they've been tricked somehow. But CBO wasn't tricked. If it were, Cantor, who has a staff dedicated to figuring these things out, would have a better argument than the one he's offering."
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by Christopher Hass - http://my.barackobama.com/page/community/post/obamaforamerica/gGMKDj
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