So Does the Health Care Bill Reduce the Deficit At All?

By Megan McArdle

This Fox News story implies that the memo from the CBO means that the bill increases, rather than decreases, the deficit under CBO scoring. 

Republicans, emboldened by a new letter from the Congressional Budget Office, accused Democrats on Wednesday of "Bernie Madoff accounting" for double counting the savings from Medicare as a means to pay for the Senate health care bill.

As the Senate prepares for a crucial vote before final passage of a massive overhaul bill that Democrats argue will reduce the deficit by $132 billion over 10 years, Sen. Jeff Sesssions, R-Ala, said the nearly $500 billion in cuts to Medicare actually will add $300 billion to the deficit

"The real score on this legislation is that it would cause the deficit to increase, and not be a surplus as the president has promised," Sessions told Fox News. "And a lot members of our Congress have said I won't vote for this bill unless it's deficit neutral. It's not deficit neutral. It will add to the debt. That's clear today."

Sen. Judd Gregg, R-N.H., added, "This is Bernie Madoff accounting and it's an outrage."

I don't know whether it is the senators or the fine folks at Fox who are confused, but this is not correct.  What the CBO memo says is that if you count the Medicare cuts as extending the solvency of Medicare, you cannot then also count them as paying for the bill:  it's one or the other.  But if the bill is implemented as written, then under the CBO scoring model, it will reduce the deficit by $132 billion over ten years.  Unfortunately, we'll still have a big Medicare budget problem, and we've used up some of the most obvious ways to fix it paying for other things.

This article available online at:

http://www.theatlantic.com/business/archive/2009/12/so-does-the-health-care-bill-reduce-the-deficit-at-all/32545/