Here's the story budget wonks will tell from today's Congressional Budget Office report: The deficit is poised to shrink to its lowest level since 2008. Good news? Yes, if you're a deficit hawk. Bad news? Yes, if you think (as I do) the deficit is falling too quickly, especially at a time of high unemployment and declining household debt.
Here's the story I wish more people would talk about: Our incredible shrinking Medicare projections. Since August, CBO has now revised down its projections of mandatory health care spending by nearly $500 billion, as Michael Linden pointed out. Since the 2010 CBO report, projected Medicare spending between 2013 and 2020 has fallen by just over $1 trillion ... or 16%.
Here's the graph comparing 2010's Medicare projection to 2013's ...
... and here's the graph comparing cumulative Medicare spending over that time. In three years, we've taken projected Medicare spending in the twenty-teens down from about $6.5 trillion to about $5.5 trillion.
Two reasons. First, the "runaway" growth of health care costs has been a motivating reason for responsible Washingtonians to ignore the unemployment crisis and focus on our deficit. But lo-and-behold, we've cut more than ONE TRILLION DOLLARS from projected Medicare spending -- and much more if you project out for the full decade. Many of the cuts have come from laws, like the Affordable Care act. Others came from lower growth in overall health care spending.
Second -- and this is the really important point I wish I could make more often -- this is an invaluable lesson in the folly of long-term budget projections (yeah, I appreciate the irony that I'm graphing budget projections to make this point). In a world where all predictions about the future of U.S. government spending turn out to be true, it makes a lot of sense to pay rapt attention to 10- and 20-year forecasts of spending and revenue. But in a world where the most exquisitely delicate change in hospital cost inflation suddenly saves hundreds of billions of dollars, it makes projections impressionistic, at best. In the future, there are budget crises that some people think might happen. In the present, there is a long-term unemployment crisis that we know is happening.
Why should impressionistic statistics about the future win that fight for Washington's attention?