You Would be Bankrupt if the CBO Managed Your Financial Decision Making


By Richard H. Frank

Our esteemed Senate is about to cast their vote to approve Government-controlled healthcare for all Americans.  They have continued an unending rhetoric that any bill passed must “reduce overall costs, provide coverage for all Americans, bend the cost curve downward and not increase the deficit.”  They are quick to site the Congressional Budget Office analysis as the authority against which they measure the proposed legislation to meet the above objectives.

Nowhere, however, do they challenge the track record of the CBO for accuracy.  One of the most revealing examples is their forecast for the 2002 Budget producing a surplus of $405 billion dollars that actually resulted in a $157 billion deficit.  That miss of $562 billion, or 138% should you prefer, is more representative than not of their track record for accuracy.  Let us not, however, be too hard on the CBO as they only use the assumptions given to them by the administration in preparing their forecasts.  I believe in this case the Clinton Administration may have provided the assumptions.

Should we examine the elements that caused their forecast to be wrong, we find the assumptions to be incorrect in the following areas:

Technical changes –                                       missed by 48%

Economic changes –                                      missed by 17.8%

Tax Relief –                                                      missed by 13.5%

Discretionary spending –                              missed by 14.1%

Mandatory Spending –                                  missed by 6.6%

Technical changes amounted to about one half of the miss by the CBO.  Obviously the impact on individual income and capital gains tax bases resulting from the terrorist attacks and slumping stock market could not have been foreseen.  However, the exclusion of spending increases, a cap imposed in 1990 were seen as no longer useful as a measure of current policy for projecting discretionary spending.  Since Congress was spending in excess of the caps imposed upon them, why consider them in their estimates for the future? So much for a base line budget using historical data as a basis to form any assumption.

The CBO asserts that changes in estimates for tax collections not accounted for by economic conditions and the number of entitlement beneficiaries caused the need for adjustments (misses) to their forecast.  How can the CBO not recognize the unfunded obligations from Social Security, Medicare and Medicaid that have this Country on the path to bankruptcy by 2025?  Congress needs to stop creating new entitlement programs such as healthcare and address those existing programs that are the fundamental factors in the demise of this Republic.

But NO, Congress will just keep the blinders in place, present those assumptions to the CBO that support their promises for reduced costs, universal coverage, bending the cost curve and not increasing the deficit while burying their heads in the sand to the real costs of the legislation.  How stupid do they think the American people are?  If the CBO says the cost of the Affordable Health Care for Americans Bill is only $1 trillion, you can bet it is really $3 trillion and adds to the deficit.  More importantly, it does nothing to solve the unfunded liability problems of Social Security, Medicare and Medicaid.

Thank God the CBO isn’t managing our personal financial decisions….or are they?  Big Government, unfunded liabilities, unchecked spending and the increased national debt are all warned against by the Founders and not provided for in the Constitution.  Wake up and stop the drunken Government spending binge being thrust upon us and future generations.  CHANGE CONGRESS IN 2010!

One Response

  1. They need to let the people vote on these matters.

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