CBO Says Senate ObamaCare Not Deficit Neutral

When Congress comes back from it’s Christmas break, they are going to have to deal with a serious funding problem with the new Healthcare bill. The original CBO estimate of the Senate version of ObamaCare showed it would save $130 billion over 10 years; this figure has been parroted by both Harry Reid and the President. The problem is just prior to the Senate vote, the CBO issued a letter saying they had errored in their estimate. The main funding for the November Senate ObamaCare over 10 years is as follows*:

$149 billion -Taxing “Cadillac” Health Plans

$190 billion -Reducing expansion of Medicare fee for service plans

$200 billion -Cuts to Medicare Advantage

$36 billion -Penalties

The main areas of cost for the Senate ObamaCare over 10 years is as follows*:

$ 447 billion -HealthCare Exchange

$ 374 billion -Cost to expand Medicare

$14 billion - Misc

*The figures used are similar to published funding and cost estimates, but are presented for demonstration purposes.

If you add up the totals, there doesn’t seem to be enough to pay for the plan, none the less have an extra $130 billion; that because there’s not. The plan is going to cost about $835 billion, while the funding is $575 billion. You know, I’m not an accountant, and I’m certainly not a member of the Congressional Budget Office, but I see a problem here; so did Senator Jeff Sessions (R-AL). He took a trip to the CBO to find out how one uses $575 billion to pay for an $835 billion plan, and come out with an extra $130 billion. Well CBO Director Doug Elmendorf explained the error. It seems the CBO pays Medicare from a trust fund. When figuring the cost of ObamaCare, they mistakenly paid the increases in Medicare ($374 billion) with the same money that was going to be cut from Medicare ($390 billion); in other words the Medicare money in the trust was used twice. If one factors in an additional $390 billion dollars for funding, to the original $575 billion funding ($965 billion); subtract the $835 cost of the health plan; hey!, you’ve got $130 billion dollars left over. Turns out the Health plan is actually $260 billion in the hole (Sessions cited a $300 billion deficit). Check out FOXNews GOP Senator Senate Health Care Increase Federal Deficit, which includes the letter from Doug Elmendorf.

If you take them at their word, the Democrats are in a world of hurt. Pres Obama has promised on numerous occasions not to sign off on a healthcare bill if it increases the deficit by “one thin dime”. Senator McCaskill from Montana said “My statement all along is it has to slow down the increase of health care costs over time, and that is bending the cost curve, and secondly, that it has to be deficit neutral,” and she added “We have to be saving more money for our government than we’re spending. And if we’re not saving more money for our government than we’re spending, then not only will I not support it, the president said he won’t support it,” she added. So if the Democrats are to be believed, the HealthCare bill is dead without a huge increase in funding. The only Democratic response from Harry Reid’s spokesman, "The statements in CBO's December 19th letter about the federal budgetary commitment to health care remain correct," said spokesman Jim Manley. "After 2019, the effects of the proposal that would tend to decrease that commitment would grow faster than those that would increase it. As a result, the CBO expects that the proposal would generate a reduction in the federal budgetary commitment to health care during the decade following the 10-year budget window." In other words, ignore the problem; but that was to be expected. What was Harry Reid supposed to say? He just discovered all his bribery and posturing had may have just gone up in flames.

Can Harry Reid Save HealthCare From Repeal?

Can Sen Harry Reid's no repeal provision in the Healthcare bill be binding? Reed wrote into the bill, "it shall not be in order in the senate or the house of representatives to consider any bill, resolution, amendment, or conference report that would repeal or otherwise change this subsection". The term for this kind of action is called entrenchment. In a posting by Eric Posner; Entrenchment Provisions in the Health Care Bill, he asks and answers the question, Can Congress bind itself in this way? As it happens, I have written a paper on this topic (with Adrian Vermeule). The short answer is “no,” or at least, no one thinks that Congress can bind itself in this way. (For some Supreme Court dicta, see U.S. v. Winstar, 518 U.S. 839, 872 (1996).

In US vs Windstar, the Government referenced William Blackstone, an English judge who wrote a definitive work on Common Law. “In his Commentaries, Blackstone stated the centuries old concept that one legislature may not bind the legislative authority of its successors." and referenced a Supreme Court State Rights case, " Hence, although we have recognized that "a general law . . . may be repealed, amended or disregarded by the legislature which enacted it," and "is not binding upon any subsequent legislature", Manigault v. Springs.

US vs Windsor was a violation of contract case filed against the US Government. After the Savings and Loan scandal in early 1990's, the Government gave Windstar and other financial institutions, tax incentives to take over failing S and L’s. The Government then tried to renege on these incentives and Winstar sued. The government tried to use the argument against entrenchment to justify their actions.

In US vs Windsor, the government referenced a legal essay, Temporal Limits on the Legislative Mandate: Entrenchment and Retroactivity (1987); Julian N. Eule that is more on point. The following is an abstract from JSTOR on the Eule essay: “According to the general wisdom, legislatures lack both the power to "entrench" their enactments against alteration by their successors and the power to "retroactively" undo the efforts of their predecessors. The author argues that, rather than being in conflict, these principles share a common theme. Legislatures operate as agents of the people under constitutionally defined mandates that are limited in time as well as scope. Actions that transcend-either forward or backward in time-the temporal delegation of authority conferred by periodic elections do not bind the electorate. In the first half of the article the author suggests that an understanding of the rationale behind the entrenchment prohibition can help shed light on a diverse group of issues including congressional power to prescribe internal rules of operation, constitutional amendment procedures, and legislative impairment of contracts. In the second half of the article the author takes issue with the traditional objection to retroactivity grounded on vested rights and unfulfilled expectations. In its place he proposes a theory of retroactivity embodied in republican principles concerning the temporal relationship between the people and their legislative agents.”

The court dismissed the entrenchment defense, and found in favor of Windsor. The court took notice of the Eule Article, but said “Although Congress subsequently changed the relevant law, and thereby barred the Government from specifically honoring its agreements, we hold that the terms assigning the risk of regulatory change to the Government are enforceable, and that the Government is therefore liable in damages for breach.” In other words the government had the right to change the law, but all entrenchment arguments aside, the Government is responsible for the monetary consequences of that change.

Posner explained that everything from indebtedness to wars, are uncontroversial entrenchments. However, a Legislature could not entrench a future Legislature to a pre-determined course or strategy, once the next Legislature took control. A Congress at time 1 can pass all the entrenchment provisions it wants, but Congress at time 2 can repeal them by majority rule, rendering the entrenchment provision nugatory ex ante (having no future authority).

A Lesson for President Obama; You Can't Get Something For Nothing

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It might be interesting to see how the Democrats new Health Care Plan will be funded. Now, there are differences between the Senate and House bills, but the majority of the funding remains the same. Keep in mind that the American people will be taxed for the first 4 years without any improvement in Health Care. It will only be after $400 billion or so has been raised, that there will be enough funding for the Health Care bill. The primary funding will come from $50 billion a year savings by reducing "fraud and waste" from Medicare. This may sound good, but it’s a little dishonest. The so-called waste in Medicare is the 12% cost over standard Medicare that goes to Medicare Advantage. In 1997 Congress introduced Part C (Medicare Advantage) to Medicare. The purpose of the plan was a government paid subsidy to the insurance companies so they can offer low premiums and still pay claims. The reasoning behind the Part C plan was skyrocketing cost of Medicare supplements (Medicare pays 80% and Medicare supplements pay the remaining 20%). Part C would fund Private Health care with Medicare funds to create health plans that combined Medicare and supplements into one plan. The majority of these plans are a HMO/PCP plan, as opposed to standard and more portable "Pay For Service" Medicare coverage. These Part C plans eventually cost 12% more than a standard Medicare coverage, partially due to paying doctors higher salaries, however it still gives a considerable savings to recipients over standard Medicare Supplement plans. Currently about 25% of Medicare recipients belong to a Part C plan. The additional cost of Medicare Part C is about $50 billion a year. In other words, the big savings from a reduction in fraud and waste is simply to de-fund Medicare Part C. It should be noted that Medicare Part C has significantly less fraud than standard Medicare, since most the fraud is a result of the low pay for service rates dictated by Medicare. In this case Democrats have been very disingenuous, as there is no plan for any legislation to prevent any fraud or waste in Medicare, beyond de-funding Medicare Part C.

Medicare has two main avenues for reducing costs. The first is mandating hospital and doctor compensations and the second is working with Part D (prescription) insurance companies to negotiate drug costs with drug producers (Big- Pharm). As I have already stated, poor compensation rates has already led to widespread fraud, so it is doubtful the Feds will lower these rates any more. In order for a standard Medicare doctor to make $200,000 in gross income, they would need to see approximately 35-40 patients a day. This compared to a Medicare Advantage doctor, that see on average about 16-20 patients a day, to make the same $200,000 income. This, according to the Democrats is the waste and fraud that needs to be removed from Medicare. On the subject of Big-Pharm, the option to negotiate lower drug prices will not exists, as Pres Obama made a deal with Big Pharm that removes any negotiations for Medicare drug prices, as long as they did not oppose ObamaCare and pay the Senate Finance Committee $80 billion over ten years. This is estimated to double the cost of prescription drugs for Medicare from $250 billion over 10 years to $500 billion (minus $80 billion of course). President Obama has promised that the Health Care bill will be “deficit neutral”, meaning it will be 100% paid for by cuts in Medicare and new taxes. President Obama (and the CBO) has further said the Health care bill will reduce the deficient $130 billion over the next 10 years. However, this savings will be offset by the $170 billion increase in drug expenditures from President Obama’s deal with Big-Pharm. This also allows President Obama to keep his deficit neutral promise on health care, by simply moving the cost back to Medicare.

There are also unfunded mandates in the Healthcare bill that would increase access to Medicaid. Medicaid is funded by federal and state coffers. This will probably result in an increase in state taxes to cover these mandates, but again these costs do not show-up as Health Care costs. Also, there were some sweetheart deals cut my Harry Reid to buy votes to pass the bill. Nebraska, Vermont and Massachusetts will receive matching funds for new Medicaid enrollment that could cost over $2 billion. Further Sen. Mary Landrieu (La) received $300 million for her vote and the biggest of all, Florida gets a pass on Medicare Advantage reductions to the tune of $25 billion a year. None of these payouts will show up as Health care costs and will simply be added to the deficit. Add it up and Harry Reid will increase the deficit $1 trillion dollars over the next 10 years with these payouts; that's more the total cost of the Healthcare plan!

The say you can’t cheat an honest man, because he knows he can’t get something for nothing. Unfortunately there is no clever saying dealing with deception my misdirection. Perhaps after the real cost of the health care bill is realized, there will be.

**added 04/10/2012: Turns out the CBO misstated the savings from ObamaCare by double counting cuts to Medicare . Medicare Trustees Obamacare Will Increase the Deficit by as Much as $527 billion Medicare trustee suggests that the law will actually increase deficits, over the next ten years, by between $346 and $527 billion In March of 2011, Health and Human Services Secretary Kathleen Sebelius admitted that the law double-counts its reductions in Medicare spending, by claiming that the law both reduces the deficit and extends Medicare’s solvency.

Chuck Blahous, who was appointed by President Obama to be a public trustee of the Social Security and Medicare programs...  estimates that at least “$470 billion of the Medicare savings under the ACA scored by CBO through 2021 substitutes for savings required under previous law.” Whether or not you accept his approach depends on whether or not you think that Medicare funds should be segregated from the rest of the budget. 

A CBO report in 2009 stated;  To describe the full amount of HI (Medicare Hospital Insurance) trust fund savings as both improving the governments ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the governments fiscal position.

The White House response is not that it isn't true; what they are saying is it's okay because it has been done before.   The White House cites a report from the left-leaning Center on Budget and Policy Priorities that says that Republican Congresses engaged in Medicare double-counting with the Balanced Budget Act of 1997 and the Deficit Reduction Act of 2005. And apparently that makes it okay.

The Myth of Carbon Credits

I continue to believe there are well meaning folks that continue to believe in global warming, believe that fighting Man Made Climate Change, is about cleaning up the poisons and pollution we are putting into the air. If that were so, I would be in the front lines, fighting for clean air and water. But, that is simply not the case. The history of Man Made Climate Change and it's agenda can be partially traced back to the United Nations and the Intergovernmental Panel on Climate Change (IPCC) . In 1995, Ben Santer of the IPCC, deleted from the United Nations Working Group I Report, conclusions from IPCC scientists, which stated that humans were not responsible for climate change. This was followed by the Kyoto Global Climate Convention. In Kyoto, a world wide treaty was signed by world leaders including President Bill Clinton. The treaty was a thing of which conspiracy theory's are born. The basis of the treaty was carbon dioxide causes global warming, that industrial countries were responsible and they should pay for the damage they have done. This payment would be done by industrial countries paying for their carbon footprint, or the amount of carbon dioxide they produce. Although, these countries are mandated to lower their carbon footprint by a certain percentage, there is no need for them to actually do so; all they need do is pay more money. In Kyoto. the money was to go to non-industrial, low carbon producing countries, that would sell their so called carbon credits. In Copenhagen that was changed to the money going to the International Monetary Fund or IMF, that is controlled by the UN. Either way the result would be the same; a world regulatory agency, or world "government" in the words of Al Gore, echoing then French President Chirac at Kyoto. Obviously the treaty is a world wide re-distribution of wealth and would eventually cause industry to come to a grinding halt in industrialized countries. In 1997 the US Senate realized what this treaty was and voted it down 99 to 1.

Two of the nastiest air pollutants is S02 (sulphur dioxide) and N02 (nitrogen dioxide). These are the pollutants that sting your eyes, hurt your lungs, causes acid rain and is turning the oceans to acid as Al Gore likes to say. Other greenhouse gases are methane, carbon monoxide and some commonly referred to as soot. Wouldn't it be nice if Al Gore was trying to clean the atmosphere of known poisons such as these, instead of C02. If Al Gore and the Man Made Climate Change crowd gets it's way the US and other developed industrial countries will pay trillions of dollars on carbon credits, but be free to dump as much of this poison in the air as it wants. And as I've said before, it won't even lower the levels of C02. The framework the Man Made Climate Change advocates are putting into place will accomplish one thing, it will take money from industrialized countries and give it to non-industrialized using carbon credits. As long as the industry can pay the carbon credits and still make a profit, they will continue to do so, without reducing their carbon footprint. Further, if carbon credits become too expensive, were industry really starts cutting back on it's carbon footprint, that will mean less money to those selling the carbon credits. This means there will be no inducement to raise the cost of carbon credits to force any real reduction in C02, which supposedly is the point to carbon credits.

Hopefully, at least one person has read this and realized the Man Made Climate Change will not remove one ounce of pollution from the air, and is designed solely so UN bankers can get their cut of the carbon credits, as money is re-distributed through the planet; all the while, real pollution is being ignored. And who is on the forefront of cashing in on these Carbon Credits? Would it surprise you to learn that Al Gore is expected be the first Carbon Credit billionaire from his investments in carbon credit investments banks in Europe; once the US enters the picture that amount should double. Until that time Sec of State Hillary Clinton has pledged $100 billion a year.

But there is hope. In recent events it appears the CRU, for this first time in history, is starting to release it's raw data. The data they first released was collected from Russia. Turns out the CRU cherrypicked Russian climate data and ignored 75% of the data that conflicted with temperatures not raising. So I guess all the nay sayers about Climate-Gate were right, the emails didn't appear to show that the CRU scientists had actually falsified any figures in an attempt to strengthen the case for CO2-driven global warming, they simply ignored any data that was conflicting. And again, the CRU provides all the Global warming information used by the United Nations.

One more interesting fact about Climate Change. It seems all the scientists who have signed on to the Man Made Climate Change bandwagon, have ruled out the sun as having any affect on Global Warming. I know, I making this up; there is no way a scientist would ignore that huge thermo-nuclear ball in the sky that is responsible for +99.99 of the heat on the planet (there are also volcanoes, but lets not even start to discuss their carbon footprint). It seems they have decided that the sun is a constant and has no effect at all on global warming or cooling for that matter. Well, it seems there are some pesky climatologist that have figured out that when the sun has spots, Global temperatures go up and when the spots go away, Global temperatures go down. This might have something to do with the phenomena that global warming on Mars mirrors the global warming on earth. And even without instances of very generous interpretations of Man Made Climate Change, the sun spot theory corresponds with every known period of global cooling and warming, in which data exists. Hmmm, might be something more climatologists might want to look into.

C02 Is Not Pollution

The recent Climate-Gate scandal has not totally discredited science, but it does show that science and political expediency do not mix. One of my favorite definitions of science, is “the ongoing attempt to disprove a theory”; the science of Man Made Climate Change departed this from this almost from the beginning. Forget for a moment that the data for Made Made Climate Change has been corrupted to the point that the CRU says it will take 3 years to re-calculate it's findings. Lets look at Man Made Climate Change purely from a prospective of what would actually would be done by the United Nations and Al Gore if the world signed on to a carbon reduction, cap and trade treaty. The Kyoto and Copenhagen conferences presented a plan that the industrial developed world, primarily the United States and China would accept an arbitrary cap on their carbon emissions and would need to buy carbon credits for any carbon admissions over that amount. In other words, as long as the carbon credits cost less than their profit margins, these industrialized countries will simply pay to increase their carbon footprint; this is why it has been referred as “pay to pollute”. These carbon credits will come from non- industrialized countries, where the industrialized countries will trade carbon credits (much they way stocks are traded). In the Kyoto accords, the countries rich in carbon credits would have sold them directly to the countries in need of the credits. However, in Copenhagen, the UN inserted a middleman, the IMF (International Monetary Fund) to control the credits. When the carbon credit rich countries were informed of this, they revolted and the Copenhagen Accord collapsed.

So what does all this mean? First, it means that the science of Man Made Climate Change is being used purely for a re-distribution of wealth between the developed and non-developed industrial countries of the world. The made up value of the world wide carbon credits has been estimated at 23 trillion dollars. Those prone to make the most money are the investment bankers that will broker the carbon credits. Al Gore has invested heavily in these banks and it has been projected that he will become the first billionaire as the result of world wide carbon trading. If science eventually shows that atmospheric levels of C02 does not trap heat, and/or that man's contribution to the C02 levels does not cause Global Warming, then the United Nations and many countries in the world would lose their share of the $23 trillion pot. Since it is science that is being used to justify this re-distribution, there is a huge conflict of interest for scientist are only being given grants to prove the existence of Man Made Climate Change and, according to the CRU hacked emails, any scientists that are questioning Man Made Climate Change are being blocked form peer review and there has been such far reaching attempts to discredit them, that CRU scientists have discussed pressuring colleges to invalidate their credentials.

I am an optimistic person. History tells me that in the long run, science will win out. As I said in a past letter, “When science is used for political purposes, it can only be as corrupted as politicians”; it is the poison of government. It would seem that science is best when it is in conflict with the status quo. But take science out of it's element and it can be used to justify tyranny and fascism. F.A. Haytek described this process in his 1944 book, The Road to Serfdom. Once science has to serve, not the truth, but the interests of a class, a community, or a state, the sole task of the argument and discussion is to vindicate and to spread still further the beliefs by which the whole life of the community is directed. When science becomes political the result is Geocentric(s), Eugenics, and now Man Made Climate Change. Science is a process and at it's best is man's only real attempt at being objective. As long as scientist admit there is no scientific fact, and that all scientific theories will eventually be dis-proven, science will continue to search for understanding, regardless of where it leads.

Al Gore and His Anecdotal Science

Okay, let's stop for a moment and look at what Man Made Global Warming is not. Man Made Global Warming is not about stopping the polluting of the earth. If you're like me, you are in favor of reducing pollution. But the proponents of Man Made Global Warming do not care about pollution as we know it, they are concerned that CO2, a colorless, tasteless and harmless gas, somehow raises temperatures when it's percentage increases in the atmosphere. Now Al Gore is famous for saying that increased CO2 results in increased temperatures is a scientific fact; well, not really. It's actually the opposite; science has long known that an increase in temperature results in an increase of C02, not the other way around. This is very important because there are two ways to prove scientific validity. The first is basic Newtonian physics; reduce a theory to it's basic components and try and reproduce your findings. In other words, create an experiment that proves your theory. The fact that increased heat results in increased levels of C02 can be proven by a very simple experiment. The C02 comes from the oceans heating up. As an example, all you need to do is put ocean water in a sealed tank and heat it up; with in a very short time the CO2 levels will increase.

So, if Al Gore is correct, you should be able to prove the opposite, right? Well no, there has never been an experiment that has shown that C02 traps heat. To say that C02 traps heat because Heat increase C02 is called reverse logic and is the worse form of science. It would be the same as saying because heat melts ice, then melting ice must cause heat. To try and prove his reverse logic, Al Gores uses a second and much harder to prove scientific method, called proxy. Proxy science requires you to first prove a phenomena exists and then try and prove what causes it. In other words, rather than observing a phenomena, you simply reason it exists; then you try and reason why it exists. The main problem with proxy science is, it's very difficult to know what other forces play a part in the phenomena your are dealing with. In the first part of this equation, Al Gore and the scientists paid by the United Nations and the Carbon Credit traders for their analysis, have spent most of their time trying proving that Global Warming exists. Since Global Warming is not immediately observable, the scientist have to develop some method to show it does. This is primarily done through temperature probes (thermometers) placed all over the planet and monitoring Arctic and Antarctic ice flows; and while they say their data proves Global warming is occurring, the recent hacked-emails from the CRU say, it is a "travesty" they can't prove Global Warming. Then, without the distraction of proving the planet's temperature is actually raising, he determines the C02 emitted into the atmosphere by man, to the exclusion of the massive amounts of C02 that is naturally produced, all the other gases in the atmosphere and all natural phenomena (including the sun), is sufficient to cause Man Made Global Warming . Then Al Gore ignores that there is no science that proves C02 does anything other that feed trees; states that C02 traps heat, but refuses to discuss the basis of this reverse logic with anyone; the proxy science becomes anecdotal dogma.

So when you hear Al Gore mis-state science, do what I do and yell out, "Liar!" When Al Gore states that 40% of the Arctic Ice has melted, yell out "Liar"; the 25% of the ice that melted in 2007, has returned this year. And, when Al Gore says all the Polar Bears are dying, yell out, "Liar"; their population has stayed steady at about 20,000- 25,000 for the last 20 years and is believed to be an increase from 1950 population of 5,000. Oh, and by the way, Polar Bears are excellent swimmers and the male has a nasty habit of eating it's young unless stopped by the mother. When science is used for political purposes, it can only become as corrupted as politicians, lets hope Man Made Global Warming goes they way of the conventional wisdom that earth was the center of the universe.

This is in response to Michael Stobbe comment on my Global Warming article published in your paper Dec 20. First I want to compliment Mr Stobbe for responding in such a respectful way, although we may not agree (hard to tell, but I'll get to that in a moment) it is the intelligent exchange of ideas that is missing from the Man Made Climate Change discussion. What Mr Stobbe misunderstood was I was not trying to make a case for increased C02 levels coming primarily from the Ocean; actually I don't believe that at all. What I was saying is it doesn't matter were the C02 is coming from, because, beyond questionable anecdotal science, there is no evidence that C02 traps heat. My little experiments were simply (very simply) designed to demonstrate the difference between experimental and anecdotal science; and the anecdotal science of Man Made Climate Change is horribly flawed. I again state my argument. We know that heat causes atmospheric C02 levels to rise. The entire Man Made Climate Change argument rest on the fallacy that C02 traps heat and causes temperatures to rise. To use one to prove the other is like saying because heat melts ice, then melting ice causes heat. If you believe that than I've got some carbon credits for sale.