Double counting caused appearance of deficit reduction

"This bill will strengthen Medicare and extend the life of the program."

- President Barack Obama, after the Senate health care bill secured 60 votes.

We never believed the claim that ObamaCare would result in reducing the federal deficit because it used a transparent trick: A ten-year horizon was used. During that ten years the tax increases and benefits cuts came early, but the benefit increases (if any) came later. Any ten-year period with all effects will cause a substantial deficit. So it was an illusion.

But the problem is worse. Health-care takeover proponents are double counting the savings from cutting my and your future Medicare benefits. To use them both within Medicare and elsewhere in the budget to "reduce the deficit." They say they are saving Medicare. But we can only spend those dollars once.

So which is it? Preserving some funding for Medicare to "strengthen Medicare" or funding to offset other expenses and reduce the deficit? Can't be both. The Congressional Budget Office explains.

CBO document dated 12/23/2009

The key point is that the savings to the HI trust fund under the PPACA would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs. Trust fund accounting shows the magnitude of the savings within the trust fund, and those savings indeed improve the solvency of that fund; however, that accounting ignores the burden that would be faced by the rest of the government later in redeeming the bonds held by the trust fund. Unified budget accounting shows that the majority of the HI trust fund savings would be used to pay for other spending under the PPACA and would not enhance the ability of the government to redeem the bonds credited to the trust fund to pay for future Medicare benefits.
To describe the full amount of HI trust fund savings as both improving the government’s 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 government’s fiscal position.

Megan McArdle aka Jane Galt at The Atlantic goes into further detail. And she shows that this double counting was not an isolated incident. It was repeated everywhere including by President Obama quoted above.

Senator Sessions says correcting this error would turn the claimed budget surplus into increased deficit of $300 billion.

Via: Say Anything Blog and American Spectator.