Right-wing media baselessly claim CBO estimate erases health care deficit reduction
Research ››› ››› ERIC SCHROECK
Right-wing media have claimed that health care reform will "cost $115 billion more than we thought," thus "wip[ing] out" promised deficit reductions. In fact, that money would only be spent if Congress separately appropriates it, just as Congress would have to do for any other spending bill. And even then, that spending would only adversely impact the deficit if Congress decided not to offset it with corresponding spending cuts or revenue increases.
Varney, HotAir baselessly claim new CBO numbers "will wipe out" the deficit savings from health care reform
Varney: CBO says health care reform is "going to cost $115 billion more than we thought, and that will wipe out the savings which were supposed to reduce the deficit." On the May 12 edition of Fox News' Fox & Friends, Fox Business' Stuart Varney claimed: "Six, seven weeks after [health care reform] passes, now we get CBO numbers saying, wait a minute, it's going to cost $115 billion more than we thought, and that will wipe out the savings which were supposed to reduce the deficit."
HotAir's Allahpundit: "Practically all" of the health care reform savings "is gone now." In a May 11 post, HotAir blogger Allahpundit wrote about the CBO estimate and stated: "Just bear in mind that the vaunted 'savings' from O-Care per the CBO score before the bill was voted on was $138 billion. Practically all of that is gone now."
But Congress must separately vote on provisions included in the $115 billion figure
CBO: Enacting health care reform legislation will reduce deficit by $143 billion over first decade. In a March 20 cost estimate of the Senate health reform bill and the health care and education reconciliation bill, CBO reported that if Congress approved those pieces of legislation and President Obama signed it, the implementation of the mandatory provisions of the bills would "produce a net reduction in federal deficits of $143 billion over the 2010-2019 period."
CBO: Health care reform authorizes at least $115 billion in "discretionary spending" that Congress could choose to approve separately. In a May 11 letter to Rep. Jerry Lewis (R-CA), CBO estimated the "costs that will be incurred by federal agencies to implement the new policies established" by the health care reform legislation, as well as the cost of "[e]xplicit authorizations" for grant and program spending that is not specifically appropriated by the bills. CBO determined that costs of implementation would be at least $10 billion to $20 billion over 10 years, while the costs of the explicit authorizations would be "about $105 billion" over that period, and thus the total would "probably exceed $115 billion over the 2010-2019 period." The letter makes clear, however, that "By their nature... all such potential effects on discretionary spending are subject to future appropriation actions, which could result in greater or smaller costs than the sums authorized by the legislation." In other words, Congress must separately approve those funds in order for them to be spent.
Time's Pickert: "[T]his additional discretionary spending will only happen if Congress authorizes it." Time's Kate Pickert wrote on May 12 that "this additional discretionary spending will only happen if Congress authorizes it. The $938 billion in mandatory spending called for in the law, on the other hand, will happen unless Congress acts to change the law." Pickert further stated:
So the new law says the government will spend $938 billion over ten years on provisions in the Patient Protection and Affordable Care Act. The law also says Congress can spend $115 billion more, but it doesn't have to. In other words, future discretionary spending called for in some new programs, along with expenses incurred by federal agencies charged with overseeing implementation -- like the IRS and Department of Health and Human Services -- is up to Congress.
This is not atypical. This is run-of-the-mill business as usual Congress. Funding to keep the government running -- and the lights on at the IRS -- is often doled out this way, via the budget. There is $34 billion in authorized spending for community health centers in the new CBO health reform estimate. These centers are almost always paid for with discretionary spending. In fact, says Paul Van de Water, of the Center on Budget and Policy Priorities, "Most of things [in the CBO letter] are things traditional [sic] financed through appropriations."
White House: Discretionary health care provisions would have to be offset by comparable spending cuts
White House has said discretionary spending must be "offset somewhere else in the discretionary budget." In a May 11 article about the CBO estimate, Politico reported that Office of Management and Budget spokesman Kenneth Baer stated, "If these authorizations are funded, they must be offset somewhere else in the discretionary budget. The president has called for a non-security discretionary spending freeze, and he will enforce that with his veto pen."
Politico: Democratic aide said discretionary spending "will need to compete for funds within set budgetary limits." Politico further reported: "[A] Democratic leadership aide on Capitol Hill said the Congress will have to stay within the budget." Politico quoted the aide as saying: "Just like other authorized programs, the discretionary programs in health reform will need to compete for funds within set budgetary limits."
CNN.com: "Congress requires most discretionary spending to have available resources under so-called 'pay to go' rules." Reporting on the revised CBO discretionary cost estimate, CNN.com noted that "[i]ncreased costs in discretionary spending would not necessarily offset the estimated deficit reduction. Congress requires most discretionary spending to have available resources under so-called 'pay to go' rules."
CBPP: "[I]ncreases in discretionary funding related to health reform may be accompanied by decisions to provide less funding for some other discretionary accounts." The Center on Budget and Policy Priorities (CBPP) has noted that "Congress operates in most years under a limit, set in the congressional budget resolution, on the total amount of discretionary funding that can be appropriated for that year." CBPP continued: "As a result, any increases in discretionary funding related to health reform may be accompanied by decisions to provide less funding for some other discretionary accounts, since Congress will need to remain within the operative ceiling on discretionary appropriations."
Congress often decides not to approve this type of authorized discretionary spending
OMB spokesman: "Congress does not always act on authorizations that are put into legislation by drafters." The Associated Press reported on May 11 that "the additional spending is not mandatory, leaving Congress with discretion to provide the funds in follow-on legislation -- or not." The AP quoted Baer as saying: "Congress does not always act on authorizations that are put into legislation by drafters. ... Authorizations for discretionary spending are not expenditures."
CBPP: "Congress traditionally authorizes spending for many discretionary programs at much higher levels than are actually appropriated." CBPP wrote on March 25 that "Congress traditionally authorizes spending for many discretionary programs at much higher levels than are actually appropriated; indeed, many authorizations are never funded at all, because the Appropriations Committees cannot find room to fund them within the overall amount they are allowed to appropriate for the year." CBPP also stated:
CBO treats mandatory spending and discretionary spending separately in estimating the cost of legislation. It does so for good reason. Mandatory spending, such as Medicare and Medicaid, continues from year to year unless new legislation is passed to reduce it. In contrast, discretionary spending, which covers most of the day-to-day operations of federal agencies, is provided for a year at a time in annual appropriations bills and is provided only to the extent that those bills make funding available. The CBO cost estimate for health reform appropriately includes all mandatory spending costs in its calculation of the effects of the legislation on the deficit, and provides a separate tabulation of the possible discretionary spending that could -- contingent on future appropriations legislation -- result from enactment of health reform.
Wash. Post's Ezra Klein: "CBO doesn't count potential discretionary costs because they may or may not be real." Washington Post writer Ezra Klein stated on May 12, "When the Congressional Budget Office assesses the cost of a bill, they look at mandatory effects. ... If the bill simply says that you can choose to fund something by taking another vote on it in the future, it doesn't enter the tally. It's a world of musts, not mays." Klein further stated that "CBO doesn't count potential discretionary costs because they may or may not be real, just like it doesn't count savings that may or may not happen, because they can't be projected with any sort of certainty."
CBO offered previous estimate of potential discretionary spending before Congress passed health reform
Before Congress passed final bill, CBO identified "at least $50 billion" in potential discretionary spending associated with health care reform. Contrary to Varney's claim that CBO said health care reform will "cost $115 billion more than we thought," Time reported on May 12 that "CBO said in March that the reform law authorized about $50 billion in discretionary spending. This new letter is simply an update with some corrections." Indeed, on March 15, CBO stated that it had "identified at least $50 billion in specified and estimated authorizations of discretionary spending that might be involved in implementing" the Affordable Care Act as passed by the Senate. CBO further noted that such spending "would require future action in appropriation bills."