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Friday, November 06, 2009

Beware politicians (and the CBO)

From the executive summary of the CBO analysis of the Republican response to the House Health Care bill:
This evening, CBO released a preliminary analysis of a substitute amendment to H.R. 3962, the Affordable Health Care for America Act, proposed by Representative John Boehner, the Republican Leader in the House of Representatives. CBO and the staff of the Joint Committee on Taxation (JCT) estimate that the amendment would reduce federal deficits by $68 billion over the 2010-2019 period; it would also slightly reduce federal budget deficits in the following decade, relative to those projected under current law, with a total effect during that decade that is in a broad range between zero and one-quarter percent of gross domestic product.
So, the Republican plan would reduce the deficit by $68B? Not really. The deficit would still exist it would only be $68B less than forecasted!!

Thus, the CBO forecasts what the future will be without the amendment. Then the CBO forecasts the future with the amendment. Then it subtracts one forecast from the other and suggests that the difference in the forecasts is the value on which we should all focus?


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