Congressional Budget Office

You may have heard about a new report claiming the Affordable Care Act will increase the deficit by $340 billion, rather than decreasing it by $143 as projected by the Congressional Budget Office. Now, there is a big difference between these two numbers, so you would be justified in asking how this new study could come to such a different conclusion from the CBO, the government’s own nonpartisan scorekeeper. The answer is by using some very fuzzy math.

It’s a little complicated, even for me and I’m a numbers person! But the issue is basically this: Medicare benefits are paid out of a trust fund. Legally, the trust fund can’t spend money it doesn’t have. So this new study is based on the assumption that when the trust fund is expected to run out, the government will simply stop paying for Medicare benefits. This is important because one way the ACA reduces the deficit is through long term Medicare savings. The new study argues that these savings shouldn’t be considered, since the Federal Government won’t be paying for Medicare benefits eventually. Basically, if the government wasn’t going to spend the money anyway, we shouldn’t consider this money “savings.”

But frankly, this is bogus. Does anybody think that the government is really going to cut off health care benefits to millions of seniors? Read more »

The super-committee could not agree on a plan to cut the deficit by $1.2 to $1.5 trillion. Some in the media are calling it a failure – but we’re relieved that there were members who rejected plans that were unbalanced and unfair. Here are five reasons why:

1. The most immediate deficit the nation faces is the lack of jobs—and further spending cuts would have made that deficit worse.

   Yes, the nation faces a long-term fiscal imbalance. But the most urgent economic problem is unemployment. Since the “recovery” started in June 2009, the job market has made only modest gains— unemployment is still at 9 percent—and women have actually lost jobs, largely because cuts to public sector services have disproportionately eliminated jobs held by women. More spending cuts would have meant more job losses. In contrast, providing more help to struggling families boosts the economy, and thus can help reduce long-term deficits. The Congressional Budget Office estimates that extending emergency unemployment insurance and providing additional refundable tax credits in 2012 for lower and moderate-income people “would have the largest effects on output and employment per dollar of budgetary cost.” And growing the economy reduces the fiscal deficit as well as the jobs deficit; workers with jobs need less from safety net programs and pay more in taxes.