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Cato Dispatch for October 9, 2009

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(Links to outside sources were active as of the date of this dispatch; however, not all news sources maintain links to current stories indefinitely. Some links also may require registration.)

What They Aren't Telling You about the CBO Report

The Congressional Budget Office released a report Wednesday claiming that the Baucus health care reform bill being debated in the Senate will not increase the federal deficit.

But Cato Director of Health Policy Studies Michael F. Cannon finds that not only would the Baucus bill cost about $2 trillion—more than twice the CBO estimate—but it achieves its "savings" through accounting gimmicks and huge tax increases.  According to Cannon's research, Baucus has "carefully and methodically hidden those facts."

The Baucus bill assumes that Congress will allow the "sustainable growth rate" cuts in Medicare's physician payments to occur beginning in 2012.  Yet Congress has routinely and repeatedly blocked those cuts, making Baucus's assumption preposterous.  The CBO handled the issue delicately, but essentially said, "Sure, provided that the sun rises in the west in 2012, then yes, this bill would reduce the deficit." That means Baucus will come up at least $200 billion short on the revenue side, making his bill a budget-buster. But the worst part is that the Congressional Budget Office's preliminary cost estimate omits the cost of the private sector mandates in the Baucus bill.  In Massachusetts, those costs accounted for 60 percent of the total cost of reform.  That suggests the actual cost of the Baucus bill - $829 billion plus $75 billion plus $33 billion, times 2.5 - is well over $2 trillion.

Writing in the New York Post, Cato scholar Michael D. Tanner explains how Congress cooks the books:

The CBO provides 10- year projections of a bill's cost. But most provisions of the health bill don't take effect until 2014. So the "10-year" cost projection only includes six years of the bill. Plus, the costs ramp up slowly. In its first year, the House bill would only cost about $6 billion; in its first three, less than $100 billion. The big costs are in the final years of the 10-year budget window — and beyond. In fact, over the first 10 years that the House bill would be in existence (2014 to 2024), its costs would be closer to $2.4 trillion. Similarly, the real cost of the Senate bill over 10 years of operation is estimated at $1.5 trillion. Worse, the trajectory of the costs after 10 years rises dramatically — meaning "reform" would cost even more in its second 10 years and beyond.

For more on health care costs, listen to Wednesday's Cato podcast.

Eight Years in Afghanistan

Wednesday marked the eighth anniversary of the U.S. invasion of Afghanistan. President Obama has indicated that he may send more troops to the region, a course of action that Cato foreign policy experts have advised against.

In a co-authored article in Foreign Policy, Cato scholar Malou Innocent explains why the U.S. must narrowly define the mission in Afghanistan:

Who is the enemy? What are the objectives? Is counterinsurgency meant to achieve the goal of counterterrorism (beating al Qaeda), state-building (bringing stability and democracy to Afghanistan), or both? What would "victory" in Afghanistan even look like? And how will the war stay won, after the United States leaves? Without knowing the answers to such questions, the United States has no way of determining whether it is succeeding. And as long as it continues to conflate military and state-building objectives, the United States will always appear to be losing. But by focusing on stamping out al Qaeda with a light military footprint and accepting an Islamist government in Afghanistan, the United States has an opportunity for unqualified success.

In a new Cato video, Cato foreign policy experts explain the dire situation.

Cato Launches DownsizingGovernment.org

The Cato Institute announced the launch of DownsizingGovernment.org, a new website aimed at providing policymakers, media and the public with comprehensive data on federal spending. The site spotlights the ongoing, extensive waste of taxpayer dollars by executive agencies. "Some people have lofty visions about how government spending can help society," says Cato scholar Chris Edwards. "But the essays on this website put aside such bedtime stories about how government programs are supposed to work, and instead focus on how they actually work in the real world."

The site breaks down federal spending department-by-department, serving as an authoritative reference for identifying ways to cut the size and scope of federal spending.

Click here to visit DownsizingGovernment.org.

Chris Moody, editor, cmoody@cato.org