Tag: Congressional Budget Office

The CBO Is About to Get Droned

That sound you heard was the White House trying to spin the CBO’s latest report on Obamacare.

The Affordable Care Act will reduce the number of full-time workers by more than two million in coming years, congressional budget analysts said Tuesday in the most detailed analysis of the law’s impact on jobs.

After obtaining coverage through the health law, some workers may forgo employment, while others may reduce hours, according to a report by the Congressional Budget Office. Low-wage workers are the most likely to drop out of the workforce as a result of the law, it said. The CBO said the law’s impact on jobs mostly would be felt after 2016.

This is triple their previous estimate. The reason for that change is that their previous analysis just looked at how many employers would lay off people because of the employer mandate. This analysis looks at people who will choose to stop working due to the effects of the law (more on that in a second).

The 2.5 million fewer workers it the banner headline, but the report is even worse than that. Two million fewer people will gain insurance thanks to the botched rollout of Obamacare. All told, this program will add $1.4 trillion in debt over the next decade (we can add that to the $1 trillion the newly-minted farm bill will add). Our deficit, which is now below the 3% of GDP that economists consider “sustainable” will soon start rising again, thanks at least in part to Obamacare.

Remember when Obamacare was passed, the Democrats claimed that it would decrease the deficit? They could claim this because the CBO is only allowed to project budgets a decade into the future and the Democrats delayed all the big spending until year 11 (I’m not making that up). The CBO tried to warn us that budget was gimmicked and the long-term outlook was a lot worse. But no one listened.

Now the CBO’s projections should always taken with a good dose of salt. But I think it’s very unlikely they are far off in their projections. Their analysis is consistent with other economists and think tanks are getting.

Unbelievably, the Democrats aren’t shooting the messenger this time and accusing CBO of being a Right-Wing cabal. They’re not even blaming Republicans, if you can imagine that. Instead, they are … embracing this, arguing that it’s a good thing that people can quit their jobs and not worry about insurance. I’ve rarely seen someone throw the logic of the welfare state out there so nakedly.

But they are also full of shit. As the CBO notes, the reason people will leave the workforce is because, if they work, they lose Obamacare subsidies and are subject to a massive marginal tax rate that, at certain income points, exceeds 100%. This is exactly what conservatives and libertarians have been warning about for years — the danger of creating a system where it is more profitable to not work than to work. Thanks to Obama, we now have it.

So, should we give up hope? Well, maybe not. The Republicans have proposed a healthcare overhaul of their own — a “repeal and replace” that would leave enough parts of Obamacare intact to get Democrat support but make enough changes so that the system doesn’t completely crash and burn. One of the biggest changes is that you could not be denied insurance for a pre-existing condition … provided you had maintained coverage. This would mean that changing jobs or even losing your job would not necessarily cost you your healthcare. But it would make it impossible to simply go uninsured until you get sick. It would also eliminate the mandates and pare back the subsidies. The result would be a much more workable and much less expensive system that cost a lot fewer jobs.

Is the Coburn-Burr-Hatch bill ideal? Not by a long shot. But it’s the first proposal I’ve seen so far that could get Democratic support and still turn us back from the abyss. And the CBO has just shown us that the Obamacare abyss is very very deep.

CBO numbers fail again.

Recently I posted about how the CBO had to downgrade the effects it was claiming for the Patronage Bill. Certain people then proceeded to not just question that this was what happened, while trying to defend this epic trillion dollar failure, but to imply I was purposefully being dishonest about the CBO being dishonest – leaning left in that dishonesty – or the way the LSM reports on this crap. Well, the the usual suspects at the CBO were at it again:

A recent report from the Congressional Budget Office (CB0) says, “The share of income received by the top 1% grew from about 8% in 1979 to over 17% in 2007.” This news caused quite a stir, feeding the left’s obsession with inequality. Washington Post columnist Eugene Robinson, for example, said this “jaw-dropping report” shows “why the Occupy Wall Street protests have struck such a nerve.” The New York Times opined that the study is “likely to have a major impact on the debate in Congress over the fairness of federal tax and spending policies.”

But here’s a question: Why did the report stop at 2007? The CBO didn’t say, although its report briefly acknowledged—in a footnote—that “high income taxpayers had especially large declines in adjusted gross income between 2007 and 2009.” No kidding. Once these two years are brought into the picture, the share of after-tax income of the top 1% by my estimate fell to 11.3% in 2009 from the 17.3% that the CBO reported for 2007.

WHAT? The CBO rigged a report in such a way that it could advance a collectivist talking point? NEVAH! It’s not like we have a history of them doing this – as I pointed out in the comments, only to be rebuffed. We saw the same shit with the CBO scoring of Obamacare. Granted, the CBO got off easy because they claim they where “told” to score it that way by the usual suspects, but that’s nonsense considering there is a history there of doing things like that.

Before you ask what the problem was with what the CBO reported about Obamacare, let me point it out in brief. The CBO scored it over a decade, 10 years for those that are math challenged, and then factored in tax income from day one while only factoring the really big outlays after 4 if not 5 years of collecting taxes. That was all done so they could make the ludicrous claim that Obamacare would save us a measly $112 billion or such. Anyone that understands basic math, ignoring the obvious shenanigans and double counting of outlays/savings from Medicare and other such systems they claim they will raid for cash to make these numbers work, sees two things. The first is that there is no way these numbers produced by the CBO bear out even if you focus only on the narrow window they looked at. If this boondoggle follows historical precedent – and you can look at the bits and pieces they have so far put in place for proof this will be more of the same – it will cost at least twice as much as they predicted. So, unless you also believe in Unicorns, it is clear that we will not have any savings at all, but be running a deficit before the first decade is over.

Then, the second obvious issue, which comes at the end of that decade the CBO scored for, clearly shows that we are looking at massive deficits to fund this program. There is not enough rationing that can be done to make these numbers work. Obamacare is going to cost us trillions in just the next 2 decades.

Back to our CBO bullshit du jour. Maybe it is not just the fact that the Keynesians are economic illiterates but signs of an actual plan in motion, one that advances and explains what Obama means when he talks about “social justice” and “wealth redistribution”, that gets pointed out by this passage in the WJS article:

The larger truth is that recessions always destroy wealth and small business incomes at the top. Perhaps those who obsess over income shares should welcome stock market crashes and deep recessions because such calamities invariably reduce “inequality.” Of course, the same recessions also increase poverty and unemployment.

The author then goes through some details to point out precisely why the CBO chose to ignore 2007-2009 in that report. The evil wealthy, those 1%ers, took a huge hit when things went south and that 17% number the left uses to tell us how unfair it is that the wealthy have money, would drop considerably and then seriously undermine the class warrior’s agenda. Further more, it shows that whenever government tries to fleece the producers, they don’t just roll over and play along, but take active measures to shield their wealth (How evil of them! – that was sarcasm BTW). And that what this obviously and purposefully rigged CBO analysis, done to create more class warfare collectivist talking points, really should have reported was the following:

In short, what the Congressional Budget Office presents as increased inequality from 2003 to 2007 was actually evidence that the top 1% of earners report more taxable income when tax rates are reduced on dividends, capital gains and businesses filing under the individual tax code.

Of course, that doesn’t fit the ultimate goal of the current narrative – that government should be collecting more money, and once the wealthy have been fleeced they can simply turn to the rest of us – so no chance we ever see that from the CBO. I wonder how many of the usual LSM suspects, like the ones at WaPo mentioned in this article, which was quick to carry water for the collectivists when the rigged numbers worked in the favor of the class warrior/collectivist narrative, will actually report on what this WSJ author points out. I am not taking bets unless I am able to bet against them reporting, BTW. I don’t do stupid. But we can keep pretending that whenever we point out how unreliable these LSM cum CBO collectivist talking points are, that the fault is with those of us that call them out on their lies.

After all, as comrade Obama pointed out in his speech just the other day, what Americans need is more social justice, and if it needs to come at the expense of their freedom, well dog gone it, that’s just dandy. After all, the old slave & land owning doofuses that produced that pesky constitution weren’t as wise as the class warrior class fancies themselves to be. In the mean time we march on to a tyrannical, but “socially just!!!1!!” country molded after Greece. Great.

Things are far worse than they seem..

Yeah, that’s my new special post category, in honor of CM, which try as he might, seems to only use vague and generalized personal attacks to dispute my points, and makes the case that I am exaggerating how bad things are. Well, in honor of that I have this juicy revelation for today:

(CNSNews.com) – The Congressional Budget Office (CBO) says the real cost of the federal government guaranteeing the business of failed mortgage giants Fannie Mae and Freddie Mac is $317 billion — not the $130 billion normally claimed by the Obama administration.

That’s more than double the real risk/cost that they told us was involved here. Remember that Fannie Mae and Freddie Mac where the key instruments of the idiotic policy that forced lenders to give loans to bad risk, then guaranteed those risk at the tax payer’s expense, and pushed for the regulations to create the disastrous credit swap scheme. Neither organization, nor their role in causing this recession, was addressed by all the new regulation passed by Barney Frank and Chris Dodd, two of the key players behind the policies that allowed the shenanigans to go on. We already poured millions into these two to bail them out, and we might not be done at all, since Bloomberg predicted that the actual bailout amount for this disaster might even top a trillion dollars back when: a number I wouldn’t be surprised ends up being the low end. But back to the article in question.

In a report delivered to the House Budget Committee on June 2, the CBO said a “fair value” accounting of guaranteeing the two defunct mortgage companies – known as Government Sponsored Enterprises (GSEs) – was more than twice as high as the Office of Management and Budget had accounted for.

“Specifically, CBO treats the mortgages guaranteed each year by the two GSEs as new guarantee obligations of the federal government,” the CBO report said. “For those guarantees, CBO’s projections of budget outlays equal the estimated federal subsidies inherent in the commitments at the time they are made.”

“In contrast, the Administration’s Office of Management and Budget continues to treat Fannie Mae and Freddie Mac as nongovernmental entities for budgetary purposes, and thus outside the budget,” the report stated. “It records as outlays the amount of the net cash payments provided by the Treasury to the GSEs.”

The total of those cash payments is $130 billion, and is normally reported as the cost of the bailout of the GSEs to date. However, the CBO said that merely counting the cash payments, and not the cost of federal subsidies granted to the GSEs, obscures their real costs. Essentially, the CBO is accounting for the cost of the federal government guaranteeing the loans bought and securitized by the GSEs.

What this says in short is that the Keynesians have purposefully underestimated the debt they have straddled us tax payers with, because while they claim Freddie & Fannie are non governmental agencies, we the tax payers still are on the hook for their risk taking ventures, which I must again stress, remain untouched and ongoing. But don’t take my word for it: here is the CNS article:

Currently, Fannie and Freddie rely on explicit federal guarantees to continue to secure below-market financing rates. Because Fannie and Freddie are insolvent, the federal government must make up their losses when the loans they have guaranteed lose money in default.

However, the CBO counts not only the amount of federal funds spent to keep the GSEs operating but the cost to the federal government to subsidize the mortgage guarantees issued by Fannie and Freddie. In other words, the CBO counts as a federal spending commitment the subsidy given by the government to the GSEs.

And the CBO has to count that in, because our government, well we the tax payers, are responsible for those risky loans. And it gets better:

However, this subsidy cost could grow if the housing market continues to be weak. While the CBO expects it to recover, the difference between the agency’s own 2009 and 2011 estimates show that this may not be the case.

We haven’t heard the true numbers yet. Me, I wouldn’t e surprised that in the end it is closer to a trillion dollars of risky loans that will need to be written off and paid for by the tax payers, because in my personal experience the number of people that never should have been given a loan far surpasses those of us that didn’t buy more than we could afford, or worse, promptly took out 125% or more of the value of the homes they owned out to do other frivolous things.

Don’t worry though: Freddie & Fannie are in good hands. And don’t forget that we the tax payers are paying for the lawsuit by the government against the Freddie & Fannie execs too. Joy! All hail the Keynesians! Things aren’t all that bad….