Keith Hennessey has done us all a great service by highlighting the CBO’s summer baseline update:
While I disagreed with some of the judgment calls CBO made during the health care debate, on the whole I think they did a good job under difficult circumstances. This missing information, however, was and is a significant failing by the CBO. Unlike with other major legislation, CBO’s scoring of the health laws blended spending increases and tax cuts into a single measure of deficit effects. The final scoring showed that these two bills combined would reduce the budget deficit over the next ten years.
As Keith explains, this single measure of deficit effects masked the relative role of spending cuts and tax increases. What we now know is that the CBO estimates that PPACA will increase federal entitlement spending by $401 billion while raising taxes by $525 billion. I’m not necessarily averse to a $525 billion tax increase given our deteriorating fiscal position. It is not obvious that a large permanent increase in federal entitlement spending was the best way to reduce the deficit. This could be why leading Democratic strategists are recommending a shift in tactics:
Key White House allies are dramatically shifting their attempts to defend health care legislation, abandoning claims that it will reduce costs and the deficit and instead stressing a promise to “improve it.”
This is shrewd. It’s not terribly inspiring, however.