AP's Babington Plays Obama/Dem Party Mouthpiece, Ignores CBO 'Double-Counting' Advisory

APabsolutelyPathetic0109The Associated Press should seriously consider renaming itself "Associated Dems" or "Associated Leftists."

This morning, the AP's Charles Babington uncritically relays the latest Democratic Party talking point about its statist health care plan that has been passed in two very different forms in the House and Senate. The supposed point is that anyone who voted to create Medicare Part D in 2003 and voted against ObamaCare is "obviously" a flaming hypocrite.

Along the way, Babington ignores a Congressional Budget Office report response issued just before Christmas asserting that characterizations of the Senate's bill as reducing future government deficits are wrong. Beyond that, the litany of other distortions and errors in Babington's report is perversely impressive in its no-fib-or-spin-left-behind comprehensiveness.

Here are the first several paragraphs of Babington's babble, followed by its final sentence:

GOP lawmakers change tune on costly health plans

Democrats are troubled by the inconsistency of Republican lawmakers who approved a major Medicare expansion six years ago that has added tens of billions of dollars to federal deficits, but oppose current health overhaul plans.

All current GOP senators, including the 24 who voted for the 2003 Medicare expansion, oppose the health care bill that's backed by President Barack Obama and most congressional Democrats.

The Democrats claim that their plan moving through Congress now will pay for itself with higher taxes and spending cuts and they cite the nonpartisan Congressional Budget Office for support.

By contrast, when Republicans controlled the House, Senate and White House in 2003, they overcame Democratic opposition to add a deficit-financed prescription drug benefit to Medicare. The program will cost a half-trillion dollars over 10 years, or more by some estimates.

With no new taxes or spending offsets accompanying the Medicare drug program, the cost has been added to the federal debt.

.... When the Republican-led Congress passed the Medicare expansion in 2003, the deficit was $374 billion and projected to hit $525 billion the following year, in part because of the new prescription drug benefit for seniors.

The trouble is, Babington's third paragraph is flat-out wrong, and he should have known it. The CBO said so in a response to GOP Senators Jeff Sessions and Judd Gregg on Wednesday that was posted at its Director's Blog at 3:16 p.m. that day. Babington's report is currently time-stamped at 5:31 a.m. today, i.e., 2-1/2 days later.

CBO tells us that it was asked "whether the reductions in projected Part A outlays and increases in projected HI (Medicare Hospital Insurance) revenues under the legislation can provide additional resources to pay future Medicare benefits while simultaneously providing resources to pay for new programs outside of Medicare."

Their answer is "no":

The key point is that the savings to the HI trust fund under the PPACA would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs. Trust fund accounting shows the magnitude of the savings within the trust fund, and those savings indeed improve the solvency of that fund; however, that accounting ignores the burden that would be faced by the rest of the government later in redeeming the bonds held by the trust fund. Unified budget accounting shows that the majority of the HI trust fund savings would be used to pay for other spending under the PPACA and would not enhance the ability of the government to redeem the bonds credited to the trust fund to pay for future Medicare benefits. To describe the full amount of HI trust fund savings as both improving the government’s ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the government’s fiscal position.

Reuters columnist James Pethokoukis usefully observes that, "This is a similar shell game played by the government when it uses Social Security surpluses to mask the true depth of the budget deficit."

Megan McArdle at the Atlantic's Business Channel elaborates:

Basically, Medicare, like Social Security, has a "trust fund" (actually, more than one), which is supposed to fund it until the trust fund is exhausted in 2019. The "trust fund" does not exist in any meaningful sense, because its "assets" consist of claims on the general fund, i.e. all the rest of the tax money. As Medicare goes into deficit, it trades in those assets to cover its funding gap, which means the general fund has to find the money to pay off the special bonds by either raising taxes, cutting other spending, or borrowing more money. After the trust fund is exhausted, the general fund has to find the money to pay for the Medicare deficit by either . . . raising taxes, cutting other spending, or borrowing more money. The difference to taxpayers is nil.

In sum: It's a new dog, and they're teaching it the same old tricks.

Here are Babington's other major howlers:

  • He quotes Bruce Bartlett at Forbes saying some time ago that Medicare Part D "had no dedicated financing, no offsets and no revenue-raisers. One hundred percent of the cost simply added to the federal budget deficit." Uh, no. While it's in many ways a poor example of fiscal stewardship, the fact is, according to a Kaiser Family Foundation overview of Medicare published in May 2009, 11% of Part D's "revenues" of $66 billion came from beneficiary premiums, and 12% came from "state offsets"; the rest is from "general revenues." That's far less than ideal, but Bartlett said "no offsets, and no revenue-raisers." Bartlett was wrong. I'm wondering if Babington really knew that (if he doesn't, why is he even assigned to this story?), but chose to quote Bartlett anyway.
  • The "Democratic opposition" that the GOP overcame in 2003 primarily opposed the law because it wasn't "generous" enough, not because of any interest in controlling spending, as Babington apparently would like readers to believe. Carolyn Lochhead at the San Francisco Chronicle reported in November 2003 that "liberals (opposing the plan) seek a government- guaranteed benefit" (Medicare Part D is a voluntary program). The late Sen. Edward Kennedy (D-MA) claimed that it would "dump seniors in the cold arms of the HMOs."
  • Babington also conveniently ignores the fact that in a rarity for any kind of government program, costs during the initial years of Part D have come in well lower than originally anticipated, both for taxpayers and seniors.
  • Finally, Babington "forgot" to tell us in the final excerpted paragraph that the "projected" 2004 deficit of $525 billion came in at $413 billion as collections-enhancing effects of the 2003 Bush tax cuts were kicking in.

Babington also goes bubbly about how "Bill Clinton's administration was largely constrained by a pay-as-you-go law, requiring most tax cuts or program expansions to be offset elsewhere with tax increases and spending cuts." I don't think this is correct, but even if it is, it's almost certain that the Republican Congress that would have passed such a law and imposed its constraints.

Anyway, it's as if Clinton is solely responsible for the brief era of budget surpluses. No sir.

Clinton only gets credit for being behind the 1997 capital gains tax cut passed by the GOP Congress, which raised Treasury collections significantly. Otherwise, the rest of the credit goes to the GOP Congress, especially its Budget Committee Chairman from Ohio John Kasich; welfare reform, which Clinton signed only to preserve his 1996 electoral viability, and which reduced outlays and added well over a million new taxpayers to the employment rolls during its first four years; the dot-com boom (which the Clinton administration's SEC unfortunately allowed to run out of control, giving rise to the dot-com bubble); and finally, the fact that Clinton and wife Hillary failed to saddle us with statist health care earlier in their term (but that battle did set the stage for the Gingrich Revolution, which led to the previously named factors).

If Babington were even trying a tiny bit to be a supposedly objective and informed wire service reporter, he wouldn't have committed the egregious error of ignoring the CBO's "double-counting" response, and he wouldn't have recited the partisan fibs and half-truths present in his report. If he really wants to continue in his current position, he should either change his ways, or tell his bosses to change their masthead to Associated Liberals or Associated Democrats.

Cross-posted at BizzyBlog.com.

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