Politico: How Democrats can say the bill costs less than $1 trillion
October 29, 2009
politico.com
There was a lot of confusion this afternoon when the CBO released its cost estimate for the House bill. Democrats had said earlier in the day that the bill would cost $894 billion -- just under the $900 billion limit set by President Obama.
But in the CBO analysis there were two price tags: a net cost of $894 billion and a gross cost of just over $1 trillion. Both numbers are correct, but Democrats shifted the terms of the debate and cherry picked the lower one.
Until now, lawmakers have quoted the gross cost when talking about how much reform legislation costs. But today, House Democrats used the bill's net costs -- the amount the bill will cost after taxes, penalties and other pay fors are factored in.
For instance, the cost everyone quotes when talking about the Senate Finance Bill is $829 billion, the bill's gross cost. The bill's net cost of $518 billion is rarely mentioned.
But with a gross cost that exceeds Obama's limit by $100 billion, House Democrats chose to focus on the smaller, net figure.
Another way of thinking about it is in terms of salary, which has both gross pay (before taxes) and net pay (after taxes).
If someone asked you what you make, you could tell them either number and be correct. But customarily, when people talk about salary they're talking about their gross pay.
Posted by Chris Frates 06:02 PM
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October 29, 2009
CBO analysis murky
The CBO has put out its cost estimate for the House bill and it is less than straightforward.
The CBO says that the bill will spend a little more than $1 trillion on subsidies, small business tax credits, Medicaid and children's health care. CBO then offsets some of those costs with $167 billion in penalties paid by employers and individuals, presumably for not carrying insurance.
So it appears CBO is partly offsetting the $1 trillion total with some of the $167 billion in penalties to reach the $894 billion cost estimate that Democrats were trumpeting today.
CBO says that the $894 billion covers the cost of expanded insurance coverage.
I have messages in to CBO to get more clarification and will update this post when I know more.
UPDATED: I explain the difference between the $894 and $1 trillion numbers here. (see above update)
Posted by Chris Frates 04:36 PM |
