SCANDAL! Deficit fixed

[Cutlass]

I wonder how much of that is merely because bureaucracy is expensive?

That's a major part of it. And is, from an economic perspective, but not a political one, the low hanging fruit. A large part of the problem being that the interplay between the insurer and the provider is an adversarial relationship where each is trying to get more out of the other by the process of drowning each other in paperwork. Up to half the costs of running a healthcare provider office is in the bureaucracy. And something like 17% of the entire healthcare budget, IIRC. And it's essentially all just waste in the system. Dead weight loss, to economists. Work and anti-work to Dilbert.

There are many other cost drivers as well. But the real cost savings would come from a government takeover of the system. Which is impossible in current American politics.

 

[Cutlass]

A lot of it is due to treating the symptoms and not the causes - whether those paying are the government or the insurance companies. There is very little real doctoring going on these days and I'm not sure if that can be pinned on the doctors. Of course we would have to pry 64 ounce sodas out of the cold, but not yet dead hands of some people, but soda is just the tip of the iceberg. Even the so-called healthy stuff is mainly junk and what we are taught about nutrition is lobbyist driven and mainly wrong.

Bad incentives to the doctors and medical researchers is also a major long term driver of costs. Big Pharma wants to create medications that "manage" a condition, rather than cure it. That way they can sell it for life instead of a short treatment.

 

[El_Machinae]

That's a major part of it. And is, from an economic perspective, but not a political one, the low hanging fruit. A large part of the problem being that the interplay between the insurer and the provider is an adversarial relationship where each is trying to get more out of the other by the process of drowning each other in paperwork. Up to half the costs of running a healthcare provider office is in the bureaucracy. And something like 17% of the entire healthcare budget, IIRC. And it's essentially all just waste in the system. Dead weight loss, to economists. Work and anti-work to Dilbert.

There are many other cost drivers as well. But the real cost savings would come from a government takeover of the system. Which is impossible in current American politics.

You seem to have switched from Medicare to private insurance.

 

[Formaldehyde]

Well, in the first case it's fairly likely the person votes Republican, and in the second case it's fairly likely they vote Democrat.

It seems to me the more liberal the views of the person, the more they care about the health of the poor.

 

[Cutlass]

You seem to have switched from Medicare to private insurance.

In part. But they are related. It is the private sector bureaucratic issues that drive the cost of the entire healthcare sector of the economy. Medicare administrative costs run, depending on whose estimates you want to trust, from 1/3 to 1/10th of the private sector insurance administrative costs. But the private sector costs as a whole drive costs for the entire sector, and Medicare cannot divorce itself from that, for the government does not have enough control over the whole of the healthcare costs.

 

[Azale]

I want to guys to weigh in on the CBO's deficit opinion. Is this really as great as it looks according to all the initial analysis?

 

[Cutlass]

CBO is considered by anyone who really watches these things to have the best numbers in Washington. But any projection has to be taken with a grain of salt because of the economic projections it is based on are always subject to change.

That said, given a choice between CBO numbers and anyone else's numbers, trust CBO.

 

[Antilogic]

I want to guys to weigh in on the CBO's deficit opinion. Is this really as great as it looks according to all the initial analysis?

How do you mean? Is it actually a great thing that we are cutting how much to preserve the tax cuts from prior administrations to reduce the deficit? Whether or not factually the CBO has their inputs right? Whether or not their assumptions are correct or generally good?

Because to the latter questions, as Cutlass said, the CBO is probably the most trustworthy organization on these issues. As to the prior, that's a value judgment that I'm not on board with.

 

[Kaitzilla]

I want to guys to weigh in on the CBO's deficit opinion. Is this really as great as it looks according to all the initial analysis?

The CBO is mandated by law to be incredibly wrong and criminally incompetent.

I'd trust this budget forecast about as much as a paper crash helmet.

 

[El_Machinae]

I dunno if it's 'handled', tbh. 2% of the economy? That's nearly the desired GDP growth rate of the economy. If the Federal gov't is 25% of the economy, isn't the deficit nearly 8% of their budget? How's that not huge?

 

[Cutlass]

The CBO is mandated by law to be incredibly wrong and criminally incompetent.

I'd trust this budget forecast about as much as a paper crash helmet.

And yet everyone actually involved in the field thinks CBO has the best numbers. Including former Republican Senate staffers.

 

[Antilogic]

I'm not sure anything is actually mandated by law to be criminally incompetent.

 

[Cutlass]

Have you looked at the OSH Act? One of Nixon's finest hours.

 

[Kaitzilla]

And yet everyone actually involved in the field thinks CBO has the best numbers. Including former Republican Senate staffers.

That must be why Congress felt comfortable enough to pass Bush's tax cuts.


This is a good story on the handcuffs that the CBO operates under. Same author as the OP article
http://www.washingtonpost.com/blogs...sts-are-wrong/2011/08/25/gIQAjZiSfQ_blog.html

The CBO knows its basic forecasts are wrong

Posted by Ezra Klein at 02:18 PM ET, 01/31/2012

Speaking of the Congressional Budget Office, some new research (pdf) out of the St. Louis Fed has raised questions as to the agency’s basic competence.

The authors, Kevin Kliesen and Daniel Thornton, show that CBO’s budget forecasts are less predictive than a so-called “random walk” model that assumes next year’s deficit will be the same as last year’s deficit. That makes the CBO look pretty bad. Or, it does until you realize the CBO agrees with Kliesen and Thornton, and their budget forecasts account for the huge errors in their basic model.


Congressional Budget Office (CBO) Director Douglas Elmendorf testifies on on Capitol Hill in Washington. (Charles Dharapak - AP) According to Kliesen and Thornton, CBO’s problem isn’t that it can’t predict the path of the economy. It’s that it can’t predict the decisions made by policymakers. CBO has to yoke its basic forecasts to “current law.” But current law is often clearly wrong. Right now, for instance, it says that the Bush tax cuts will expire in 2013. But the Democrats want to extend 80 percent of the Bush tax cuts and the Republicans want to extend all of them. Under those conditions, the Bush tax cuts are very unlikely to fully expire. And the CBO knows it.

So required by law to issue wrong forecasts, and then the lawmakers make laws based off those CBO predictions. Heck of a system we've set up in the USA.

Is this latest CBO prediction of prosperity in 10 years their basic prediction or the alternative-fiscal scenario? I might have to retract all the bad stuff I've said if it's the latter.

 

[Tarquelne]

The CBO spends a lot of time crunching numbers on hypotheticals. If the press, the legislators - or you - don't pay attention to the givens the CBO is using for a prediction, that's not the CBO's fault.

And the problem is hardly unique to the CBO or the US. A fundamental problem with intelligence work - and budget analysis is rather similar in this way - is that the consumer can and often will ignore anything that doesn't fit their preconceptions or agenda. Like, for example, the hypothetical situation the CBO is analyzing. Or their entire report.

The CBO's job is especially hard because their humint sources (lawmakers) are notoriously unreliable and their primary consumers (lawmakers) are notoriously politicized.

Your last comment, btw, makes it sound like you think there aren't any panzers in Arnhem, there are only a few, unprepared Chinese on the other side of the Yalu, and that you know where the WMDs are.

 

[Kaitzilla]

The CBO spends a lot of time crunching numbers on hypotheticals. If the press, the legislators - or you - don't pay attention to the givens the CBO is using for a prediction, that's not the CBO's fault.

And the problem is hardly unique to the CBO or the US. A fundamental problem with intelligence work - and budget analysis is rather similar in this way - is that the consumer can and often will ignore anything that doesn't fit their preconceptions or agenda. Like, for example, the hypothetical situation the CBO is analyzing. Or their entire report.

The CBO's job is especially hard because their humint sources (lawmakers) are notoriously unreliable and their primary consumers (lawmakers) are notoriously politicized.

Your last comment, btw, makes it sound like you think there aren't any panzers in Arnhem, there are only a few, unprepared Chinese on the other side of the Yalu, and that you know where the WMDs are.

See, all that reasonable and well thought out logic is bringing up the Tavern quality too much.

Now I got to bring it down a notch again.


Humint means we need a Spy Song!™

[YOUTUBE-OLD]?v=O1tzVPepicI[/YOUTUBE-OLD]

 

[Kaitzilla]

Fine, let's compare the U.S. government's income since 2000 with what the CBO is predicting towards the year 2023.
Always important to know your income vs. your spending when calculating how much money you have to borrow each year.


What the government actually got as income through taxes:
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200

2000 - $2,025 billion
2001 - $1,991 billion
2002 - $1,853 billion
2003 - $1,782 billion
2004 - $1,880 billion
2005 - $2,153 billion
2006 - $2,406 billion
2007 - $2,568 billion
2008 - $2,524 billion
2009 - $2,105 billion
2010 - $2,162 billion
2011 - $2,303 billion
2012 - $2,450 billion


Now, what the CBO predicts will be the money the government collects through taxes in coming years (from the OP):
http://www.washingtonpost.com/blogs...icit-problem-is-solved-for-the-next-10-years/
Page 8 of the CBO report, Revenues:Total

2013 - $2,813 billion
2014 - $3,042 billion
2015 - $3,399 billion
2016 - $3,606 billion
2017 - $3,779 billion
2018 - $3,943 billion
2019 - $4,103 billion
2020 - $4,280 billion
2021 - $4,494 billion
2022 - $4,732 billion
2023 - $4,959 billion


The average worker hasn't gotten a raise in years, but the Feds are gonna get a 100% raise in the next 10? Without a single recession either?

This is fantasy budgeting.

There is even small print in their report that says nothing they produce should ever be taken for predictive purposes or as a judgement of future economic activity. (CBO's Baseline Budget Projections Page 1-2)
It is meant to simply reflect changes in law with all else being equal assumptions from over the rainbow at Candy Mountain.

Perhaps if we had reporters who majored in Math and minored in Common Sense, and some editing consultant with a memory going back to say, oh, 10 or 20 years ago, we might get a news story about CBO releasing new Comedy Gold just in time for everyone to have a good laugh again.

 

[El_Machinae]

That report pointing out that the predictions weren't much better than random walk was pretty amusing. Sigh. This field is soooo hard.

 

[Tarquelne]

There is even small print in their report that says nothing they produce should ever be taken for predictive purposes or as a judgement of future economic activity. (CBO's Baseline Budget Projections Page 1-2)
It is meant to simply reflect changes in law with all else being equal assumptions from over the rainbow at Candy Mountain.
.

That's not the small print. It's right there in the main text, at the beginning, where they just have to hope people actually pay attention to it.

And they also specify why the GDP figures - which is largely where all that revenue comes from - are as high as they are. First, they predict the economy will continue recovering from the recent downswing. Not exactly heterodox. Second, they say they're not even going to try predicting any longer term cycles. The later figures are there to serve as benchmarks when judging the effects of other proposals. Which is also how that section you refer to on page 2 ends

See, they even repeat the caution. Which, come to think of it, you've mangled significantly.
1). As I mention above, it's not in the small print.
2) They don't say nothing they produce should be used for predictive purposes or for judgement. They say the figures shouldnt be used as predictions of the economy. So what are they? They're predictions of what certain proposed laws will do and intended as benchmarks. In other words - compare them against other economic proposals and use that to help judge between them.

Your *supposed* to take everything with a grain of salt, and since they include a lot of the figures and assumptions they work with its relatively easy to use the CBO's work in your own proposals or criticism.

This document is a great illustration of that point: they predict % increases in both gov. revenue and spending. You think the spending will happen but the revenue increase won't? Then you can point out where you think your assumptions are better, and how that changes the predictions. Do that and you'll be using the document as intended.

And let's not forget the alternatives to the CBO. It's not that the CBOs projections are all that great, it's that everyone else's tend to either be even worse, or far more narrow.

Comedy Gold? The CBO doesn't write the over wrought headlines. It's really only ridiculous when you don't understand it, or don't use it right. Like a lot of things. Male genitallia, for example.

 

[Kaitzilla]

Have you looked at the OSH Act? One of Nixon's finest hours.

This one has been bouncing around for years:


http://roysanddebbies.blogspot.com/2011/08/osha-cartoon.html