Dollars to doughnuts

Number crunching is so terribly dry and for most people, boring.
WaPo puts Washington’s calculations of health care costs and savings
into interesting perspective here.

Phil Ellis may be the most powerful guy you’ve never
heard of in the health-care debate. A senior analyst with the
Congressional Budget Office, Ellis is the man who has to decide what it
would cost to rebuild the health insurance system. He has essentially
condemned two legislative proposals by slapping them with
trillion-dollar price tags. A third plan rocketed to prominence after
he said it would cost much less.

In the coming weeks, Ellis’s judgments will shape the fate of President Obama’s reform effort…

As Democrats embark on a plan to reorder one-sixth of the U.S.
economy, the CBO is the umpire, charged by Congress with assessing the
effect on the federal budget and the potentially profound impact on
American lives. The Senate majority leader has vowed to hold no vote on
a health plan until the CBO passes judgment. But the agency, while
almost universally praised for honest and impartial analyses, does not
have a crystal ball.

“Everyone in the process — especially the CBO — knows that it is
very, very difficult to make these estimates and that they’re no more
than very educated guesses,” said Alice Rivlin, who served as the CBO’s
founding director in 1975. “But if you didn’t have this process, we
know that the consequence is that everyone would want to spend money
and not pay for it.”

What refreshing honesty about a process usually muddled in dense and incomprehensible bureaucratese.

It gets better. Bring these calculations into your own household…

Much of what the CBO does is akin to trying to forecast
your grocery bill in 10 years. First, it establishes a baseline: Your
history of spending $200 a week at Safeway projected into the future
with adjustments for inflation and expected demographic trends (i.e.,
more children, larger pets). Then it factors in proposed policy
changes: Say you want to eat only organic and enroll your husband in
Jenny Craig. Costs for meat, produce and dairy would go up, but
spending on toothpaste and Saran Wrap would be unaffected. Meanwhile,
the extra $70 a week for diet food would be partially offset by lower
spending on Cheetos and frozen pizza.

The CBO has plenty of data to help make such calculations, including
projections for inflation and the price of organics. But it would have
to make some judgment calls: Is it reasonable to assume that Krispy
Kremes are off the table? Or is it safer to budget for a dozen
doughnuts once a quarter? And even the most careful estimate can be
blindsided: What if the baby you projected to arrive in 2012 turns out
to be twins in 2010?

Then you would be doubly blessed. And the government would have two
more taxpayers for that future tab. And if the household wants some
favorite comfort foods around in the meantime, factor in the doughnuts.


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