Rational Arguments

In the past, I’ve sometimes been hard on Megan McArdle.  I’m about to do it again.  On the topic of the recent CBO estimate on discretionary health care spending, she writes:

Meanwhile, the CBO just came out and said that the health care reform was slated to cost $115 billion more than they said it would.  Why?  Because they didn’t have time to calculate the effects on discretionary spending such as new administrative capacity, demonstration projects, and continuation of successful short-term initiatives.  As my fiance notes, Olympia Snowe’s demands to slow down the process suddenly seem a lot more reasonable.

The progressive response on this, as I understand it, is threefold:

1. We don’t have to fund this stuff
2. Maybe we’ll cut something else to fund this stuff
3. C’mon, who cares?

Predictably, I find none of these convincing.  Some of the stuff we do have to fund, because the agencies are going to have to have staff to deal with the new requirements; and the stuff we don’t have to fund is the demonstration projects that I was assured were going to bend the cost curve.  So if we save this money in the first ten years, we lose the possibility of lower cost growth after the first decade.

What’s really worrisome, however, is that I’m unaware of any happy surprises where it turns out this thing is going to cost less than expected.  It’s early days, yet, of course–but it’s a little too early to take rapidly mounting cost projections in stride.  We haven’t done anything yet, and we’re somehow already at least $100 billion in the hole.

McArdle is an economist.  She’s the business and economics expert for the Atlantic.  It says so, right there next to her name on her blog.  You would think she might at least try to see if there might be another explanation.  Perhaps the one offered by the Director of the CBO, himself:

The potential discretionary costs identified two days ago include many items whose funding would be a continuation of recent funding levels for health-related programs or that were previously authorized and that PPACA would authorize for future years. (For example, those potential costs include $39 billion authorized for Indian health services that already receive appropriations every year.) CBO estimates that the amounts authorized for those items exceed $86 billion over the 10-year period (out of the roughly $105 billion total shown in the table provided yesterday). Thus, CBO’s discretionary baseline, which assumes that 2010 appropriations are extended with adjustments for anticipated inflation, already accounts for much of the potential discretionary spending under PPACA. That is one of the reasons that potential discretionary effects are shown separately from effects on revenues and mandatory spending in CBO’s cost estimates.

It’s frustrating enough that it’s nearly impossible to counter the misinformation spread by politicians; it’s simply ridiculous that content experts can’t be bothered to check with the source itself to see if they are right or wrong.  Especially, when McArdle is so kind as to claim she knows the only possible explanations, even though many people (including me) offered another one before she published her post.  It takes a special kind of hubris to decide that the other side is wrong without even seeing what their argument is.

Moreover, the snide comment about Snowe and her slowing things down is maddening.  It’s petty, has nothing to do with the CBO numbers, and should be beneath her.

I don’t expect to be restarting my Atlantic subscription anytime soon.

I was just on the radio talking about the meaning of Senator Snowe’s vote on health care reform, and I think it’s worth a post.

Since I admitted I was wrong about Senator Baucus’ plan, I’ve been trying to rethink whether the administration has been right in their quest for bipartisanship.  Whether or not you agree with President Obama’s agenda, you have to admit that he’s a pretty gifted politician.  I can’t count the number of times I thought, during both the primaries and the general election, that he was doing the wrong thing.  Turns out each time I was wrong, and he was right.

So maybe he was right about this, too.

You see, without Senator Snowe’s support, the administration (and the Senate) would need to negotiate with a handful of Senators, who are often far more conservative than Senator Snowe.  They are not only against the public option, they also seem to be against robust subsidies.  Now, with Senator Snowe’s support, they need to negotiate with only one reasonably moderate Republican.  If they get her support, it seems very unlikely that any Democrats would vote against the bill; certainly they won’t filibuster it.  And, really, the only support they need is to allow the bill to come to the floor for a vote.  They won’t have any trouble passing it.

Moreover, Senator Snowe has been vocal about the need for subsidies large enough to make insurance affordable to the middle class.  Negotiating with Senator Snowe may ironically yield a much more liberal bill than negotiating with Senators Lincoln, Bayh, Landrieu, McCaskill, Pryor, and Nelson.

Did they really think this far ahead?

UPDATE:  Since some you asked, here is a link to the radio interview.

Yesterday, I predicted this about Senator Snowe’s vote:

This means it is unlikely that there will be a robust public option in the final bill.  I doubt the White House will want to lose their chance at a “bipartisan” bill.  Nor will the Senate.  I think they will make sure to retain Senator Snowe’s “yes” vote.

Today I saw this in the NYT Prescriptions Blog:

Senator Olympia J. Snowe of Maine, the lone Republican on the Finance Committee to vote in favor of the bill, would be invited to future sessions. And Mr. Manley said the Democratic leader [Reid] was prepared to go to substantial lengths to keep Ms. Snowe’s support. “He is prepared to do what he can to keep her on board while putting together a bill that can get the 60 votes necessary to overcome a Republican filibuster,”

Everything I said yesterday still holds.  Senator Snowe is going to have a major hand in the bill.  This means no robust public option, and potentially more cuts to the bill’s “cost“.  And I maintain that she will still be a driving force when it comes time to reconciling with the House.

It could be worse, however.  Senator Snowe has her mind in the right place when it comes to subsidies.  And it may be better to have her at the table than some of the most conservative Democrats.