Getting good estimates is not easy. Anyone who’s hired a contractor knows to make sure the estimates are sound by insisting that bidders stick to their estimates.
This is not what happens in government, though. Projects almost always start out with a whopping figure for an estimate . . . and then as the project gears up the costs shoot higher and higher — it soon becomes clear that the high initial cost estimate was a low-ball figure after all.
My “favorite” recent example of this has been California’s high-speed rail project, which soared by the billions before even breaking ground.
But move over, transit. Here’s medicine — 2008’s Patient Protection and Affordable Care Act, better known as “Obamacare,” has just received an estimate upgrade. When passed, the legislation’s enthusiasts boasted a ten-year cost estimate of “only” $940 billion. Now, the Congressional Budget Office has revised the decade’s cost tally up to $1.76 trillion.
According to Philip Klein in the Washington Examiner, the CBO says that weakness in the economy leads to more people “obtaining insurance through Medicaid than it estimated a year ago at a greater cost to the government . . . fewer people will be getting insurance through their employers or the health care law’s new subsidized insurance exchanges.”
I “daringly” predict that this estimate, too, will turn out to be woefully below the actual figure . . . unless something novel happens, like Americans rallying around a “throw the bums out” campaign to elect a Congress and a President that will surgically remove Obamacare from the body politic. Before it kills us.
This is Common Sense. I’m Paul Jacob.
10 replies on “The $820 Billion Oops”
Excellent article Paul…..
I AGREE WITH YOU…THROW THE BUMS OUT. WE have to budget our money which is very little compared to the government. Yet, we somehow try to manage even though OUR GOVERNMENT is making it harder for us by decreasing our wages and increasing the prices on food, gasoline, property tax, sales tax, more fees, and making us pay more for medical insurance
WE have to make ends meet, WHY CAN’T THE GOVERNMENT BUDGET THEIR GREAT AMOUNTS OF MONEY THAT WE HAVE TO SUBMIT. HAVEN’T THEY HEARD OF CHECKS AND BALANCES? Every successful business has to balance their budget at the end of the year, and yet they have profits. Our government always wants more money to spend on foolish things, like illegal aliens who pay no taxes but reap all the benefits which the citizens of our nation should have gotten.
Just to be fair, Paul — yes, the CA HSR program soared from 30-some billion to 100-117 blllion. But that’s an unfair comparison.
After all, the original plan we Californians voted on included HSR to San Diego and other cities throughout the state. This latest murky version at best includes a rail line from LA to San Francisco, but nothing south of LA.
Yes, costs ARE higher than projected, but then, the service will be far less too!
The cost is already calculated without considering the 35 million currently insured people that will lose their private insurance because the cost of being in the business and meeting all of the new government mandates has made the private insurance business unprofitable. (Mean old insurance companies that are focussed on making a profit just to stay in business.) So the actual cost is the expense of first adding 35 million previously uninsured people to the insurance roles. What is not figured in is the inevitable DIFFERENT and currently insured set of folks get kicked of their plans because their plans folded. “You can keep it” if you can find it.
The actual coming cost of Obamacare cannot be calculated by the CBO, because they are legally proscribed from making calculations based on what people are actually likely to do. But those 35 million people will soon have no insurance and no way to afford to get insurance, since the government mandates have jacked up and are ratcheting up even further the cost of private insurance. So the additional, unfigured cost will be of the government “rescue” insurance plan, where those 35 million people will be taken under the government’s wing, to have and to hold and to regulate.
They couldn’t put THAT part of the program and the expense in the original bill because even Congress would have been too embarrassed to vote for the humongous cost that it will entail. So they broke it up into two pieces. The
additional “rescue” part will be a separate bill that Congress will justify because they are doing it “for the children” or something. It will make the $1.76 trillion look like small change.
(see Cloward and Piven)
To paraphrase Everett Dirksen (http://en.wikipedia.org/wiki/Everett_Dirksen), I believe, “A trillion here, a trillion there, and pretty soon you’re talking about real money.” … or at least a pile of FRNs. 🙂
It’s not like they’re ever REALLY going to pay it back……
Good points!
Perhaps we should make politicians who sign these “deals” personally liable for overruns. That would put an end to much of the spending. After all, these are essentially promises from politicians.
The problem of course, is that no politician (with a few exceptions like Kerry or Romney) have more than $100 million net worth.