Why are government cost projections always so utterly wrong? - Jack Hellner

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by Jack Hellner

Free stuff is never, never, free.

The Congressional Budget Office and other such experts of public finance routinely severely underestimate the cost of major government programs such as Medicare, Social Security, student loans, government pensions, lifetime health benefits for government employees, and Obamacare.

They also miss estimates on "smaller" government projects (we're still talking billions here) such as the "big dig" in Boston and the bullet train in California.

They're always underestimating these costs. Why are we always so broke at most government entities? Why do these costs always overshoot their budgets? The short answer is that politicians and bureaucrats routinely underestimate the costs of all government programs and then they overestimate the revenue from the new taxes that they propose to pay for the programs. Through abject ignorance or intentional malfeasance, they do not project that taking additional money out of businesses and individuals’ pockets through higher taxes and additional regulations will slow down the economy. Then as costs come in higher than expected and revenues lower than projected, they just borrow more and tax more, furthering the vicious cycle. The greedy government continues to get bigger and more powerful while this and future generations suffer. But politicians are out buying votes with more “free” stuff. The public are pawns.

All federal government projects cost much more than they should because Democrats cater to their special interests. These laws -- they include prevailing wage statutes and other non-market carve-outs -- have oppressed taxpayers for around 90 years, but they are still there because of Democrats.

So, when Democrats give an estimate of the future costs of Medicare for all, or a public option, or else the big green deal, everyone should realize they are just made-up numbers and most are a significant underestimate.

Once a government program starts, no matter whether it works or not, it is essentially on automatic pilot because a special interest benefits and if anyone ever wants to stop or even reduce a program we see sob stories from the media.

The easiest example of a significant underestimate is Obamacare, where CBO claimed that Obamacare would not only pay for itself but would reduce the deficit. It didn't.

They also pretended that the economy would grow much faster than it actually did. It truly takes ignorance or intentional bias to not understand that a 2,000-page bill with over 10,000 pages of regulations and more than twenty new taxes that takes away choice from consumers, that punishes businesses, and that reduces competition would slow down the economy, not speed it up.

President Obama and his surrogates knowingly lied that people would have the choice to keep their plan and their doctor, that their costs would go down, and that the plan would reduce the deficit. Critics of Obamacare were derided as racists and the media played along.

Since then, we have been indoctrinated about how good Obamacare has been, despite its poor results. Now we are told that we should trust the government to take away private health insurance. We are expected to ignore the lies of Obamacare and the failures of the VA and the Indian health system, and go right along with the next new proposal.

Here's a string of headlines showing just how bad the CBO record is, from a Forbes column:

As Congress readies legislation to repeal and replace the Affordable Care Act (ACA), Congressional Budget Office (CBO) estimates will play an important and respected role as they did in the passage of the law in 2010. We now know that many of CBO’s projections of important aspects of the ACA have significantly differed from actual outcomes.

Exchange Enrollment Much Less Than CBO Projected

Insurers Performance Much Worse Than CBO Projected

Reinsurance Program Subsidies Much More Generous Than CBO Projected

Medicaid Expansion Enrollment Much Greater Than CBO Projected

Medicaid Expansion Spending Much Greater Than CBO Projected

More New Medicaid Enrollees Were Already Eligible Than CBO Projected

Economic Growth After Obamacare Much Lower Than CBO Projected

In January 2010, CBO projected that growth in real gross domestic product (GDP) would average 3.2% from 2010 to 2016. By way of comparison, the annual GDP growth rate after the first six years of another severe recession (1981-82) averaged 4.6%.

Economic growth after the Great Recession has been anemic by historical standards and relative to expectations. As the figure below shows, annual real GDP has increased just 2.1%, 50% below the average growth rate predicted by CBO and less than half the growth rate during the Reagan recovery.

Every policy or program the Democrats are proposing consists of transferring money and power from the private sector to the federal government. 

As the private sector is reduced throughout the country, sales taxes, income taxes, gas taxes, property taxes and all other revenues to states and cities will fall. Stock and home prices will go down. That does seem to be the ultimate goal of Democrats, to make the rich poorer instead of lifting others up.

As the Democrats offer free health care and other "free" stuff, they are clearly trolling for votes. They certainly don’t care how destructive and costly their proposals are. They appear to want as many people to be dependent on government as possible.

Democrats claim to care deeply about the wealth and income gap, but all their policy proposals make the very wealthy Washington D.C. richer and the rest of the country poorer. Therefore, their proposals compound the problem. And the press makes things even worse.

Here are some simple questions for journalists and other Democrats: Why are so many Democrats proposing to greatly increase gas taxes to pay for infrastructure projects when they are simultaneously advocating eliminating gasoline? Are they committing fraud when they tell the investors the gasoline tax will pay off the bonds? I bet they aren’t projecting a decrease in revenue from gas taxes in their budget? Are they lying to the public by not telling them which taxes they will replace the gas tax with when gasoline is no longer used??

That's just for starters.

Jack Hellner

Source: https://www.americanthinker.com/blog/2019/08/why_are_government_cost_projections_always_so_utterly_wrong.html

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