Relevant and even prescient commentary on news, politics and the economy.

CBO Aug 7, 2015: Monthly Budget Review for July

Monthly Budget Review for July 2015
Bolding mine:

The federal government’s budget deficit amounted to $463 billion for the first 10 months of fiscal year 2015, CBO estimates. That deficit was $2 billion larger than the one recorded during the same period last year. If not for shifts in the timing of certain payments (which otherwise would have fallen on a weekend), the deficit for the 10-month period would have declined by $41 billion. On the basis of the government’s revenues and spending so far this fiscal year, CBO expects that the annual deficit will total about $425 billion, which would be less than the $486 billion that the agency projected in March. CBO will publish new multiyear budget projections later in August.

Hmm. $61 billion improvement over four months. Pretty significant however you slice it. And maybe puts some context on 75 year projections put out either by SSA or CBO.

CBO Budget and Economic Outlook: 2015 to 2025

CBO Budget and Economic Outlook: 2015 to 2025

Document link for Robert’s post. Lots of numbers here, including a new
Jan 2015 Baseline for Social Security
Just started poking at the numbers but it seems that CBO has revised projected revenue for SocSec down going forward. Not by a lot but perhaps enough to make Brother Krasting happy. But in the interest of ‘Numbers for All!!!’ and before I dive back in here are the links for Bears to start their own foraging.

Update: Well I found the smoking gun that drives those revenue forecasts. It is on page 114 in App A.

A change in CBO’s forecast of economic growth lowered
revenue projections for the 2017–2024 period. CBO has
slightly reduced its projection for the pace of economic
growth over the 2016–2019 period: Real (inflationadjusted)
GDP is now projected to be about 1.1 percent
lower, on average, over the 2017–2024 period than CBO
anticipated in August, and nominal GDP—the main
source of taxable income—is projected to be lower by
1.2 percent over the same period. (The projection for
inflation as measured by the price indexes for GDP is
little changed.)
Consequently, CBO also has lowered its projections for
wages and salaries—the most highly taxed type of income
specified in the economic forecast—by an average of
1.2 percent over the 2017–2024 period. That change
in the forecast has led CBO to make a downward adjustment—of
slightly more than $300 billion (or 1.1 percent)—in
its projections of revenue from individual
income and payroll taxes for that period.

I will leave it to smarter Bears to see if these drops in GDP and wages make sense.

Social Security Defender Shared Files

Who or what is ‘Social Security Defender’? Well it is basically a G-mail account controlled by me: . Which is kind of pretentious and vainglorious on my part but does allow a platform for some attached products including the blog Social Security Defender and a Google Drive. In which as an experiment I have created a Public Folder called Social Security Defender Shared Files into which I plan to save any number of official SSA and CBO Reports and tables and figures extracted from them. So if this works you should be able to Bookmark/Favorite the link and have a one stop location for lots of Social Security resources.

As of this moment the folder includes a PDF of the 2014 Report, folders containing TIFFs and PNGs of the various Figures from that Report, plus maybe a copy of my 2014 SocSec Report Tables Workbook which might or might not open for you in Excel or be able to be saved to your own Google Drive to open in whatever. I have been wanting and planning to ramp up Social Security Defender into an integrated product supporting the blog, a Google+ site, and file sharing for about four years but given that the enemies of Social Security had simply gone on hiatus recently put the project on the back burner. Well THEY’RE BACK!!! and attacking via the Disability program. So here we go.

Feedback and advice can be left in comments or sent to the g-mail address. Thanks.

The CBO Wants to Discuss Healthcare and the Deficit?

The CBO Wants to Discuss Healthcare and the Deficit?
(from run75411)

Someone struck a nerve, “The Lady Doth Protest Too Much: CBO Director Asks for A Chat . . .”. Yves Smith at Naked Capitalism received an interesting email after a voice mail from the Associate Director of Communications for the CBO:

Greetings, Susan.

I am following up on my voicemail to see if we can arrange a time either today or sometime this week for you to speak with our director, Doug Elmendorf. He wanted to speak with you about your blog post “Fed Budgetary Experts Demolish CBO Health Models, the Lynch Pin of Budget Hysteria” that appeared Sunday on Naked Capitalism regarding CBO.

I am copying Brianne Hutchinson, Doug’s executive assistant, who will work with you to find a convenient time for the call. You can reach Brianne by e-mail or directly at: 202-226-2700.
We look forward to hearing back from you at your convenience.

Kind regards,
Deborah Kilroe
Associate Director for Communications
Congressional Budget Office
2nd and D Streets, SW
Washington, DC 20515

Recently, Dan posted some of my earlier conversation with Yves and other participants on her post’s thread “Healthcare Spending Growth in the US” at Naked Capitalism . Yves’s post pointed to a recent paper completed by Glen Follette and Louise Sheiner examining and challenging the CBO analysis of healthcare costs as a percentage of GDP An Examination of Health-Spending Growth in the US. Simplified, what the study is found Healthcare growth as a percentage of GDP is sustainable at 1% which is precisely what Obama and even Romney used in their limiting factor for healthcare costs.

Read more at   Health spending growth in the US  at Angry Bear.

Medicare Cuts: What is the Fight About?

by Run75411

“Water For Elephants”

carrying water for elephants” is a phrase that means carrying a heavy load, much like carrying a secret that you can’t tell even someone you love wholeheartedly, just as in the end Jacob does for his wife
An elephant drinks 25-75 gallons of water a day far more than any man would be able to carry at any given time. “Water for Elephants” Sometimes when you get older . . . things you think on and wish on start to seem real. And then you believe them, and before you know it they’re part of your history.”

Most recently former NY Lt. Governor Betsy McGaughey in the WSJ (August 8th) commented on the ACA in “ObamaCares’s Phoney Deficit Reduction” choosing to carry water for the Republican candidates Romney and Ryan with the hope she can convince voters that President Obama’s ACA will not reduce the cost of Medicare and instead will rob the Medicare TF. By her words alone, Ms. McGaughey cannot change the numeric of Medicare expected and occurring reduced growth and costs resulting from the passage of ACA. In her, Romney and Ryan’s mines the logic of how the robbery of benefits and the Medicare is all too real even when the proof of the opposite is self-evident. The three will have to do double time if they are to provide enough water to conflate the ACA to the public if in fact they are to make them believe the illusion.

Ms. McGaughey critiques CBO Director Elmendorf’s and the JCT’s analysis (letter to House Leader John Boehner) on the impact of repealing the ACA, what it means to the country in increased costs, and then conflates the cuts to the Advantage Program and other parts of Medicare as actual cuts in benefits to Medicare recipients. The ACA states Medicare benefits cannot be reduced for Medicare recipients.

As operated by commercial insurance companies, the Advantage Program intent was to provide competition to Medicare and separate from Medicare. As Betsy believes and everyone else imagines, private commercial insurance can provide similar benefits at a lower cost and more efficiently. Except the Advantage Program did not do so and has out spent Medicare by an average of $1000 or 7% to 18% (dependent on who you read) more and in total for similar Medicare benefits.

                                        Ezra Klein , “Romney’s right: Obamacare cuts Medicare by $716 billion. Here’s how.”  
                                  Note: HMO is health maintenance organization; PPO is preferred provider organization. 


The very same CBO Director who wrote about the impact of repealing the ACA to House Leader John Boehner and the resulting increased costs was also a part of the CBO team which pounded the final nail into the “Hillarycare” coffin resulting in its demise in Congress. Healthcare then was 20% of the cost of what it is today. I doubt Director Elmendorf has lost any of his boldness since Clinton. So, who is right?

The best way to counter supposition and conjecture by Romney, Ryan, and Ms. McGaughey is to present detail about the cuts and to what they are related , the same as the actual cost of the Advantage program in relation to Medicare. The planned reduction in Medicare costs come from three areas, which also include the government sponsored Advantage program.

                                SOURCE: Medicare Payment Advisory Commission Report to Congress, March 2008.
                               “Medicare Advantage”; Kaiser Foundation 

30.2% of the planned reduction in Medicare costs will come from the elimination of Advantage subsidies as I stated above. The ACA also applies the same rules to the Advantage insurance programs it applies to hospitals by tying reimbursement (or fees) to quality of outcomes instead of a fee for the number of services provided.

34.8% of the reduction in cost comes from revised calculations in the reimbursement of hospitals for provided services. Hospitals not only give up the pay-for-services cost model to embrace better quality outcomes for services cost model; but, they move to electronic record keeping (which proved to be cost effective with the VA, Longman “Best Care Anywhere“), and the bundling of payments eliminating multiple billings and forcing a split of the total compensation. Knowing the increase in patients coming from the addition of the uninsured, there is also the influx of an aging baby-boomer population, which also influenced hospitals to accept the changes.

35% of the reduction result from a combination of smaller cuts in extra funds ( ~5%) given to hospitals to cover the uninsured (not needed as more people will be covered), reductions in homecare providers (~8%), fraud reduction, etc..

The $716 billion is far larger than the initial $449 billion first reported. In 2010, the CBO arrived at an estimate of savings of ~$449 billion starting from 2012 onwards and covered 6- 7 years from when the bill takes full effect in 2014 to 2019. The second estimate of savings was the result of John Boehner’s request for a review of the costs and gains realized from the repeal the ACA in its entirety. The second review covered the period from 2014 to 2022 and resulted in the $716 billion. “Medicare Cuts: What is the Fight About?”

And what of other things implied?

– Healthcare spending was 17.9% of GDP in 2010 and will rise to 19.6% in 2021. Neglected and a part of the article from which this snippet of CMS information was pulled is this: Current projections also do not include potential drops in spending through health care delivery reforms, such as the accountable care organizations and medical homes being promoted by the health law.” In other words, the author projections of $ and % are being made as if the ACA did not exist. The author of this particular article is an MBA and not an economist or a doctor. Quelle Surprise?

– “Repeal also would reduce government spending, lower taxes, and undo the evisceration of Medicare; all good results.” I guess it is still unclear how Medicare is to be eviscerated under the ACA when Obama will plow the results back into Medicare, and the CMS has lengthen the TF out to 2024-2029. Comparing this to Romney wishing to end Medicare and Ryan wanting to keep the very same reductions as the ACA and take the savings for tax breaks, who is eviscerating what?

Healthcare Costs have been decreasing for years? Maybe not so long and since 2009/2010 at the earliest?

Secretary of Heath Kathy Sebelius made the comment in an article that a family of 4 paid ~$6,000 for private insurance in 2000 and ~$12,000 for similar insurance in 2009. “Public Needs To Get Their Facts Straight” Part of this is due to increased administrative costs and much more is a reflection of increased healthcare care costs which insurance and Medicare reflects.

Medicare has had slower growth because it has taken the necessary actions to control much of the costs associated with healthcare through pilot programs, negotiations, etc. The results of its actions are clear in the S&P Indices. The increase in enrollment of healthier patients over the last two recessions has contributed to the slow down; however, it is the ACA which started hospitals and doctors to begin to plan for full implementation and take the steps necessary to meet ACA goals for commercial insurance.

spending per enrollee slowed to 4.2% annually, as compared with 4.5% among private payers. After large increases in enrollment due to two recessions and the increasing numbers of Americans with disabilities are accounted for, growth of Medicaid spending per enrollee was relatively slow (less than 3% per… and Medicaid Spending Trends and the Deficit Debate”

– And the Pink Cadillac Tax? The ACA does impose a tax on plans exceeding $27,000 and typically carried by executives in the rarefied levels of management. They can always shuck it off and go to one of the insurance exchanges for a cheaper plan with no tax. There is also an excise tax on plans with premiums exceeding $10,200 for individuals or $27,500 for a family tax Other taxes include Increase Medicare tax rate by .9% and impose added tax of 3.8% on unearned income for high-income taxpayers.

So what is the Fight About? It is about whether Romney/Ryan can eliminate Medicare and repeal the ACA, and keep the same proposals President Obama put in play for Medicare but using the savings from it elsewhere (tax breaks – think SS surplus) rather than within Medicare, as both are opposed to Obama plowing the savings back into Medicare. “Medicare Cuts: What is the Fight About?”


Maggie Mahar Health Beat Blog Federal Government Will Pick Up Nearly All Costs of Health Reform’s Medicaid Expansion ” Romney’s right: Obamacare cuts Medicare by $716 billion. Here’s how CMS Bright Future for Spending . . .
Affordable Care Act Update: Implementing Medicare Cost Savings Projecting future drug expenditures—2012 Medicare Cuts: What Is the Fight About? Medicare Advantage Romney, Obama Uphold Health Care Falsehoods Public Needs . . . Government forecasts modest health spending growth ” Steep Rise in Health Costs Projected” “Medicare and Medicaid Spending Trends and the Deficit Debate” “Containing the Growth of Spending in the U.S. Health System”

CBO Sleight-of-Hand

I’m late to seeing this, and Bruce has probably already covered it, but Doug Elmendorg at the CBO inadvertently gives away the game on the Administration’s approach to—let alone opinion of—the Social Security “Trust Fund”:

The balances in trust funds have accrued because income associated with those programs has exceeded the expenses; when that happens, the surplus cash flow is used to finance the government’s ongoing activities, and the trust fund is credited with a corresponding amount of Treasury securities. Although trust funds have an important legal meaning, in that they may constrain the amount a program can spend, they are essentially an accounting mechanism and have little relevance in an economic or budgetary sense. The value of Treasury securities held by trust funds and other government accounts measures only some of the commitments the government has made, and it includes some amounts that may not represent future obligations at all. [emphases mine]

Pay particular attention to that last; it’s the closest you’ll find to an acknowledgement from a government official that There is No Crisis.

As Bruce has noted, only by distorting the worst-case and median cases does the Administration produce scenarios under which the Social Security Trust Fund—if credited with its accruals as the Greenspan Commission intended (see “Off-Budget” Again-“; h/t PGL here)—does not have the funds to pay its obligations in perpetuity. (As Dean Baker once observed, if you take those scenarios and apply them to the equity markets, the case for privatization disappears even more quickly.)

Doug Elmendorf’s admission that there may well be a perpetual Social Security surplus, even if it is phrased as “some amounts that may not represent future obligations, stands in stark relief of the most notable “unforced error” of the Obama Administration.

Who Scores the Deficit Commission: CBO or OACT?

by Bruce Webb

(My God, can we get any more jargony and wonkish? Well “Si, Si, Puede!”)

When the Greenspan Commission was convened back in 1982 Social Security scoring started and stopped with the SSA Office of the Chief Actuary who are also tasked with researching, compiling and presenting the Annual Report for review and signing by the Trustees, many of whom may not have any relevant training. OACT is by statute and tradition a professional and non-partisan group of technocrats. Sometime after 1983 the role of scoring Social Security started being shared with the Congressional Budget Office, also by statute and tradition a professional and non-partisan group of technocrats. What is more CBO formally agrees to accept OACT demographic projections. So you would expect the top line numbers of both to come in pretty close alignment in regards to Trust Fund Depletion. Well you would be wrong, CBO and OACT have in the past seen pretty wide variations in dates of TF depletion and total actuarial gap. Now in the past decade or so this didn’t matter much because even the Bush push for Social Security reform never made it as far as the legislative process, to my knowledge no bills were submitted, meaning no official CBO scoring. Moreover in the normal course of events there was enough lag between the reporting by SSA and CBO that the divergence between them could go unnoticed since neither stayed in the news past a news cycle or two anyway.

Well this year is different. We have a presidential Deficit Commission which has already announced a focus on ‘Entitlements’, including Social Security, and are prepared to make a recommendation in December, which recommendation if passed through the Senate was last week guaranteed a vote by the House. Meaning that this year the question of scoring is going to come to the fore, in selecting a package of SS ‘reforms’ whose score is going to have the final say? I put this question to a panel of experts with decades of experience and while some gave me pretty definitive answers the consensus was “Bruce, that is an awfully good question.”

Report geekery below the fold.

The two main sources of Social Security scoring are the Annual Reports of the Trustees of Social Security, normally released on March 31st and available here, and CBOs Long Term Projection for Social Security, normally released in August and available here. This five month gap normally results in SSA numbers being internalized in the MSM, with few reporters or columnists noting the difference, with a major exception of Dean Baker, who for a variety of reasons tends to go with CBO numbers.

Well a funny thing happened this year, the Social Security Report did not come out on March 31st, it didn’t even come out on the semi-official revised date of June 30th, and Treasury refuses to commit to a firm date even now, with the best guesses on Capitol Hill suggesting sometime in August. Now there is no reason to suggest that CBO will experience a similar delay they came out with their Long Term Budget Outlook (which has a Social Security component) on time and also released a scoring of thirty different Social Security Policy Options on July 1st. So best available information as of this minute is that we will have two dueling Reports coming out head to head right in time to inform the decision making of the Deficit Commission.

So which one rules? Well we got an interesting hint in an article (interesting in itself) detailing some internal strife in SSA between Commissioner Astrue and Chief Actuary Steve Goss published in the NYT on July 11: Lawmakers Defend Social Security’s Chief Actuary in Clash With Commissioner. The following two sentences jumped out at me (bolding mine):

Mr. Goss’s responsibilities have suddenly increased. Leaders of a presidential commission seeking ways to reduce the federal budget deficit said they would rely exclusively on his estimates to measure the financial effects of proposals to overhaul Social Security

Which suggests that for the Commission’s purposes when it comes to Social Security and Medicare CBO is locked out. But can they equally lock out CBO when it comes time to other spending and tax suggestions? Can they just agree to look at one part of a data table while ignoring another that mentions Social Security?

And whatever the Commission decides what happens when the package hits Congress? In 1983 there was no CBO long term scoring of Social Security, and a Congressional staffer who worked on the legislative package confirmed to me that at least House Ways and Means and probably Senate Finance relied exclusively on OACT. Then again they didn’t have a lot of choice. But in 2010 we know from observation of the Stimulus and HCR legislative process that budget bills BY RULE live or die based on CBO scoring.

To which some people will suggest that it doesn’t matter much, after all the 2009 Social Security Report put the long-term gap at 0.7% of GDP while the most recent CBO scoring puts it at 0.6% of GDP. On the other hand the gap between the 2009 SS Report and the 2010 looks to have stretched out by 15 months (May 13th to mid-August) and performance of Social Security, particularly on the Disability Insurance side, was MUCH more miserable than expected, we can expect OACT to bump that 0.7% up a bit. Moreover each 0.1% of GDP represents maybe 0.3% of covered payroll, no one should be surprised to see CBO scoring the 75 year gap at 1.6% of payroll and OACT at 2.2%, this would simply mirror the similar gaps we saw in the respective 2008 and 2009 reporting.

Why is this gap important? Because a lot of the options on the table score right in that .2 of GDP/.6% of payroll gap between CBO and probable SSA, a package of three fixes designed to meet SSA scoring could be revised to two fixes and still meet the requirements of CBO, a seemingly balanced package coming out of the Commission could be transferred to an unbalanced, and based on history even more worker-unfriendly one, by Congress using CBO numbers to say strip out a cap increase proposal in favor of one focusing entirely on benefit cuts.

There may be little in this world more geekish than focusing on the fine points of CBO vs OACT scoring. But that doesn’t mean it is not important. Your future retirement may rest on which way this one leans.

CBO data on taxes and income

CoRev asks if anyone wants to discuss the justifications of the beneficiaries of the different parties policies. So I though this gives me an opportunity to present some recently published
CBO data on income and tax that could give people something to tie the discussion to.

Republican policy has been to favor the more affluent in our society and justifies it with the claim that increasing the wealth and/or income of the “investor class” will make everyone better off — a rising tide lifts all boats. If this worked I would strongly support such policies.

But look at what this data shows has happened between 1979 and 2007. This is a good set of dates for comparisons because it is essentially a peak to peak comparison from just prior to the 1980-1982 double recession and the current recession. Moreover, it is an era dominated by the Republican policy of tax cutting and the investment boom of the 1990.

First, as everyone knows this has been an era of a great surge of income inequality driven both by natural economic forces — the winner take all economy — and tax policy.

The net product of this 30 year era was a shift of about ten percentage points of the economic pie from the bottom four quintiles to the top quintile.

This shift in the share of income share by the top quintile has also generated a significant
increase in the share of taxes paid by the top quintile.

But the shift in the distribution of the tax burden is due entirely to the growth in income
rather than a shift in tax policy as the average effective tax rate paid by each quintile has fallen. Actually, on a proportional basis the lowest quintile had the largest drop in its tax burden.

The federal tax burden is quite progressive as the last chart shows. But in general state and local taxes such as sales taxes and property taxes are much more regressive, so the total tax burden is much less progressive than this chart implies.

If this shift in income to the top quintile had generated the increase in savings and investment and generated widely shared prosperity it would be a good thing, and the
greater income inequality would be a fair trade-off for greater growth.

But the actual results since the early 1980s has been a significant slowing of economic growth and a drop in private savings– just the opposite of what republicans and economic theory says would happen. Rather the results has been that since the early 1980s the US has increasingly lived beyond it means and ran up a major foreign debt to finance this consumption binge. The two major drives behind this shift in the US has been the Reagan and Bush tax cuts.

So I’ll take on CoRev and argue that the reason I oppose Republican policies is that they have been a complete and utter failure to deliver the results they promise. They have just ran up a massive foreign debt to finance our living beyond our means and now blame Obama because he has failed to reverse the adverse impact of the failed republican policies.

Supporting the republican “starve the beast” strategy reminds me of the comment I use to make back in the early 1970s that if Arthur Burns — the Fed Chairman — was a friend of business, business did not need any enemies.

Why the Pelosi Rule MAY not be a sell-out on Social Security

by Bruce Webb

There is a huge disturbance in the Force, at least as sensed by the Jedi of FireDogLake, Democratic Underground, AMERICAblog, and OpenLeft, which is to say among the Obama-skeptics of the Left. The substance is this, in a last minute move prior to adjournment Nancy Pelosi pushed through the rule for handling the recommendations of the Obama Deficit Commission, and on the surface they mirror that of Cooper-Wolff or its Senate counterpart Conrad-Gregg, that any recommendations coming out of the Deficit Commission has to be voted up or down without amendments. The actual language is here:

“Commits the House to vote on any Senate-passed recommendations of the bipartisan Fiscal Commission and that net savings from any Commission recommendations will go to deficit reduction.”

Meaning on the FDL reading that any Commission proposal focusing heavily on Social Security benefit cuts can simply sail through with Republican and Blue Dog support. Simple sell-out right? Well maybe. But whatever the intent of the players, including Pelosi, the effect might be much different. Because despite strong and deliberate similarities the Obama Deficit Commission is NOT the same as either Cooper-Wolff or Conrad-Gregg. Argument below the fold.

The entire Peter G Peterson backed argument as manifested in both Cooper-Wolff and Conrad-Gregg is that the major threat to the economy going forward is long-term deficits, that the major cause of those deficits are projected to be entitlements, and that the only solution is major cuts to those benefits. In this vision the disease and the medicine are determined beforehand and the whole purpose of the Commissions is to give bi-partisan cover backed up by a requirement that any proposal coming out of such a Commission is subject to an non-amendable up or down vote. And if this vision was still controlling the entire debate then this would look like total surrender by Pelosi. But I argue that it isn’t, that the Obama Commission was formally given a much different mission, and one that in the end conflicts and subverts that of PGP.

The main impetus for the Obama Commission was not the structural long-term deficits seen as the result of ‘unsustainable’ entitlements, instead it was the very large, as in more than a trillion a year, deficits starting with FY 2009 as a result of the worldwide economic crisis, that is the crisis is not defined as intergenerational but instead in the here and now with the main expressed fear is that without action the Invisible Bond Vigilantes and the Chinese Central Bank will stop buying our debt. Well I’ll leave that bigger argument to Prof K, the result was that the Obama Commission was given a specific charter, that of getting the deficit down to 3% of GDP by 2015. And the problem in a nutshell is that you can’t get there via benefit cuts to Social Security, one because Social Security is not actually projected to contribute to the deficit over that time period and two because even the most draconian proposals don’t start operating by then.

It has been an accepted principle since the Leninist Strategy of 1983 that benefit cuts shouldn’t come at the expense of people in or nearing retirement, a principle that was also the first one listed by Bush’s CSSS (Commission to Strengthen Social Security) in 2001, and followed by the various proposals fronted by Alan Simpson, the Ryan Roadmap, and even Michelle Bachmann. Each would give varying periods of grace ranging from seven years (Simpson) to not effecting people over 55 (Ryan Roadmap) to as much as 20 years. But what all share in common is that none of them show any savings under CBO scoring prior to the mandated target of 2015, they simply CAN’T bend the short term deficit path.

It is not clear that any of PGP, the Obama Commission, or Speaker Pelosi quite get this because the whole argument has been framed in terms set by the Social Security and Medicare Trustees where the score is generally expressed over the 75 year actuarial window, or since 2003 over the Infinite Future Horizon. Under those long-term scoring windows new revenues or benefit cuts get scored in the current year even if the actual incidence of the tax increase or benefit cut doesn’t occur for years or even decades. Well all of that is fine in its own place but it doesn’t cut any ice when it comes to projected deficits in 2015, when CBO scores whatever recommendations come out of the Commission, 2015 won’t (or shouldn’t) get credit for savings that won’t be seen until 2030 and later. Now the argument can and will be made that future cuts add current confidence to those nervous (but as yet invisible) Bond Vigilantes, but at most the real effects in 2015 could only be seen in lower interest rates, and those rates are rock bottom now.

How does this play out in practice? Assume the worst, that the real intent of the Catfood Commission is to slash entitlements and particularly Social Security, the question is whether they can present a package that does that yet doesn’t do anything for 2015’s bottom line? Can they get away with putting forth a ‘deficit reduction’ proposal that under CBO scoring doesn’t actually lower the deficit by 2015 or within the standard 10 year scoring window? Well I don’t see that they can, not without revealing their true colors. And this is where the Pelosi Rule might actually work to protect Social Security.

Cooper-Wolf and Conrad-Gregg were both to be established pretty much openly as ‘Entitlements Commissions’ along the lines of the 1994 Kerrey-Danforth ‘Entitlement and Tax Reform Commission’ , a package entirely focused on entitlements would not only not be surprising but expected giving the framing. But the Obama Commission has a different framing, that of near term deficits, requiring a different approach, the Commission has to at least present some measures that will actually address their charter of reducing the 2015 deficit. Which means revenue enhancements and spending restraint OUTSIDE of Social Security. (Or just biting the bullet and cutting current SS benefits, something most concede would be political suicide). Now the examples of the Stimulus and HCR Bills tells us how this could work, the Commission introduces a balanced proposal of short and long term revenue increases and cuts with a focus on both 2015 and 2083 and that proposal gets whittled down bit by bit ostensibly to gain the votes of Conservadems and Blue Dogs, but really just to eliminate any tax increases or defense cuts leaving only entitlement ‘reform’ intact. The Pelosi Rule, by intent or not, prevents that whittling process.

Seen in this light Pelosi would be simply calling the Blue Dogs bluff, is it really about deficit reduction? or about slicing away at the social safety net?

I don’t believe the Commission can get away with a package that only slashes future entitlement payments but does nothing about near term deficits, it would just be too raw in light of their mandate. Yet the more cover they add in the way of truly bi-partisan measures to increase revenue and cut discretionary spending, including military, the more support will bleed from Conservadems and Blue Dogs, to say nothing of Republicans, while Progressives are not going to jump on board an entitlements cut only program. Where they might have gotten away with a straight out Entitlements Commission whose focus was on 75 year and Infinite Future savings, they are handcuffed by a 2015 target and attendant CBO scoring.

My opinion anyway. For anyone else, well that is what comments are for.