Repealing Obamacare will increase the deficit by $109 billion over 10 years.
That was a headline from a CBO report in May when Republicans voted on full repeal of Obamacare. Somehow, when it comes to ascertaining the costs of wrongheaded policy, CBO wants us to engage in willing suspension of disbelief. The most costly entitlement will actually reduce the deficit, they claim. In Washington, up is down and down is up.
We are now seeing the same thing with the amnesty/immigration deform bill. You need not be an actuary to understand that 11 million poor illegals and tens of millions of other poor legal immigrants and guest workers, along with their American-born children, will wind up receiving a lot more in benefits that they pay in taxes. Yet, CBO will have you believe that this bill will actually reduce the deficit over 10 and 20 years by $197 billion and $700 billion respectively. In fact, the only main costs in this bill are the border security provisions.
Well, if you take their estimate to its logical conclusion, we should double the number of illegal immigrants, thereby doubling the level of deficit reduction. Also, countries like Mexico should be economic superpowers by now. It’s this sort of dyslexic bean counting that has led to $17 trillion in debt.
When determining whether a population would be a net contributor or a net recipient to the tax/benefit structure we have in this country, you have to understand that tax/benefit structure. All conservatives agree that when the income level is relatively low, those individuals will be net recipients; hence, the progressive system that everyone on the right rails against. Yet, somehow, when that simple fact is extrapolated to new immigrants, some of these people get disgruntled.
But CBO fails to factor in the degree of progressivity to our tax system even for the native population. In 2011, CBO issued an analysis showing that our tax and government transfer system had become less redistributive since 1979. At the time, I showed that, in fact, the share of income taxes paid by the top 1% grew from 19% to 36.7% while the share of the bottom 50% shrunk from 7% to 2.25%. Meanwhile, government transfer payments have exploded since 1979.
But somehow CBO found that our system had become less redistributive since the growth of refundable tax credits and welfare programs. With that in mind, it’s no enigma that they believe a low-income group of aliens will also be net contributors.
Here are some other points to consider:
After reading this cost analysis, I’m reminded of the comments from former CBO director Douglas Holtz-Eakin: “I used to joke that the estimate was based on whatever my mood was in the shower that morning.”
Cross-posted from RedState.com
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