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Surprise! Haggard Harry’s Health Care Bill Relied on Shady Accounting. Will Deficit Hawks Turn Back?

Jimmie | December 23, 2009 | Comments (1)

I today’s edition of The Delivery I said that Obamacare was a done deal, but I may have spoken a bit too early. A story has broken today that may blow up the whole deal right in Harry Reid’s glowering face.

One of the biggest cost-savers in the Senate plan involved some $500 billion saved from cutting “waste, fraud, and abuse” in the Medicare system. Under the plan, that money would go into a trust fund, in the form of bonds, that would be used to partially shore Medicare up in the future, as costs continued to rise (you know, the costs that are supposed to decrease thanks to the gaseous emanations from the hinder parts of various Magic Unicorns). That was counted as a savings, since we could use that money on Medicare instead of appropriating new cash. So far, so good.

However, that isn’t the end of it. Realizing that they had a trust fund that would theoretically be stuffed with money, Senate Democrats then set up a number of new programs that would be funded from money from that same trust fund.

In other words, Harry Reid and his Band of Renown were counting that trust fund twice, as a set-aside to offset future spending and as revenue to fund brand-new spending. That’s dirty pool, no matter what accounting rules you use.

Senator Jeff Sessions noticed the double-spending and asked the CBO its opinion. Not surprisingly, the CBO said that you can’t use the same money for two different purposes at two different times, which makes sense. You can only spend a dollar on one thing at a time and trying to do other wise, if you weren’t a member of Congress, would land you in jail.

This is going to put several Democratic Senators, who are firmly on record as saying they will not vote for any bill that increases the deficit, in a huge bind. They can only vote for the reconciled bill, which will hit the deficit like a speeding Peterbilt loaded with concrete into a Prius, by throwing their oft-repeated promises into the nearest garbage pail.

As of right now, the White House is making hesitant noises that negotiations on the reconciled bill will slip well into February. You can bet that President Obama, Nancy Pelosi, and Harry Reid will be trading every horse in their stable to make sure those Senators to break their words.

UPDATE: James Pethokoukis has the scoop on what straightening out this shady accounting does to the deficit numbers (short answer: it ought to turn the blood of “deficit hawks” like Evan Bayh and Kent Conrad to water). He also has comment from a former director of the CBO, Douglas Holtz-Eakin.