Are you going to believe a bunch of grainy old videos taken on camera phones by the type of people who attend speeches and seminars about Health Care policy — which the White House does not denied their authenticity — or the White House Communications Director spin?
Here is the nuts and bolts of why they are panicked. From economist Keith Hennessey’s blog:
The President’s fiscal policy is based upon a flawed health care premise, and the flaws are becoming apparent to a wider audience.
The Administration’s fiscal strategy is to increase short-term spending (and not just on health care) and more than offset those spending increases through long-term reductions in federal health care spending.
In theory this strategy could work, but by ducking painful policy choices on health care reform that would actually reduce long-term health care spending, the President and his team have placed their health care and fiscal policy strategies in jeopardy.
Flaw 1: The arithmetic is nearly impossible. These bills start by increasing federal health spending 10-15% by creating a new entitlement. That digs a huge hole before beginning to address the existing fiscal problem.
Flaw 2: As it becomes increasingly more difficult to pass health care reform legislation, the Administration is lowering the bar to say such legislation must not increase the long-term deficit (rather than must reduce it). But to make their fiscal policy case, the Administration needs to be able to demonstrate that health care reform will reduce long-term deficits.
Flaw 3: The Administration has not recommended policies that would actually reduce long-term federal health spending. When experts (like CBO) point this out, the Administration misrepresents the analysis and repeats their claims of long-term savings.
As CBO has dismantled this argument, it has placed health care legislation in jeopardy. In addition, the linchpin of the President’s fiscal policy case is buckling.
Flaw 4: The Administration says the long-term savings will exist, but the savings are too nebulous to be precisely scored. What, then, do they plan to display in next year’s President’s budget if they are successful? At some point someone would have to attribute specific long-term budgetary effects to an enacted health care reform bill. You can’t just hand-wave past this problem forever. It will catch up to you.
Perhaps the most prominent non-lefty economist is Greg Mankiw. He summarizes the issue the following way: