GREAT REPORTING – AT 5:44 P.M. ET:  Nobody knows more about explaining the economy, and economic history, than Amity Shlaes, formerly of the Wall Street Journal, now of Bloomberg.  She demolishes a lot of the propaganda used to sell the health bill: 

Everyone knows the bill will widen deficits over time. Entitlement and mandate expansions always do. And everyone knows that health-care reform isn’t about fiscal rectitude. As Peter Orszag, the director of the Office of Management and Budget, wrote last summer, the point of the proposal “was never to generate savings over the next decade.” It was to insure the uninsured.

Oh.  I guess we were misinformed.

The question is how can lawmakers get away with their misrepresentation? One answer lies in the structure of the Congressional Budget Office, the government’s official accountant. Its job is to establish an honest price: to tell legislators and voters what a policy will cost in the short, medium and long terms. That CBO work is important because Americans rightly sense that the politicians’ math is rigged...

...The CBO’s rules make it hard for the group to fulfill its own mandate. You’d think, for example, that the CBO would use its own parameters when it crunches numbers. Instead, the CBO must use the same mathematical assumptions supplied by the very lawmakers who wrote the bill the group is evaluating. No matter how improbable those formulas are.

Former CBO director Douglas Holtz-Eakin, writing in the New York Times, described the group’s process as “fantasy in, fantasy out.”

And that is how those numbers were sold to us, or at least sold to those who weren't watching too carefully.

CBO rules often preclude common sense. Its forecasters can’t take into account any other legislation when studying the price tag of a proposed bill. That enabled the forecasters costing out House Speaker Nancy Pelosi’s bill to overlook this fact: Medicare spending increases will force tax increases, which in turn will hurt growth.

Oh.  Maybe we should tell the Dems to write that down.

This dynamic is permitted because the answers the CBO supplies make it easier for politicians to sell their bills. They’re happy. And so, for the moment, are voters who are painfully aware that the U.S. federal budget can’t cover new entitlements, yet accept such legislation as a balm for that pain.

And...

The CBO’s structural failure benefits the Democrats this week. Indeed, Pelosi is teaching Republicans something: the bigger the misrepresentation, the greater the credibility with voters. Croon to them a tune about entitlement, and they forget that you’re clearing a path for a tripling of the tax on dividends.

COMMENT:  Hitler once said that people would sooner believe a big lie than a small one.  Many politicians eventually learn that.  Sad, isn't it?

March 23, 2010