Innumeracy at the highest levels

Barack Obama evidently lost the first debate Wednesday night, although it will take a few more days to measure the damage in the polls accurately. So far, according to the data on fivethirtyeight.com, very incomplete data suggests that he has lost a couple of points in swing states. I must confess that I was among the few Americans watching who did not feel that Obama was taking a beating, although I did think Romney was doing somewhat better than expected. One reason was that I didn't see how any American except an extreme partisan, regardless of education, could take the discussion very seriously--especially when the candidates used numbers. That, I had decided well before poor Jim Lehrer said goodnight, was going to be the theme of my discussion, and so it is.

Politicians have been arguing about budgets at least since Franklin Roosevelt, and they argued about them constantly in my youth--but in those days, citizens could follow the discussion. Most educated Americans, it seems to me, had some idea of what the federal budget was--in fiscal 1965, I remember, it was almost exactly $100 billion. (Yes, that was a long time ago.) More critically, when politicians talked about a tax cut or a budget increase, they discussed its estimated value over the next fiscal year. During the Graham-Rudman deficit reduction discussions in the late 1980s it seems to me everyone talked quite specifically about a series of annual cuts. The turning point, I think, was in the elder Bush's Administration, when he put forth a "$500 billion deficit reduction plan," a figure which referred to the next five years. That trend has continued to the extent that no one has any idea any more what the figures thrown around by Presidential candidates mean.

Since I want to do something about this problem this morning as well as identify with it, let's begin with a few basic facts. The 2012 federal budget, covering the fiscal year that ended last week, anticipated $2.47 trillion in revenues and $3.73 trillion in expenditures, leaving a deficit of $1.3 trillion. Please try to keep those figures in mind as we look at some of the things the two candidates said during the debate.

The figure that we heard most often during the debate came from Mitt Romney: that the President "supports taking $716 billion out of [Medicare]." Now if you read that last paragraph with any care, you immediately must have realized that something is very wrong somewhere, because although Medicare is an expensive program, it doesn't soak up 20% of the federal budget, and even if it did, a $716 billion cut would mean the elimination of Medicare, which the President obviously is not proposing. (Medicare spending for this year is in fact projected at $484 billion.) But it turns out that the letter from the Congressional Budget Office to John Boehner from which that figure comes, which tried to estimate the impact of repealing Obamacare, expected repeal to increase payments from Medicare by $716 billion over a ten-year period. So the actual annual figure is about $72 billion a year, which is a 15% reduction. But that ain't all. The CBO explained that, under Obamacare, about three-quarter of those cuts will come out of Medicare advantage plans--that is, Medicare-funded HMOs, which have turned out to be considerably more expensive than regular Medicare--and reimbursements to hospitals, most of which are now profit-making enterprises that do very well out of Medicare. And none of the savings are going to come out of payments to physicians, as far as I can see. This is part of Republicanism 101: when Democrats try to take the profiteering out of a popular program, they are accused of cutting it. Meanwhile, Mitt in the midst of this discussion mentioned, "But my experience -- my experience the private sector typically is able to provide a better product at a lower cost." If there's one thing every concerned citizen ought to know nowadays, it's that Medicare is the cheapest health insurance program there is, which is why every single Republican refused to include a Medicare-for-all public option in Obamacare.

Now just to show that I don't believe President Obama is innocent of the same sort of nonsense, let's look at his favorite number: Mitt Romney's $5 trillion tax cut. "Governor Romney's central economic plan," he said," calls for a $5 trillion tax cut -- on top of the extension of the Bush tax cuts -- that's another trillion dollars -- and $2 trillion in additional military spending that the military hasn't asked for. That's $8 trillion." Once again, a quick look at my summary paragraph above is enough to prove that something is very wrong somewhere, since total federal tax revenues for the fiscal year that just ended were about half of that. It has taken my quite a while to figure out where that $5 trillion figure might have come from.

The nonpartisan Tax Policy Center has analyzed Romney's tax policies as thoroughly as it could, although any definite answers are impossible because Romney refuses to specify the deductions he wants to end. They do find that he has proposed substantial cuts in rates for most Americans that will have an important impact on revenue. They found that if we do indeed extend the Bush tax cuts, as President Obama agreed to do in 2011, that Romney's rate cuts would cost the Federal government an additional $480 billion a year by 2015. That's about 20% of current revenue and roughly one-third of the current deficit. It would appear that Obama is using the same algorithm in this case as Romney did on Medicare, and giving the figure for a ten-year period (the cost of Romney's tax cuts would grow, presumably, as the GDP and potential revenues increased.) But, of course, he never said so, making the figure meaningless.

It's worth noting, by the way, that a bipartisan reliance on meaningless figures is bound to help the Republicans, because their proposals are so much more fiscally irresponsible (as they have been since 1980) and out of touch with reality. If Romney had to accuse Obama (dubiously as we have seen) of cutting Medicare by 15% a year, while Obama countered that Romney wanted to cut total federal revenues by 20% a year and thus increase the deficit by about 33%, Americans would be much better served. And there's really no reason why the media couldn't start using annual figures even if the candidates refused to do so.

Romney's next line, however, has been even harder to run down--and you all know that I don't give up easily. Here are his comments on the effects of Obamacare.

"And, unfortunately, when -- when -- when you look at Obamacare, the Congressional Budget Office has said it will cost $2,500 a year more than traditional insurance. So it's adding to cost. And as a matter of fact, when the president ran for office, he said that, by this year, he would have brought down the cost of insurance for each family by $2,500 a family. Instead, it's gone up by that amount. So it's expensive. Expensive things hurt families. So that's one reason I don't want it."

When one searches for "Obamacare $2,500 CBO," as I did, one discovers that this has become a new article of faith in the Republican blogosphere, one that Romney has not scrupled to preach himself. I found this, for instance, in a Tea Party blog.

"The CBO previously had blown apart another Obama promise – that that his health care plan would save families $2500 in premium expense. A July 2012 analysis concluded that ObamaCare will actually increase premium cost by $2400 – a $4900 difference in the wrong direction for American families!"

I then went to the CBO Study which the blogger linked. That study has nothing to do with premium costs for average families. It's about the net impact of the Supreme Court's decision on the costs of Obamacare, which mainly involve fewer people receiving Medicaid (because states are no longer forced to expand it) and more people therefore being required to buy their own insurance or pay a penalty. The figure $2400 does not appear anywhere in the study.

What has been noted widely is that the average employee share of a family plan has increased $800 a year in the last four years--but obviously that can't be charged to Obamacare, which isn't even in effect yet, and it's only 1/3 of the figure that the Republicans are throwing around. I'm still offering a free copy of any one of my books to anyone who can plausibly explain where they are getting that figure.


Romney wasn't through with Obamacare. "You've raised them [taxes] by $1 trillion under Obamacare," he said, and I can't explain that one either. Of course we know enough now to assume that he meant $100 billion a year, but that same CBO study estimates that the penalty for not buying insurance and other tax changes under the plan will bring in just $50 billion a year, not $100 billion. (We know now that the penalty is officially a tax, of course, because the Supreme Court said so.) How Romney doubled that figure is a mystery.

"That's how we cut a trillion dollars of spending that wasn't advancing that cause," President Obama remarked at one point. I assume he meant $100 billion a year too, but I have no idea what cuts he was talking about.

I still expect the President to be re-elected, but I still don't see how this is going to help the country move forward very much. This is one of the reasons: thirty years of utterly politicized propaganda and declining American education have made it impossible for Presidential candidates sensibly to discuss the problems that we face. No one could have learned anything useful from that debate. The truth is out there, but you have to be awfully persistent to find it. Now let's see who can claim the free book.