William M. Briggs

Statistician to the Stars!

Democrats’ Appalling Budget Wishcast

Update No extra charge for today’s initially misspelled headline.

It is a logical fallacy to say that it OK for John to lie, cheat and steal because Mary lied, cheated and stole.

If magnificent lies are evil, and they are; if cheating is hateful, and it is; and if stealing is a crime, and it surely is; then whoever commits these acts is despicable. You must not believe that because one person or group of persons got away with a crime that is fine for others to go unpunished.

Thus, because Republicans have abused the Congressional budget process before, it is no excuse for Democrats to say that they should be allowed to. Even stronger, defending politicians with this argument makes you an ass.

And talk about abuse! The Sabine women were treated better than our budget was with the passing of Obamacare.

Part of the debauchment lay in forecasting how much Obamacare will cost in future years. This forecast—mandated to produce a deficit reduction so that the House could cram the bill through the reconciliation process—had at least two components. (1) Direct fabrications, and (2) Wishcasts.

The direct fabrications, while spoken of, have (understandably) received little attention. The worst is the government has forbade private entities to make student college loans. Verboten! They have usurped yet another right that belonged to us. I don’t know their argument for doing so. Since it’s Democrats who have stolen from us this time, presumably it’s “fairness.”

Another way to state this is that Democrats have “liberated” the rights of citizens to make a living by making loans.

Incidentally, if they stole the right to make this business, why stop there? Will housing loans be next? After all, many banks made a lot of asinine mistakes recently. Can you honestly say that, since the government has taken for itself the power to be the sole lender of one kind of loan, it won’t expand its shakedown to other kinds? Just wait….

Oh, right. Why are we talking of student loans at all? Because, through an accounting trick that would have made Bernie Madoff blush, Democrats said that by forbidding private loans, the deficit will go down. Get this: because the government will hand out money to a large and growing pool of college students, the deficit will go down.

Anyway, if you haven’t lost your milk by now, the gist is the Democrats told the Congressional Budget Office that they should believe this. Why?

The CBO needed to believe it to make their forecast of what will happen to the budget under Obamacare come out on the side deficit reduction. Problem is, the bulk of the “deficit reduction” you have heard about came from stealing the right to make student loans. The health “care” itself will cost money.

Which brings us to the second whopper. The care itself won’t kick in for five years. Many taxes, fees, and regulations will begin immediately, of course, but payouts won’t begin until 2015 (or ’14?). At that point, and probably before, the money starts gushing.

Of course the budget fares well if new taxes are levied but their accompanying payouts are deferred. But once the deferment is over, the payouts will overtake the income, and an eventual deficit will ensue.

But the CBO was asked to consider only the short term when making its forecast. Their eventual prediction said that the deficit, ten years after The One signed his bill, will decrease by about a hundred billion dollars.

Wow, that’s a lot! But it is surely wrong; both because of the cheating and because of wishcasting.

Wishcasting is when somebody or some group produces a forecast for something in the direction that they want the thing to go. Wishcasting is separate from cheating: a wishcast is that part of a forecast where the person fools himself, not on purpose, but unconsciously or through ignorance.

Thus, wishcasting is desire masking as prediction. For example, meteorologists often exaggerate the chance for snow on The Federally Recognized Holiday of December 25th.

Where does the wishcasting come in with Obamacare?

Consider Medicare. In 1966, Congress forecast that by 1990 it would cost $12 billion (adjusted for inflation). It actually cost $107 billion. This is nine times higher.

A similar story is had for Social Security, Medicaid, and every other government program I have ever heard of. Every budget is under-predicted from five to ten times. (It’s worse than it seems, because Congress has been stealing from Social Security for decades, and the bills are coming due.)

Even generously assuming that Obamacare’s health “care” spending is off by only five times, by roughly 2030, our deficit will have grown so large that we will either be a wholly owned subsidiary of China or inflation will inch toward Weimar Republic levels.

Any way out? Only if large portions of the bill are repudiated, rejected, and overturned. Chance for that? Not good.

Wishcasting Study Incidentally, if somebody wants to fund a study of wishcasting of government budget forecasts, contact me. Won’t be cheap. Any think tanks need a statistician?

11 Comments

  1. Are you sure it’s really a budget forecast and not a budget scenario?

    What is this, a tax denier site or something?

  2. In the profit and loss world of business, budgets (forecasts of revenue and expense) are never made for periods longer than 12 months (footnote 1). And such budgets are reviewed monthly — as in, “How did we do last month relative to budget and how does it look for the rest of the year?” If a shortfall in revenue happens or appears on the horizon, actions are taken to pressure the sales staff or cut expenses. Not so in Washington.

    Footnote 1: Longer term projections are required for capital spending, product development and market expansion but they are very uncertain, are reviewed frequently, revised as necessary and abandoned when conditions warrant.

  3. The Canooks and Euro-trash are all for it. Anything that cuts American throats and spreads their Marxist infection here is awlrite with the furners.

  4. And if we are given the gift of Cap and Trade– we will have govt increase entitlement spending at the same time it dismantles the economy’s ability to pay for it. A wonderful government plan- uncontrolled spending– and restrained production.

  5. So many things….

    Is it a “logical fallacy to say that it OK for John to lie, cheat and steal because Mary lied, cheated and stole”? Logical falicy? not sure that is the right choice of words. If rules are rarely enforced, and are routinely broken, they cease to be rules.

    Bernardo De La Paz asks, is it moral for the government to do things that it is immoral for people to do?

    Student loans, the government created Sallie Mae, first cousin to Fannie, to standardize student loans. In the 90s, Sallie was fully privatized. Why? DK. Now the Gov’t wants control of the student loan market again? Seems schizophrenic.

    CBO, the CBO is obligated to score bills under the assumptions that congress gives.

    Social Security, when you say rob social security, there is nothing to rob. Social security taxes are “true taxes, their purpose being simply to raise revenue.” Social Security benefits are arbitrary. “Congress can change the rules regarding eligibility–and it has done so many times over the years. The rules can be made more generous, or they can be made more restrictive. Benefits which are granted at one time can be withdrawn.” Social security is not insurance.

  6. Doug:
    The government may end up behaviong in the way that you siggest, but if they were a private entity they can be deemed to have created a contract with all contributors based upon the annual statement of benefits that are promised. The political fall out of reneging on these promises would be huge. Not giving increases and changing eligibility rules such as “full retirement” age OK. Of course the thing has turned into a Ponzi scheme but that is the fate of most government programs since at least the Roman Empire.

  7. Bernie,

    It may be political suicide to cut benefits too drasticly today. But, if we face a fiscal crisis, we could easily thow some old people under the proverbial bus. Meanwhile, there will be some tinkering at the margins — cook the CPI methodology, and raise the age of eligibility.

    Nonetheless, it bothers me when people suggest that social security is akin to a defined benefit pension. Politicians sell the illusion that your FICA paments are placed in a fund where they are saved and invested and will be returned to you as SS benefits. It is completely untrue.

    The surest way to stabilize social security would be to subsidize cigarettes.

  8. Of course, you are right. The same goes for most defined benefit pension funds that are controlled by a collective bargaining agreement/negotiations – so long as you are prepared for labor action.

  9. Adjectives seem scarce.

    Complaining won’t help; they don’t care. Question is: will there be enough outrage/anger/disgust/indignation/ or whatever, to vote these loons out of office. All the way out.

  10. Or we coudl amend the constitution to only allow taxpayers (payers, not filers) to vote. That’d reign in this nonsense.

  11. kdk33 has the solution. That would stop this nonsense in a heartbeat. Vote ALL the SOBs OUT!

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