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The Simpson-Bowles Deficit Hysteria Sideshow Debuts On Fox

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The following is part of the "Virtual Summit on Fiscal and Economic Responsibility for People Who Did Not Wreck The Economy."

Before the White House deficit commission meets for the first time tomorrow, the two co-chairs Erskine Bowles and Alan Simpson gave a preview on Fox News Sunday.

It wasn't pretty.

They claim to be leading a "just-the-facts" dialogue, yet they seem unaware of the fact that we just passed the biggest deficit reduction bill in history, known as "health care reform."

Both Bowles and Simpson stressed they would be relying on official numbers from the Congressional Budget Office and government actuaries. But Simpson, unprompted, made this bizarre comment:

Somebody said, well, is the new health care bill off the table? I said, nothing is off the table, absolutely nothing.

Uh, the proper response to that question is: "Absolutely, because it would be pretty stupid to put on the table legislation that the Congressional Budget Office just estimated would cut the deficit by over $1 trillion."

If the co-chair of the deficit commission fails to understand health care, he fails to understand the deficit.

As economist Mark Thoma noted, in rebutting Fed chairman Ben Bernanke's deficit hysteria about the Baby Boomer population bulge: "The CBO has argued persuasively ... that demographics is not the main problem. In addition, Social Security can be fixed relatively easy. It is health care costs rising independent of the aging of the population that must be addressed."

And as health care expert Atul Gawande explained in The New Yorker, the new health reform law will be testing out practically every cost-control idea that has been discussed:

It creates a center to generate innovations in paying for and organizing care. It creates an independent Medicare advisory commission, which would sort through all the pilot results and make recommendations that would automatically take effect unless Congress blocks them. It also takes a decisive step in changing how insurance companies deal with the costs of health care. ... Which of these programs will work? We can't know. That's why the Congressional Budget Office doesn't credit any of them with substantial savings. The package relies on taxes and short-term payment cuts to providers in order to pay for subsidies. But, in the end, it contains a test of almost every approach that leading health-care experts have suggested...

And that's why Paul Krugman said the cost savings are likely to be even better than estimated:

...there's good reason to believe that all such estimates are too pessimistic. There are many cost-saving efforts in the proposed reform, but nobody knows how well any one of these efforts will work. And as a result, official estimates don't give the plan much credit for any of them. What the actuary and the budget office do is a bit like looking at an oil company's prospecting efforts, concluding that any individual test hole it drills will probably come up dry, and predicting as a consequence that the company won't find any oil at all -- when the odds are, in fact, that some of the test holes will pan out, and produce big payoffs. Realistically, health reform is likely to do much better at controlling costs than any of the official projections suggest.

Neither Bowles or Simpson even acknowledged that we have taken this major step toward reducing deficits in the long-term. Worse, Simpson grotesquely implied that the health reform law has made the fiscal picture worse.

A disturbing preview to tomorrow's opening session.

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