Wednesday, April 27, 2011

Funny Deficit Numbers

In a recent meeting at Facebook, President answered a question about deficit reduction:
Cesar Fernandez (ph) and Elisa Rectanas (ph) are participating in one of those roundtables, and they wanted to ask you this:  “Mr. President, in your deficit reduction speech last week you spoke of the need to not only reduce government spending but to also increase federal revenue.  In light of our nation’s budget challenges, will your administration consider revisiting policies such as the DREAM Act, which the Congressional Budget Office estimates will reduce the deficit by $1.4 billion and increase the government revenue by $2.3 billion over the next 10 years?”  (Applause.)
When I read those numbers, I was puzzled.  I couldn't imagine that the DREAM Act, which legalizes illegal aliens brought to the US before they were adults, and also provides for their continued education (at in-state tuition prices), could possibly be able to REDUCE the deficit.

So, I checked it out.

Read the CBO Report here.

Some points I immediately saw:

  • "The increase in authorized workers would affect individual and corporate income taxes, as well as social insurance taxes. On balance, those changes would increase revenues by $2.3 billion over 10 years" that assumes that all illegal aliens will immediately start paying taxes.  Doubtful, since they are generally working under-the-table, i. e., not paying taxes.
  • That rosy estimate doesn't seem to take into account an "increase (in) net direct spending by $912 million over the 2011-2020 period. That amount reflects changes in spending for refundable tax credits, Social Security, Medicare, student loans, and the Department of Homeland Security (DHS)" - the DHS expects that they will get their costs back in fees.  Wanna bet?  I'm betting that the bleeding hearts will start lobbying for the poor, underprivileged criminals to bypass that fee thingy.
  • "CBO and JCT estimate that enacting the bill would reduce deficits by about $1.4 billion over the 2011-2020 period. That result reflects an increase in on-budget deficits of about $1.4 billion over that period and a decrease in off-budget 2 deficits of about $2.8 billion over the same period. Only the on-budget effects are counted for purposes of enforcing the Statutory Pay-As-You-Go Act of 2010."  I'm dying to know what off-budget 2 deficits are.
  • "CBO estimates that the bill would increase projected deficits by more than $5 billion in at least one of the four consecutive 10-year periods starting in 2021."  Mostly entitlements for the needy.
  • On page 5 of the CBO report, there's a table of costs to the government.  Only 1 year, 2012, has a negative cost.  All others have positive costs.
  • The report doesn't count the increased cost at the state level for more kids in college.  I do know that most states subsidize student tuition, some quite significantly.  That cost isn't included.
The report is also rebuffed by Huffington Post, of all things.
The CBO estimated the bill would increase projected deficits by between $5 billion and $20 billion between 2021 and 2061 after the first DREAM Act beneficiaries gain legal status.
When you've lost the Huff, you've lost BIG.

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