New cost estimates released last night by the Congressional Budget Office (CBO) show Democrats’ misnamed “Inflation Reduction Act” signed into law by President Biden will increase the deficit through 2026.
The updated CBO score now shows Democrats’ massive tax and spend spree will add roughly $25 billion in deficits during fiscal years 2022 through 2026. This is a significant revision from CBO’s earlier score which claimed an $18 billion reduction in the deficit during the same timeframe.
CBO’s new score also downsized the bill’s overall impact on deficit reduction by roughly $55 billion during the full 10-year window of the bill.
Democrats rely on gimmicks to claim savings
The new score from CBO lowering the bill’s impact on deficit reduction further underscores how heavily Democrats rely on budget gimmicks and tricks to deceive voters and circumvent congressional rules in order to claim savings for the federal government.
CBO’s cost estimate shows that more than half of the bill’s deficit reduction comes from repealing the Trump-era “rebate rule” – an HHS regulation that Congress already delayed twice and is unlikely to ever take effect. Democrats claim more than $122 billion in savings that exist only on paper.
To further game the system, Democrats extended boosted Obamacare subsidies in the bill for only three years, despite clear expectations that they will be extended beyond 2025.
These subsidies were broadly expanded last March by increasing benefits for households at every income level and removing the eligibility limit for premium tax credits used to purchase health insurance on Obamacare exchanges. These credits were previously cut off at incomes at 400% of the poverty line, or roughly $54,000 for an individual.
Once these expanded subsidies have been in place for five years total, it will be extremely difficult to get rid of them. Given the high likelihood – and expectation – that these subsidies will be extended once they’re set to expire again, the three-year extension is a clear gimmick to force a lower cost estimate.
If the expanded subsidies were extended indefinitely, the 10-year budget deficit reduction falls by nearly $160 billion, according to the Penn Wharton Budget Model.
The rebate rule and Obamacare subsidies gimmicks alone account for the difference between the bill being scored as reducing the deficit rather than adding to it. In reality, this bill will come at a much higher cost to taxpayers than current scores show.