Princeton classmate and über-economist Greg Mankiw cautions that the Congressional Budget Office numbers that Democrats are trumpeting do not withstand scrutiny.
There has been a lot of talk lately about the CBO scoring of the health bill. Here is one thing people should understand about their numbers: When they estimate the budget impact of a bill like this, they assume the path of GDP is unchanged.
Recall that the bill raises taxes substantially. Some of these tax hikes are the explicit tax increases on capital income to pay for the insurance subsidies. Some of these tax hikes are the implicit marginal rate increases from the phase-out of the insurance subsidies as a person’s income rises. Both of these would be expected to reduce GDP growth.
Greg is cogent and instructive as always, but I confess I was intrigued even more by the custom warning label he posted on his blog (shown above). After downloading the JPEG file, on a hunch I Googled its filename, warninglabel.jpg, and sure enough, the top result was a Warning Label Generator with multiple customization options.
It’s disappointing that despite offering more than 40 alternatives, none of the icons have a financial theme. So I settled for a health care theme, at right.