NCPA - National Center for Policy Analysis


June 17, 2010

Sen. Joe Lieberman and Democratic Sen. John Kerry of Massachusetts introduced in May a climate bill they say is necessary for cutting the man-made carbon dioxide.  On Tuesday the Environmental Protection Agency (EPA) said that the cap-and-trade provisions of the American Power Act would cost an average U.S. household from $80 to $150 a year.  Lieberman was clearly pleased by the analysis.  But he nonetheless warned that "there'll be some people who will want to demagogue that politically" -- before resorting himself to a bit of demagoguery by noting that the EPA's cost estimate is "less than $1 a day." 

In making his less-than-a-dollar-a-day claim, Lieberman ignores a law of the Potomac: Government programs are never as inexpensive as those who support them say they will be.  Neither are the taxpayers as unmolested as the lawmakers who pile on larger loads of mandates promise they will be.  It is the nature of government programs and regulations to cost more than their advertised price, says Investor's Business Daily (IBD). 

For example, no program has exceeded its projected costs more egregiously than Medicare: 

  • When it was created in 1965, the public was told that its hospital portion would cost a mere $9 billion by 1990. The real cost, though, was $66 billion.
  • For all parts of the Medicare program, the cost was projected to be $12 billion by 1990, yet it actually cost $107 billion. 

When a fourth part -- the prescription drug benefit -- was added to Medicare in 2003, Washington was still having trouble calculating future costs: 

  • When the program was being debated, the public was told it would cost $400 billion in its first decade.
  • After it was passed, forecasts assumed the program would cost $534 billion across its first 10 years.
  • Then, within the space of a few months, the projection jumped to $1.2 trillion. 

The cost of Medicaid, the government's health care system for the poor, has followed an upward trend similar to that of Medicare: 

  • Launched in 1965, it was supposed to cost $9 billion by 1990.
  • But after that quarter of a century, Medicaid's real cost was $67 billion.
  • A special hospital subsidy was added to Medicaid in 1987 that Washington said would cost $100 million in five years, yet the government spent $11 billion on it.

Source: Editorial, "The Immutable Law Of The Potomac," Investor's Business Daily, June 17, 2010. 

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