Money and the government presents an interesting phenomenon. There appears no problem taking complex issues with scores of variables and predicting the cost and savings over an extended period. Based on all that, taxes are raised, obligations created and promises made. How do they do that, I can’t predict my 401k balance two days in advance.
Here is a good example. Under the Senate Finance Committee version of health care reform there is a provision to tax the value of benefit plans over a prescribed limit. This is estimated to generate $205 billion in revenue over ten years. To come up with this number one must assume employers and insurers will pay this excise tax rather than lower the value of the benefits. Well they are not going to do that, they are going to make sure the plan value stays under the limit. But wait, congressional planners have taken that into consideration as well, they further assume that when the employer trims the plan design it will make the loss up to employees by raising their pay and thus create more taxable income and hence tax revenue.
Sounds perfectly reasonable to me.