What a surprise. The new Medicare prescription drug benefit that the Bush Administration steamrolled through Congress is now being estimated to cost $720 billion over its first ten years in force. The Administration sold it to Congress (where some conservative Republicans, needed for the majority, were restive) on the ground that it would cost "only" $400 billion over the ten years that were being estimated. This was dishonest from the start, because the Administration knew that its own estimates had gone up to $550 billion, but it was also misleading in the sense that the earlier 10-year estimate included two years (2004 and 2005) when the benefit wouldn't even exist yet. So it was bound to rise substantially once the estimates were looking at its first ten years of operations. Some members of Congress nonetheless proclaim themselves shocked, shocked. They certainly should have known better, but the less attentive public was being gulled by the use of a ten-year forecast that was not actually representative of expected annual costs once the program was up and running.
The Medicare Trustees have already estimated the infinite-horizon fiscal gap for the Medicare prescription drug benefit at $16.6 trillion, or more than 50% greater than the infinite-horizon Social Security shortfall that the Administration is so fond of trumpeting. Possibly the $16.6 trillion forecast is alteady being exposed as too low. It would be interesting to hear the Administration explain why $10 trillion is intolerable while $16.6 trillion is just fine.
UPDATE: Oops, make that not $720 billion over ten years, but $1.2 trillion if some possibly dubious cost-saving offsets that are being claimed by the Administration fail to materialize.