Context is everything when examining federal budgets

by Dan Stockman

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I reported on government as a journalist for 19 years. Believe it or not, I love reading government budgets. I at times found myself explaining to the people I covered how their own processes work because I understood them better than they did.

And if I learned anything in all those years, it was the importance of context.

Context matters in all journalism, of course. That's why newspapers do a front-page story when a bank is robbed but don't do a story when it isn't.

And in all the national debate over health care and the federal budget, it seems the one thing that is missing most is context.

Context is critical when reporting on federal budget numbers because they are so large. For example: Foreign aid spending for this year is set to be $2.72 billion, which sounds like an astounding amount.

The Kaiser Foundation does a poll each year to see what percentage of the budget people think the federal government spends on foreign aid each year, as NPR reported, and every time they do, only about 1 in 20 respondents is correct. The average respondent thinks we spend about 26 percent of the budget on aid.

The reality is that while $2.72 billion is a hard number to wrap your head around, foreign aid annually makes up about one-tenth of 1 percent of the budget. When considering the good it does in humanitarian aid, foreign relations and making the world a better place — not to mention the evil it prevents, because we know that when people are healthy, fed and educated, they are far less likely to become, say, terrorists — that one-tenth of 1 percent sounds like a bargain.

Without that context, though, it would be understandable to think the number should be cut dramatically.

That brings us to health insurance. While the proposal from President Donald Trump and Speaker of the House Paul Ryan, called the American Health Care Act, died in the House of Representatives on Friday, March 24, there could still be a proposal made in the Senate or another attempt in the House.

Whatever happens, there will be lots of numbers thrown around. But let's use Ryan's plan for context and comparison.

Before the bill was pulled, the nonpartisan Congressional Budget Office estimated that the plan would save $150 billion over the next decade.

That number is so large that it's understandable why some people pointed to the figure and said that while 24 million people losing health insurance over that period was not desirable, it could not be helped given the cost of ensuring that coverage and the debt the United States already carries.

Again, context is everything.

First, politicians often give numbers that cover a time period hoping you won't do the math. So while that $150 billion in savings sounded amazing, you also needed to divide it by 10, as the savings was over a 10-year period. And while saving $15 billion a year is admirable, it is not quite one-half of 1 percent of the $3.54 trillion in this year's budget.

Suddenly, saving less than 1 percent per year at the cost of 24 million people losing health insurance doesn't sound so great.

That number sounds even worse when you consider that those 24 million people would have still gotten sick and needed health care but wouldn't have had insurance to pay for it. A Kaiser Family Foundation study showed that in 2013, we spent $1,700 per uninsured person in uncompensated health care. If health care costs were the same as they were in 2013, we would have spent an additional $40.8 billion a year to treat the 24 million additional people without insurance.

That $15-billion-a-year savings just became $25.8 billion more in spending each year.

Of course, the $150 billion in savings is net savings. The cuts in spending actually would be $1.15 trillion over 10 years, but they would be offset by $733 billion in new deficits, most of which, the Congressional Budget Office said, are from tax cuts — tax cuts aimed at the rich, including about one-third of them that would only apply to the wealthiest 2 percent in the nation.

Let's put those tax cuts in context, too. The Center on Budget and Policy Priorities reported that the 400 wealthiest people in the nation would get $2.8 billion in tax cuts a year. That's a $7 million tax break for each of them every year.

And what could the government do with an extra $2.8 billion a year? Well, you could pay for the premium tax credits for people in 20 states. Those are the tax credits that low- and moderate-income people would have received to help them pay their health insurance premiums under the American Health Care Act.

In short: The price of insurance would have gone up for 800,000 people so people whose average income is more than $300 million a year could receive a $7 million annual windfall.

So under the American Health Care Act, we would have dumped 24 million people from health insurance; made it more difficult for poor people to buy insurance; brought back things like pre-existing conditions and higher costs and less coverage for women; and spent an additional $26 billion a year treating the uninsured, all so we could give another tax break to the wealthiest Americans.

Context, indeed, is everything.

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[Dan Stockman is national correspondent for Global Sisters Report. Follow him on Twitter or on Facebook.]