The Congressional Budget Office gave the Democrat’s health care initiative another kick in the teeth late Friday. The CBO said that the plan announced late this week to give an outside panel the authority to make cuts to government financed health care would probably not save any meaningful amount of money.

From Politico.com:

A key House chairman and moderate House Democrats on Tuesday agreed to a White House-backed proposal that would give an outside panel the power to make cuts to government-financed health care programs. White House budget directorPeter Orszag declared the plan “probably the most important piece that can be added” to the House’s health care reform legislation.

But on Saturday, theCongressional Budget Officesaid the proposal to give an independent panel the power to keep Medicare spending in check would only save about $2 billion over 10 years- a drop in the bucket compared to the bill’s $1 trillion price tag.

“In CBO’s judgment, the probability is high that no savings would be realized … but there is also a chance that substantial savings might be realized. Looking beyond the 10-year budget window, CBO expects that this proposal would generate larger but still modest savings on the same probabilistic basis,” CBO Director Douglas Elmendorf wrote in a letter to House Majority Leader Steny Hoyer on Saturday.

Controlling costs is critical to getting the more conservative Democrats on board with the program. It had been a tense week as negotiations over the contend of the program broke down between the conservative Dems and the larger party over cost but it ended with some reconciliation and hope that the independent panel would produce enough savings to offset the costs they found objectionable. That hope has been dashed.

The Republican argument that the entire project needs to be scaled back and reform tackled in a manner more in tune with the fiscal capabilities of the country seems to be gaining some traction. It’s almost a certainty that Congress will not pass anything meaningful before the August recess and if the pols go out to their districts and start hearing that message then you can stamp the current Democratic direction as DOA.