The CBO and Partisan Hypocrisy – A Response

As long as there has been a Congressional Budget Office, there has been a lot of crying from one side or the other of the partisan divide about their latest estimates.  So when a conservative such as myself says I don’t believe this health care boondoggle will reduce the deficit, the immediate accusation is one of hypocrisy: you trumpet the CBO’s numbers when they support your argument, and condemn them when they don’t.

Well, sorry, for this blogger at least, that doesn’t wash.  I have no problem with the CBO – I believe that it is nonpartisan, as it claims to be, and I believe it has scored this bill properly.  The problem is the CBO can only score the bill it is presented, and if the bill as presented doesn’t tell the whole story, then neither can the CBO’s score. 

Here’s Robert Samuelson in the WaPo today:

…[T]he CBO estimate is misleading, because it must embody the law’s many unrealistic assumptions and gimmicks. Benefits are phased in “so that the first 10 years of [higher] revenue would be used to pay for only six years of spending” increases, a former CBO director, Douglas Holtz-Eakin, wrote in the New York Times on March 20. Holtz-Eakin also noted the $70 billion of premiums for a new program of long-term care that reduce present deficits but will be paid out in benefits later. Then there’s the “doc fix” — higher Medicare reimbursements under separate legislation that would cost about $200 billion over a decade.

Proposals to control health spending face restrictions that virtually ensure failure. Consider the “Independent Payment Advisory Board” aimed at Medicare. “The Board is prohibited from submitting proposals that would ration care, increase revenues or change benefits, eligibility or Medicare beneficiary cost sharing,” says a summary by the Henry J. Kaiser Family Foundation. What’s left? Similarly, findings from “comparative effectiveness research” — intended to identify ineffective care — “may not be construed as mandates, guidelines or recommendations for payment, coverage or treatment.” What’s the point then?

I don’t want anyone to miss the import of Samuelson’s argument, so let’s put a finer point on it:  the legislation is front-loaded.  Benefits are phased in, but revenues are collected from the beginning.  The result is that six years of benefits are paid for by ten years of revenue enhancements (i.e., money from your wallet). 

So what?  Well, think about it – you can only front load once.  Every further year is going to roughly 40% more expensive (1-1 benefits/revenue ratio compared to .6/1).  In other words, after the inital ten years (and the expiration of the CBO estimate, I might add), you’re going to need to come up with 40% more revenue for each year, or add even further to the out-of-control deficit.

Only it’s more than 40%, because Democrats are already promising to pass seperate legislation, at a cost of $200 billion, to reimburse doctors for Medicare treatment at a higher rate than called for in the bill.  The CBO can’t score that, because it’s in a seperate bill, you see…but, if  passed, it raises the cost of the package by a whopping 20% over the first decade.

Here’s the real kicker, though – we raise all this new revenue, and we don’t pay down the deficit, we spend it.  Imagine if you, in debt up to your eyeballs, suddenly conceive a plan to raise enough money over a decade to pay down a substantial fraction of your debt (and that’s how big the debt is now – the trillion dollars would only pay down about 7% of our debt) - and then blow virtually every penny of it on new spending.  Samuelson again:

Suppose the CBO estimate is correct. So? The $143 billion saving is about 1 percent of the projected $12.7 trillion deficit from 2009 to 2020. If the administration has $1 trillion or so of spending cuts and tax increases over a decade, all these monies should first cover existing deficits — not finance new spending. Obama’s behavior resembles a highly indebted family’s taking an expensive round-the-world trip because it claims to have found ways to pay for it. It’s self-indulgent and reckless.

Let’s get this straight, folks – spilled milk is spilled milk.  You can argue until the cows come home that it was George W. Bush who caused the deficit and not Barack Obama.  It doesn’t even matter if you are right. How petty and how beside the point!  The point is this:  Barack Obama passed this legislation – he even said his presidency depended on it.  He (and congressional Democrats) bear 100% of the responsibility for spending this money instead of reducing the deficit, and he bears 100% of the responsibility if the legislation proves to actually increase the deficit, as it almost certainly will. 

The point is not what happened in the past – that only matters for throwing partisan bricks.  The point is what we do today, given the set of circumstances that faces us.  President Obama staked his presidency on a policy that is going to bankrupt this nation…so much for sacrifice and hard choices…

5 comments to The CBO and Partisan Hypocrisy – A Response

  • Fargus

    It’s notoriously tougher to score, but why not take a look at what the CBO said about the second ten years, with both benefits being paid out and revenues being paid in? Why don’tcha, Mark?

  • When even the CBO says the second ten year projections are worthless, why bother? So much will change between now and then that it’s an exercise in futility.

    Nevertheless, let’s play along. I think YOU think you have something on me here, but you don’t. From the CBO director’s blog:

    CBO estimates that the combined effect of enacting H.R. 3590 and the reconciliation proposal would be to reduce federal budget deficits during the 2020s relative to those projected under current law—with a total effect during that decade in a broad range around one-half percent of gross domestic product (GDP).

    That calculation reflects an assumption that the provisions of the legislation are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation. For example, the sustainable growth rate mechanism governing Medicare’s payments to physicians has frequently been modified to avoid reductions in those payments, and legislation to do so again is currently under consideration by the Congress. The current legislation would maintain and put into effect a number of policies that might be difficult to sustain over a long period of time.

    In other words, Fargus, he’s saying this second ten years’ savings is illusory and quite unlikely to happen…

  • Fargus

    You’re working similarly with your own assumptions as well, are you not?

    I was only saying that you were using the CBO score selectively, and that your talk about frontloading was disingenuous since the cost for the second ten years was projected to be less than the revenues for the second ten years. You’re correct that things are exceedingly likely to change between now and then, but that’s not what you said in your discussion above.

  • Bob from Ohio

    I have no problem with the CBO

    I do. The CBO serves only to provide cover for spending, by both parties.

    The CBO’s “scoring” is worthless. Garbage in, garbage out.

    This applies to all its “scoring”, on all multi-year legislation*, ever.

    You cannot anticipate what a future Congres will do. Well, you can assume it will spend more money but even then, how much more is a wild card.

    *(I am willing to concede that a bill that spends all of its money/allocates entire tax benefit in one year can be “scored”. But you do not need a bureaucracy to do that.)

  • Well, but Bob, the CBO performs a very necessary function – you HAVE to have credible estimates of what a particular piece of legislation will cost, all other things being equal – it helps make informed decisions about those other things that WON’T be equal, for one thing…

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