Wednesday, June 30, 2010

CBO's ACA Follies

I agree completely with Brad DeLong (the "technocrat" reaction) and Kevin Drum about the CBO's strange decision to include future changes in the ACA as part of their alternative fiscal scenario.

A quick explanation...part of CBO's job is to let Congress (and the rest of us) know what is likely to happen to the budget well into the future.  That's difficult enough because it requires guesses about long-run demographic and economic trends, which become wilder and wilder guesses as they go farther into the future.  It's even trickier if everyone knows that there are certain things that Congress is going to do that are not reflected in current law.  So CBO, quite sensibly, does separate estimates: one for current law, and one for what everyone knows is going to happen.

Of course, the latter is tricky.  There are a two significant easy ones: the alternate minimum tax, and the doc fix.   The baseline, in each case, is clearly phony; every year, Congress takes action to change the law so that the "baseline" (that is, current law) -- which no one wants, in either party -- does not take effect.  Others are more complex.  It's pretty clear that majorities of Congress want some of the Bush tax cuts to continue (while under current law they would expire), but there's a lot of uncertainty about what's actually going to happen.

But the ACA?  Democrats just passed it; they presumably support the changes in taxes and Medicare spending that they just voted for.  Republicans, to be sure, opposed it, including those two things...but it's hardly CBO's job to estimate the effects of the minority party's agenda, let alone a selective portion of that agenda.  At any rate, there's a huge difference between something that both parties say they intend to do, and which they've done many times, compared to something that only one (currently minority) party says it intends to do, but has never done before.  

Drum sums it up nicely:
The CBO does itself a disservice if it starts getting too heavily involved in political calculations like this. They've already made their best estimates about what effect healthcare reform will have on the federal budget, and if they want to change those estimates they should do so openly. But simply assuming that a future Congress will kill all cost savings measures with no special evidence to back that up? That's just not their job. CBO is supposed to be an honest broker, not a Washington Post op-ed columnist.


  1. God forbid the CBO provide people with information they might want to know. I mean, I don't get it. More information is better than less, right? If it's good information, kudos to them for providing it.

    It smacks to me of a self-serving nature to decry the release of information solely because it might be damaging to your political cause.

    Saying "that's not their job" because you want the world to remain ignorant is so odd to me; Doug Elmendorf obviously thinks of his job differently than you do, and he seems to think it useful for members of the Congress to be aware of this scenario. How you can begrudge them that entirely accurate knowledge is beyond me.

  2. @Wilson

    What "accurate information" would they be withholding? Given that it just passed and there's no strong reason to believe that congress will void all of the cost savings in the plan, there's no good reason to include it in the alternative projection. If, in the future, congress starts to do just this, then it would make sense.

  3. Assuming the future Congresses will change ACA is a pretty safe assumption. Does anyone really believe the legislation won't be amended in the future? Many Democrats view it as a compromise that will need to be fixed in the future (ie. the public option). Assuming the ACA will be the steady-state condition is just as much a political calculation as anything else.

  4. This seems like head-in-the-sand denial on your part - because "everyone knows" that the democrats roll over on "cost savings" pretty much all the time. Especially when the "victims" are unionized or telegenic.

    eight or 10 years from now, if you revisit this post, and you find that, yes, the cost-savings never materialized and we have a huge ACA-related deficit, in addition to our huge Medicare deficit and SS deficit, you'll sniff, shrug and mutter something about how real-world politics are complicated, and the Democrats did what they had to do to stay in office.

    You guys believe in justice and equality, but what you actually deliver is bureaucracy and debt. Republicans, of course, deliver unnecessary wars, crony capitalism and hatred of foreigners.

  5. Andy,

    Yes, the law will be changed. How? We don't know, and CBO doesn't know. If Dems do well in the next few elections, they'll probably add a public option, which scores well. Which gets to Wilson's comment: I have no problem at all with CBO projecting what would happen under various scenarios, but there's simply a difference between the repeated-pattern things that both parties claim they'll do (doc fix, ATM) and "we think that this might happen."


    I think it's very difficult to look at the last thirty years, including current party platforms, and conclude that the Dems are the party of debt. Pre-1980, yes, I think one could argue it, although even then it's not clear. Since 1980? Just doesn't match reality.


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