Ezra Klein: Notes on CBO skepticism

[Joanne98]

My colleague Neil Irwin has a very good piece on the difficulty the Congressional Budget Office has predicting the cost of something complex like the health-care reform bill. But because his piece is coming in the context of a coordinated conservative effort to discredit the CBO's analysis of the health-care reform bill, it's worth making a couple of points.

First, be very careful with any criticism of CBO that seems to be merited by a particular score rather than a particular methodological difficulty. To put that slightly differently, does anyone think that conservatives would be squawking if CBO had disappointed Democrats by saying the bill would save less money than either the House or Senate incarnations? If not, then keep in mind that this is a political, not technical, dispute. To establish my own credentials on this, here's the post I wrote defending the CBO when liberals were arguing that it was underestimating health-care reform's savings.

Second, don't confuse uncertainty with bias. It's true that the CBO's estimates of the health-care reform bill are uncertain. But that cuts both ways. A lot of very respected health-care economists and experts think the CBO is being way too conservative in how much the bill's payment reforms will save. Historically, CBO has frequently underestimated the savings from health-care reform legislation. To use one example, they heavily overestimated the cost of the Medicare Prescription Drug Benefit. More examples here.

Third, some argue that the problem with CBO's estimates is that they can't control for Congress. The actual evidence shows that Congress is much better at sticking to tough cost controls than people give them credit for. But beyond that, if Congress can't do hard things, then everyone is screwed. Conservatives, who strongly believe in entitlement reform, are perhaps in the worst shape as that's the hardest thing to do. Moreover, the health-care bill has the Medicare Commission, which explicitly makes it easier to do hard things because it takes some of the power away from Congress and gives it to independent experts. If you think Congress is the problem here, then this bill is the best answer anyone has yet come up with.

Fourth, some conservatives are arguing that Democrats "gamed" the CBO in order to get the score they wanted. That's only true insofar as you think going to office hours and working with the teacher is the same as cheating on a test. Both parties go back-and-forth with CBO to try and get their legislation down to a price tag they're comfortable with. But it's not some sort of trick. In this case, Democrats changed their legislation so the subsidies grew more slowly over time and the excise tax would grow faster. In other words, CBO said that they'd need to do hard things their constituents wouldn't like if they wanted to cut the deficit more, and they did them. That's not gaming, it's governing.

http://voices.washingtonpost.com/ezra-klein/2010/03/notes_on_cbo_skepticism.html