CBO Chief Elmendorf Responds To Paul Ryan’s ‘Double Counting’ Charges

CBO Head Douglas Elmendorf

CBO Head Douglas Elmendorf

In the final days of the health care debate, Rep. Paul Ryan (R-WI) argued that had the CBO used different methods and models to calculate the effects of reform and included different provisions in the final legislation, the Democrats’ bill would have increased the deficit and cut into the Medicare trust fund. This argument descended into the bizarre when Ryan convinced the CBO to produce a report that estimated what would happen if certain provisions of the legislation — like the tax on high-premium insurance plans and recommendations from the Independent Payment Advisory Board — were never implemented and if the SGR fix were added to the final package. To nobody’s surprise, the CBO reported that adding more spending and less offsets, increased the deficit.

Well today, CBO head Douglas Elmendorf revisited this topic and directly responded to some of Ryan’s most frequent criticisms of the legislation. Elmendorf stressed that CBO scores “the law as written” and addressed charges that the budget office double counted savings from the Medicare program by appropriating the same funds to the trust fund and to offset the costs of coverage expansion:

Cost estimates focus on the effects of legislation on the unified (total) budget. The health reform legislation improves cash flow in the HI trust fund by more than $400 billion over 10 years. Higher balances in the fund will give the government legal authority to pay Medicare benefits longer, but most of the money will pay for new programs and will not enhance the government’s economic ability to pay Medicare benefits. (There is a much smaller effect of this sort on Social Security.)

In other words, Elmendorf is suggesting that from the perspective of the CBO’s unified budget accounting rules — which consider the spending and revenues of the entire federal budget over a 10 year period — the new health care law will increase the cash flow into the Medicare Trust Fund. However, that fund is part of the larger federal budget and some of the funds could be used on other legislative priorities.

Conservatives like Ryan, however, were ignoring these long-standing accounting rules to argue that were the agency to suddenly embrace different standards, like trust fund account rules — which look at changes over a much longer period of time – it would find that the law did not extend the life of the trust fund. But this argument is fundamentally disingenuous and it changes the rules in the middle of the game. Every member knows that the CBO’s scores are “god” and that members of both parties rely on the budget office’s scores and models to move legislation. Were Democrats to draft a health bill that comported to trust fund accounting rules, rather than unified budget accounting rules, they could have produced a poor CBO score and Republicans would have undoubtedly assailed them for increasing the deficit. Instead, they demanded that the Democrats’ bill also score well under a completely different accounting standard. What’s frustrating in all of this is that the CBO is willing to entertain these kinds of requests from Ryan and actually produce reports to estimate how much the bill would cost if provisions that were purposely taken out of the bill (to adhere to certain standards of fiscal responsibility) were still part of the legislation.

Last week, Elmendorf said he was “very comfortable” with his estimates. “There are a number of people who expressed concern that we were being gamed, and I worried about that throughout the year,” Elmendorf said. “But I don’t think we were gamed — or at least not in the sense that people seemed to be using that word.”