The OMB Strikes Back


Tim Fernholz has a good summary of the latest developments in the Orszag v. Elmendorf battle of the budgeteers:

The White House scored a point today in its ongoing battle to convince establishment Washington that health-care reform will succeed at cutting costs even as it expands coverage. The White House and budget director Peter Orszag, as well as the House Blue Dogs, are very bullish about allowing an independent board to pursue cost-cutting measures in Medicare. But when CBO scored the measure to determine if it would be succesful, they produced a very lukewarm estimate. Today, though, a group of health-care experts sent a letter [PDF] to Obama arguing that IMAC, the independent cost-cutting board, would be very effective if done right — and nine of the signatories are members of the CBO’s Panel of Health Advisers, nearly half the membership. It’s a good sign for the White House, and will help push the message that, while CBO’s scores are important, the assumptions made in that office are not carved in concrete.

Not surprisingly, according to Peter Orszag this is a huge victory for truth, justice, and Peter Orszag.

When thinking about both the politics and policy here, it’s important to distinguish between two different administration promises. One promise was that their proposal will be “paid for,” i.e. deficit neutral, over the course of the ten-year budget window. On that issue, the CBO’s word is God. The other promise was that their proposal will “bend the curve,” i.e. reduce the pace of health care cost increase relative to baseline. On that issue, the CBO’s word may matter, but it’s an inherently speculative enterprise and both the White House and Congress are free to see things however they think is best. IMAC is primarily about this latter issue.