In Defense of CBO Stodginess

As the Congressional Budget Office has proven increasingly unhelpful to the Obama administration’s health reform drive, people are increasingly looking to take hits at the CBO itself. And with some good reason. Here’s Bruce Vladeck, who ran Medicaid and Medicare during the Clinton years, drawing some blood:

Put most simply, the CBO’s track record in predicting the effects of health legislation is abysmal. Over the last two decades, the CBO has routinely overestimated the costs of expanded government health care benefits and underestimated the savings from program changes designed to reduce expenditures. Most recently, it overestimated the five-year cost of Medicare Part D — the prescription drug benefit - — by more than 35%. Even more dramatically, the CBO’s estimates of the Medicare savings from the Balanced Budget Act of 1997 underestimated the impact, on average, by a full 100%. That’s right: In the BBA’s first three years, Medicare spending fell fully twice as fast as the CBO had projected.

Noam Scheiber piles on. I’ll say, though, that I don’t really think the CBO should change its methods. You need the CBO do be methodologically conservative in terms of what it’ll score or else all kinds of monkeybusiness can start flying through congress. Instead, let me join Ezra Klein in saying we should leave the CBO as it is and just discourage people from wildly misrepresenting the significance of CBO findings.

What you actually need is for politicians to step up and make independent judgments about what they want to do. Doug Elmendorf has decent reason for not wanting to promise that MedPAC reform will lead to vast savings. But members of congress actually serve in congress, and it would be eminently reasonable for them to reach the conclusion that the CBO is underrating how dramatically the proposed reforms would alter congressional behavior. The point is just that if members of congress want to reach that conclusion, they ought to do so under the banner of their own names and own judgment about the politics and policy.


Congress is also allowed to throw caution about medium-term fiscal issues to the wind if they want to. The CBO doesn’t have coercive authority over Senators. Max Baucus was instrumental in passing a gigantic, budget-busting tax cut for rich people eight years ago. If he decides he cares as much about the uninsured as he does about multi-millionaires, he can do what he wants. Insofar as he cares more about multi-millionaires than about the uninsured, the problem is with Baucus not the CBO.

That said, I think Brad DeLong makes a sound distinction here “I think Doug should have drawn a distinction between ‘we score this, and the savings are zero’ and ‘we can’t score this.’”