Can the CBO Call Congress a Bunch of Liars?

Posted by David Strom in Health Care on Sep 21st, 2009 | no responses

CBO scoring will probably determine fate of health care reform.

One of the major insights of political science is that process matters at least as much as substance in how policy decisions are made. We can see a great example of that fact in how the health care policy debate is taking place in Washington DC.

Everybody knows that the Congressional Budget Office is the official scorekeeper of the fiscal impact of various bills and proposals as they wend their way through Congress. The fate of such proposals is often determined by the fiscal impact projected by the CBO.

At several points in the current debate CBO projections have been used as a very effective cudgel to beat up proposals when their fiscal impact was shown to exceed $1 trillion. Why $1 trillion is a magic number of affordability is a mystery to me, but that has become the benchmark against which all proposals seem to be measured.

Of course every scoring system can be gamed, and the CBO’s is no different. The latest health care proposals have incorporated an evilly brilliant way of doing so by putting into place so-called “automatic” spending cuts that are supposed to kick in if certain spending levels are exceeded.

The result of this chicanery is obvious: Congress can promise all manner of wonders for what is deemed a reasonable cost, all the while keeping the budget line lower by promising that costs will be kept in check through automatic spending cuts that are extremely unlikely to ever be implemented.

In essence they are promising everyone a Lexus, are budgeting for a Chevy, and promising that if the Lexus costs more than what they now project it will they will simply provide the Lexus for the cost of a Chevy. The CBO is pretty much forced to go along lest they base their projections on the assumption that lawmakers are liars. That may be a fair assumption in reality, but not one that an arm of Congress can tenably maintain.

How likely are the automatic spending cuts to be implemented? About as likely as Congress allowing the Alternative Minimum Tax to apply to the millions of middle class taxpayers who are exempted every year. It would be political suicide, so it won’t happen.

In short, the very same CBO scoring system that has doomed earlier reform proposals over the past year is now about to be gamed effectively to make its passage more likely.