CBO Margin Of Error For Me, Not For Thee

by Jonathan Chait | January 7, 2011

One annoying habit of conservatives is to embrace every favorable analysis by the Congressional Budget Office and discard every unfavorable one. Here's Kevin Williamson at National Review insisting the Affordable Care Act will increase the deficit:

CBO director Douglas Elmendorf readily concedes that “estimates of the effects of comprehensive reforms are clearly very uncertain, and the actual outcomes will surely differ from our estimates in one direction or another.” One direction or another. (Guess!) It will not come as a shock to observers of federal activities ranging from the ethanol program to the Iraq war that — unthinkable as it may seem — a government program may under some circumstances exceed its budget. If Obamacare spends not a nickel more than the CBO estimates, and if Obamacare produces every dime of the revenue promised, then it will prove a deficit-reduction tool over the next decade, by definition: That’s $411 billion in spending and $525 billion in revenue. I wonder if Ezra Klein would like to place a very large bet with his own money on the possibility of that happening. I would.

It's true that government programs sometimes come in over budget. They also sometimes come in under budget. For instance, the Medicare prescription drug benefit.

And yes, cost estimates are just that, estimates. There is variation in both directions. Williamson ignores the possibility that the PPACA could save more money than expected. In fact, the CBO took a very conservative stance toward measuring the numerous delivery stsem reforms in the bill, which bipartisan outside experts believe have significant cost-saving potential, but which CBO declined to score simply because they're untried. A cost-overrun scenario is possible, but a scenario in which these measures help drive transform the wildly inefficient practices of American medicine seems more likely to me. I'm not claiming certainty on this.

What I will claim certainty about is the fact that Williamson is completely wrong when he repeats this debunked, unkillable zombie lie about the doc fix being an unpaid-for cost of the law:

This discussion, as framed by Klein, also rewards the Democrats for engaging in dishonest parliamentary shenanigans. As Klein well knows and the CBO reminds us, the Medicare “doc fix” was spun off into a separate bill specifically in order to keep some costs from being counted on Obamacare’s tab. As Cato’s Michael Tanner notes, “In a letter to Congressman Paul Ryan (RWI), the Congressional Budget Office confirms that if the costs of repealing the payment reductions, known as the “doc-fix,” as reflected in HR 3961, were to be included in the cost of health care reform, the legislation would actually increase budget deficits by $59 billion over 10 years.” This is a cheap accounting gimmick, conveniently excluded from the discussion. But it certainly is convenient to be able to account for the costs of Obamacare without having to account for the cost of bribing the doctors, and the congressmen who are most sensitive to them, to accept it. That is, of course, far from the only cost-shifting mechanism at work.

The doc fix is not a cost of the Affordable care Act. It is a cost of cleaning up a mistake Congress made in 1997. It is a cost that would be incurred whether or not the PPACA happened. It is no more an "accounting gimmick" to keep this cost out of the cost of the PPACA than it is an accounting gimmick to omit it from the cost of a troop surge in Afghanistan.

I've written about this myth in greater detail. Even when I get conservatives to admit they're wrong about it, it won't die. It's a sign of the deep intellectual sclerosis on the right that false information keeps circulating endlessly.

Source URL: http://www.newrepublic.com//blog/jonathan-chait/81021/cbo-margin-error-me-not-thee