By Brian Beutler - July 27, 2009, 3:28PM
On Saturday, for about the third time since the health care debate really picked up steam on Capitol Hill, the Congressional Budget Office released an analysis that triggered bad headlines for health care reformers and big head aches for the White House.
According to CBO Director Doug Elmendorf, a proposal widely touted by the White House to give an external panel the authority to reform Medicare and Medicaid would save a mere $2 billion over a 10 year time horizon--less than one percent of the overall cost of the legislation.
"CBO deals new blow to health plan" blared
a headline at Politico--conventional wisdom that threatened to provide new momentum to reform opponents on the Hill and within the greater Republican machine.
There are a number of
analytical problems with this framing--sort of what you'd expect when cool kids (like, ahem, the Politico team) stop tormenting their favorite dweebs and start trying to understand their science projects. But as if to underscore just how seriously the administration took the political threat, the White House quickly blasted out a response from Peter Orszag, director of the Office of Management and Budget, which
called the CBO's work--and by proxy its director--into question.
As a former CBO director, I can attest that CBO is sometimes accused of a bias toward exaggerating costs and underestimating savings. Unfortunately, parts of today's analysis from CBO could feed that perception. For example, and without specifying precisely how the various modifications would work, CBO somehow concluded that the council could "eventually achieve annual savings equal to several percent of Medicare spending...
would amount to tens of billions of dollars per year after 2019." Such savings are welcome (and rare!), but it is also the case that (for good reason) CBO has restricted itself to qualitative, not quantitative, analyses of long-term effects from legislative proposals. In providing a quantitative estimate of long-term effects without any analytical basis for doing so, CBO seems to have overstepped.A predictably nerdy response to a particularly nerdy insult. But that's also polite Washington-ese for, "Step off!"
And it's easy to see why Orszag, 40, might be frustrated. As you might expect from somebody who makes a career out of churning budget numbers and hoping everything adds up to zero, Orszag, like Elmendorf, 47, places a premium on minimizing the federal deficit. You can imagine the two men joining the same chess club, or castigating a posse of tie dyed progressives for not appreciating the elegance and importance of a balanced federal budget. Though Orszag was mentored by liberal luminary Joseph Stiglitz and Elmendorf studied under conservative Martin Feldstein, Orszag eventually found himself under the spell of progressive bete noir Robert Rubin, many of whose views he appears to share. During the Bush era, he directed the Brookings Institution's decidedly middle of the road Hamilton Project--a Rubin initiative, which Elmendorf himself briefly ran in 2008.
moreIt's hard not to wonder whether Baucus is waiting on his bill while Elmendorf does some of his work for him. By holding his proposal back while the CBO trashes the House bill, he's letting people become more desperate for a bill that can be said to solve the cost problem. It may not be that Baucus can't reach a deal in his own committee -- or at least within the inner circle on his committee -- so much as he's waiting until the rest of the Senate is ready to embrace the deal he actually wants.
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