WHY CONGRESSMEN FEAR THE CBO.

[Joanne98]

This exchange between Max Baucus and CBO Director Doug Elmendorf offers interesting insight into the weird relationship between congressmen and the Congressional Budget Office.


Sen. Max Baucus, Chairman: Thank you very much, Dr. Elmendorf. We have a huge problem, haven't we? This is the most difficult public policy undertaking I've experienced in my Senate life here. I've been here thirty years, and nothing is as difficult as this. Nothing is as important as this, and I cannot think of anything that depends so much on CBO, especially at a time we're in new territory. We're not in the old situation where Sen. Grassley once said whatever CBO says is God, you're God. My judgement, you're not God.

Douglas Elmendorf, CBO Director: Correct

Sen. Baucus: My judgement is that you got the whole new era - you might be Moses, but not God - but you got the whole new era... where as I said earlier it's not too much of an overstatement to say CBO can make or break health care reform, and I mean that because we got to go by your numbers...

Dr. Elmendorf: Senator, may I respectfully disagree that...

Sen. Baucus: I do believe that there are several different intellectually honest pathways to get from here to there. It's not just one automatic, and so it needs - you got to be ever more creative to find intellectually honest pathways to get the savings we have to have - practically and both politically - to get health care reform.

Dr. Elmendorf: Senator, I would like to just respectfully disagree with the make or break role that you have assigned to us. We will do our very best to provide you and all of the members of this committee and the rest of the members of the Congress with the technical information that you need, the best estimates that the knowledge of the world can provide about the effects of alternative policies, but, as you understand, the hard decisions will be yours.

Sen. Baucus: No, that's incorrect. The hard decisions will be all ours, both of us, you and me. You can't pass the buck. The hard decisions are here, and the hard decisions are yours and the hard decisions are all of us in this country in trying to make this work. Meeting's adjourned.

Dr. Elmendorf: Thank you, Senator


Baucus is implying his point rather than saying it. But here's their argument: Baucus is saying that the CBO is a political actor with agency in the eventual outcome. The decisions they make -- and they are decisions -- will help determine the fate of health reform. He wants the CBO to feel the moral weight of that task. Elmendorf is denying that role. CBO, he says, simply offers information and estimates. They have no moral agency. Their responsibility is technical. But the technical decisions CBO makes often prove significant.

Story time: The CBO's most famous -- or infamous -- intervention in a legislative battle was its estimate of the 1994 Clinton health-care proposal. "The major issue," said Robert Reischauer, then director of the CBO, "was not how much it cost but whether the premiums that you were charged as an individual were governmental in nature and would thus be in the budget." Reischauer and the CBO decided they were. The premiums paid by every American would be included in the bills' official price tag. This meant the total was huge -- vastly larger than the price tag previously affixed to the proposal by the Clinton administration. Hearing the news, one senior administration official moaned to The Washington Post, "The Republicans will jump all over this and say we're increasing the budget by 25 percent and putting through the biggest tax increase in history." The New York Times editorialized that "the opponents of President Clinton's health care bill think they have struck political gold in an analysis of the bill just released by the Congressional Budget Office."

They were right. Donna Shalala, Clinton's secretary of health and human services, called the ruling "devastating." But through all of this, Clinton's bill never changed. Nor did the amount individual Americans would pay. Only the price changed. And it wasn't an obvious decision that the CBO made. Indeed, even some of the CBO's leading lights questioned the judgment. "In all honesty," said Alice Rivlin, who was the CBO's first director but by that time was head of the White House Office of Management and Budget, "I wasn't sure my colleagues had done it right. I mean there are mandated expenditures such as if you have to put a handicap ramp in front of your building. That's a mandatory expenditure, but that's not a tax." But it didn't matter. That was the price tag, and it helped kill the bill.

Posted by Ezra Klein on March 2, 2009 3:19 PM | Permalink

http://www.prospect.org/csnc/blogs/ezraklein_archive?month=03&year=2009&base_name=why_congressmen_fear_the_cbo