The CBO Needs to Go
March 17, 2017
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The Congressional Budget Office’s estimate of how the American Health Care Act will impact the economy and our insurance markets is simply absurd.
I told Martha MacCallum on Fox News the other night that the CBO should be abolished and replaced by three to five outside professional firms that better understand the dynamic interaction of legislation and the marketplace.
This prompted some liberals to claim I was only griping, because the bill – the first step toward repealing and replacing Obamacare – received a bad “score” from the budget office. The Left wants to create a false narrative that Republican opponents of the CBO are simply defending their party and president.
But these Democrats are reimagining history.
In fact, I have advocated replacing the CBO for more than a decade.
In my 2005 book Winning the Future, I argued that the CBO and the Joint Committee on Taxation should be replaced with an Accurate Scoring Caucus after the CBO inaccurately projected $63 billion of revenue losses from the 2003 Bush tax cut, which never materialized. Then – as now – I argued that the CBO doesn’t score legislation dynamically. It simply ignores growth that results from tax cuts in its projections, which creates an inherent legislative bias toward more taxes and budget gimmicks.
In a more recent example, I advocated for ditching the CBO after it gave Obamacare an unrealistically positive initial score.
In a 2014 opinion piece, I argued: “The CBO’s original analysis of Obamacare deserves to be the final nail in the agency’s coffin. As much as any other single institution, the Congressional Budget Office is responsible for sticking us with this egregious law. The CBO’s ‘scores’ lent credibility to Obamacare’s supporters by making predictions that weren’t very good based on assumptions that made no sense.
“On [Feb. 4, 2014], the CBO updated its projections about the health care law’s effect on the economy, and included the bombshell that because of Obamacare, 2.3 million fewer Americans will have full-time jobs over the next 10 years. The White House’s charitable interpretation of the report was that millions of people will leave the workforce or will work less because of their subsides under Obamacare.”
In the same opinion piece, I said the CBO’s “nonpartisan” label gave it “an outsized influence on policy, as reporters, commentators, ‘fact checkers,’ and many members of Congress (most of whom should know better) treat CBO projections like trump cards in debates over legislation.”
If the CBO had reported in early 2010 that Obamacare would result in 2.3 million fewer full-time jobs or that it would cost $1.8 trillion over a decade, then Obamacare would never have passed Congress.
In both my 2005 book and my 2014 op-ed, I pointed out the central flaw at the CBO is the agency does not utilize any kind of dynamic scoring. It wrongly presumes that a change of fiscal policy will have no impact on labor, markets or other economic factors.
Any analytical model that changes fiscal policy and holds other variables constant is useless, and CBO has proved this again and again.
The other day on Fox News, I argued for the same solution I suggested in 2014:
“The credit rating agencies that service financial markets could offer a useful model for obtaining better policy scores… We should consider replacing the CBO with a competitive system of multiple scoring agencies whose success depends on accuracy over time.”
What I wrote in 2014 – long before the CBO scored the American Health Care Act – is just as relevant today as it was then. I’ll say it again: We can’t afford any more errors like Obamacare.
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