I missed this when it came out in February, but this really gives a good sense of what’s actually in the budget.
The estimable P.Stack reminds us of this really nice visualization of the Obama 2011 budget:
Great job by the NYT in visualizing data that is often dry and lacks context.
Jon Gabel of the University of Chicago’s National Opinion Research Council, offers an eye-opening op-ed in today’s New York Times, describing the limitations of the CBO’s projections in health care reform:
For competence and integrity, few organizations command more respect in Washington than the nonpartisan Congressional Budget Office. As health care reform makes its way through Congress, the budget office’s assessment of how much various elements might cost may determine the details of legislation, and whether it ultimately passes. But when it comes to forecasting the costs of reform, the budget office’s record is suspect. In each of the past three decades, when assessing major changes in Medicare, it has substantially underestimated the savings the changes would bring.
The examples that Gabel describes show three separate instances where the potential benefits of major reforms were not reflected in CBO projections at the time. As a policy wonk, I get totally geeked up about methodology questions, especially how a similar program or policy option can wind up with such a wide range of cost projections from OMB, CBO, etc., nevermind the wildly divergent predictions offered by ideological thinktanks and associations across the spectrum.
As Gabel mentions, these underestimates do not reflect a bias on the part of the CBO staffers creating the projections, but they do reflect logical (policy-based) constraints guiding the projections themselves.
Essentially, he notes that CBO projections of any individual component must be based on previous evidence. Therefore, if a specific item plan is doesn’t have a relevant predecessor (such as a mechanism to regulate costs and negotiate with hospitals) than the estimated savings is zero. This proscription means that essentially, the cost savings and their impact on the total cost projected by the CBO only reflect the pieces that are repeating or expanding a step that’s been taken before. They not reflective of any—or at least not many—of the pieces that are new or innovative.
Now this doesn’t mean that the savings associated with a bill like H.R. 3200 would definitely cost less than what the CBO is projecting. But it does suggest that such an outcome would certainly be possible, and in fact probable.
The bottom line: from a policy wonk perspective, the rules guiding CBO projections are helpful, as they ensure that the CBO won’t take wildly optimistic guesses on savings created by a program.
As we live in a political world and a political debate, however, these rules actually serve to turn the (small-c) conservative projection of cost savings into the conventional wisdom.Tweet