Past Ties Between White House and CBO Cause for Concern?

Morgen on November 3, 2009 at 7:05 am

Whether Democrats succeed in passing healthcare reform legislation in the coming weeks will to a large part depend on the final bill scoring by the Congressional Budget Office (CBO). The latest report is that the House bill has been larded up to a total 10-year cost in excess of $1.2 trillion. Of course watch for Pelosi to continue the transparent shell game of claiming the “net cost” of the bill is far less, by deducting projected tax revenues generated by the “pay or play” mandates on individuals and businesses. But the real number to watch for is with the Senate bill, which is still pending an initial score from the CBO. The President has previously set a maximum target of $900 million, and given the impending mid-terms elections next year, I believe in the end that Congress will be hard pressed to pass a bill much in excess of this figure.

So it will be quite the juggling act on the part of Congressional leadership and White House negotiators as they attempt to forge a compromise on the final bill. Given the liberal slant of both the House and Senate bills, the votes they will need to ensure are with the more moderate members of the Democratic caucus. But can they satisfy enough Democrats from fiscally conservative districts without loosing liberal support? For example, over the expansion of Medicaid or the structure and size of federal subsidies. And what if enough moderates demand that there be no public option? The way this is typically done is with specific carve-outs (i.e. pork) in exchange for votes. But given the size of this legislation, and the aforementioned cost constraints, this will be much more difficult than usual.

Which only increases the importance of the CBO as they project out costs and revenues under various legislative scenarios, and various deals proposed by negotiators. Fortunately the CBO is a non-partisan entity, and so they can be trusted to be a fair arbiter in scoring what is likely to be the costliest piece of legislation in history – right? Well, they are generally regarded to be fair (or equally unfair) by both Republicans and Democrats alike. However, there is an interesting connection between the White House and CBO leadership which does not seem to be widely known, and which may be cause for concern.

The current Director of the CBO is Douglas Elmendorf, a highly-regarded, Harvard trained economist. As you may know, the CBO Director who preceded Elmendorf was Peter Orszag, who now heads up the White House Office of Management and Budget (OMB). Both Elmendorf and Orszag were senior fellows at the Brookings Institution prior to joining the federal government, but they share something else in common as well.

As it turns out, Orszag was the founding director of the Hamilton Project at Brookings, a multi-year research initiative focused on economic policy to “benefit more Americans”. When Orszag left Brooking for the CBO in early 2007, economist Jason Furman took over the reigns of the Hamilton Project. Furman departed in June 2008 when he accepted a position as director of economic policy for the Obama campaign. Who took over for Furman? If you guessed Doug Elmendorf, then you are correct.

Notably, healthcare reform was a significant focus of the Hamilton Project. Furman ultimately authored a book (Who Has the Cure? Hamilton Project Ideas on Health Care), and Elmendorf co-authored a paper with Furman which argued the benefits of “establishing universal health insurance”.

So you have three successive directors of a liberal-leaning policy initiative. Two of them are now very close economic advisers to the President. Orszag at the OMB, and Furman who is now Deputy Director of the National Economic Council. And then you have Douglas Elmendorf in charge at the CBO.

Now I want to be clear that I am not alleging improper behavior on anyone’s part. I have no basis to do so. In fact, earlier in the health reform debate Orzag and Elmendorf squared off over a CBO cost saving projection. But of course the stakes weren’t as high then. And now that they could not be higher, it’s hard not to notice that the CBO scores have been mostly good news for the proponents of reform. Most likely this is due to the CBO working more closely with those crafting the legislation, so there haven’t been any more negative surprises. But considering what’s at stake, I find the history of these relationships to be at least a little unnerving.

Category: Health & Education |