Advancing a Free Society

CBO gives us the complete picture five months late

Wednesday, August 25, 2010

Last week CBO released their annual summer baseline update.  On page 6 (page 24 of the PDF) is a box titled “The Effects of Major Health Care Legislation on CBO’s Baseline.”  It provides an important new data point that was absent when the legislation was being debated.

While I disagreed with some of the judgment calls CBO made during the health care debate, on the whole I think they did a good job under difficult circumstances.  This missing information, however, was and is a significant failing by the CBO.  Unlike with other major legislation, CBO’s scoring of the health laws blended spending increases and tax cuts into a single measure of deficit effects. The final scoring showed that these two bills combined would reduce the budget deficit over the next ten years.

Some analysts dispute this scoring.  That’s not my point.  In addition to providing the deficit effects, CBO should have told lawmakers what the separate effects would be on spending and on taxes.  To make a well-informed decision, policymakers need to know the gross effects and not just the net.

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