The Truth Behind The CBO

Driving the 480 miles from Columbus, Ohio to Raleigh, N.C., should take you about eight hours. But what if your GPS device insisted you could make the trip in four? Blindly following such an unreliable estimate, even when made by your trusted GPS, would cause you a lot of problems.

Congress too often makes the mistake of blindly following projections of the Congressional Budget Office that later prove to be grossly inaccurate. The CBO’s reputation among the public and the media may be strong, but its track record in providing accurate estimates to Congress leaves much to be desired.

This isn’t a new problem. Scholar Alan Reynolds noted clear back in 2001 that CBO’s flawed projection model often leads to inaccuracies, pointing out several inaccurate CBO projections in the 1990s. He noted their budget projections widely missed the mark even though they were made only 12 months in advance.

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Leaked CBO Numbers: 73% of GOP ‘Coverage Losses’ Caused By Individual Mandate Repeal

In the national debate over the GOP health reform proposals, one data point has stood out above all others: the estimate, from the Congressional Budget Office, that more than 20 million people would “lose” coverage as a result. And there’s been an odd consistency to the CBO’s projections. Do you want to repeal every word of Obamacare and replace it with nothing? CBO says 22 million fewer people would have health insurance.

Do you prefer replacing Obamacare with a system of flat tax credits, in which you get the same amount of assistance regardless of your financial need? CBO says 23 million fewer people would have health insurance. Do you prefer replacing Obamacare with means-tested tax credits, like the Senate bill does, in which the majority of the assistance is directed to those near or below the poverty line? CBO says 22 million fewer people would have health insurance.

22 million, 23 million, 22 million—these numbers are remarkably similar even though the three policies I describe above are significantly different. Why is that?

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CBO Says McConnell Healthcare Bill Would Slash Deficits By $420 Billion, Leave 15 Million Uninsured

Another day, another CBO score for another version of the GOP’s healthcare bill. This time, the agency estimates that McConnell’s “Better Care Reconciliation Act” legislation would lower the federal budget deficit by $420 billion over the next 10 years by reducing spending for Medicaid and subsidies for nongroup health insurance.

As The CBO notes, those effects would be partially offset by the effects of provisions not directly related to health insurance coverage (mainly reductions in taxes), the repeal of penalties on employers that do not offer insurance and on people who do not purchase insurance, and spending to reduce premiums and for other purposes.

Compared with the June 26 cost estimate for a previous version of the legislation, this cost estimate shows savings over the next 10 years that are larger – as well as estimated effects on health insurance coverage and on premiums for health insurance that are similar. The current version of the legislation would result in greater deficit reduction mostly because it would retain certain taxes that the previous version of the legislation would have eliminated. The description of the legislation and of CBO and JCT’s methodology and results that appeared in the agencies’ previous estimate largely applies to this one as well.

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Entitlements Spin Out Of Control, Economic Death Spiral

We are entering an economic death spiral.

While the White House was busy getting its latest Russia story straight, and congressional Republicans were inventing another new way to not pass health-care reform, few noticed the latest double-barreled dose of bad budgetary news. But anyone who cares about the long-term economic health of the country should be paying careful attention.

First, the Congressional Budget Office reported that this year’s budget deficit will hit $693 billion. That’s $134 billion higher than the CBO predicted just six months ago, and $100 billion higher than last year’s shortfall. Under current baselines, deficits are soon expected to hit $1 trillion per year. All this deficit spending will add more than $10 trillion to the national debt over the next decade, bringing it to more than $30 trillion.

Of course, those projections are based on current policies. President Trump has proposed deep cuts in domestic spending. Assuming the president gets everything he wants, the debt will increase to only $27 trillion. Hurray? Of course, after the health-care debacle, and given the president’s other distractions, does anyone really believe that all those cuts are going to happen?

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CBO: Repealing Obamacare Would Increase Uninsured By 32 Million, Double Premiums

One month after the CBO scored the now defunct Senate healthcare bill, forecasting it would increase the number of uninsured by 22 million while cutting the budget deficit by $321 billion over the next ten years, moments ago the CBO released its latest score of what a straight repeal of Obamacare would look like. In short, doing away with the Affordable Care Act, would increase the number of uninsured by 32 million by 2026, while reducing the budget deficit by $473 billion in the CBO’s view.

Additionally, the CRO predicts that the bill would also increase insurance premiums (apparently, even more than leaving Obamcare). According to CBO, average premiums would increase by about 25% in 2018 alone. The increase would reach about 50% in 2020, and premiums would about double by 2026, CBO said.

Also of note, the CBO says it “has not completed an estimate of the potential impact of the legislation on discretionary spending, which would be subject to future appropriation action.”

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Former George W. Bush Admin Economic Director: CBO Is ‘Part Of The Swamp’

Larry Lindsey, the first director of the National Economic Council under former President George W. Bush, defended his judgement that the Congressional Budget Office is “part of the swamp” on CNBC on Tuesday.

During the discussion on health care, Lindsey rebuked the CBO for being “consistently wrong” with its budget estimates, RealClearPolitics reported Wednesday.

Lindsey, an economist, is known for his controversial stance on the Iraq war budget in 2002. He shot down top Bush administration officials who estimated that the Iraq War would cost about $50 billion to $60 billion. Lindsey said the war could cost between $100 billion and $200 billion and was dismissed from the administration after a shake-up of the White House economic team later that year. The $200 billion estimate was later surpassed.

During the CNBC discussion with Donald Marron Jr., a former acting director of the CBO, Lindsey castigated the CBO for doing a “lousy job” of making estimates, particularly when it comes to health care reform.

“One of the biggest stumbling blocks, and I think this is the point that I sent you earlier, that we have a Congressional Budget Office that is really doing a lousy job of estimating things, particularly on health care reform,” Lindsey said.

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Markets Worry Trump May Have To Use Obama’s Secret Debt Ceiling Plan

  • Obama in 2011 prepared contingency to prioritize repayments
  • Prioritization a ‘dangerous precedent,’ Citigroup says

Deep within the Treasury Department sits a once-secret plan written by the Obama administration that could lead to the first-ever default on U.S. debt. Bond traders are worried that Donald Trump’s Treasury secretary may have to use it.

The U.S. government will reach its statutory limit on borrowing some time in October, the Congressional Budget Office estimates. The Trump administration has asked Congress to raise the ceiling before then, but it is running into the same complications the Obama White House encountered: lawmakers, mostly Republicans, who want to use the debt limit as leverage for controversial policy changes.

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