• Fuzzy math

    There have been a lot of charges and counter-charges of fuzzy math out there. I’ve probably already said more than I should about the CBO and interpretations of their work. As important as defending the CBO is (and it is), it just isn’t that interesting to me. I don’t like to fight or repeat myself.

    Actually, I mostly find the CBO scoring argument sad. There really is no hope for progress of any kind if we can’t even agree to abide by the budget scoring of a non-partisan office. If you don’t think that office is operating in good faith or don’t like the rules by which it operates, then that’s where the debate should be. Tell me some other way to score bills that everyone will agree to and abide by. Better, tell it to your colleagues across the aisle. Figure out the rules. AND THEN STICK BY THEM AND STOP WHINING WHEN THE BALL BOUNCES THE OTHER WAY!!!

    I am not impressed with selective second guessing of the work produced by an office so established. I don’t want to hear it from Republicans. I don’t want to hear it from Democrats. I don’t want to hear it from the Tea Party. If my own mother said such things I’d have some firm words with her (respectfully, kindly, but firm). And I love my mother!

    Like Jon Cohn, I may sound upset. I am, but only because I care. I don’t want to be upset by one party or the other. I don’t enjoy it. I don’t get a rush. It’s not why I pay attention to politics. I would love nothing better than to see everyone settle down and get to work–good faith, honest, hard work–addressing the problems of this nation, including health care coverage, cost, and quality. I don’t expect we’ll agree on solutions or even what the problems are. But I damn well expect we’ll honor the outcomes of the process we’ve agreed to follow. If we can’t do that, we don’t have a government. We have a bunch of children. I don’t put my children in charge of anything nearly as important as the nation’s health care system. Nor should you.

    One more thing, Cohn wrote, “This relentless effort to discredit the Affordable Care Act’s budgeting has been the equivalent of a full employment for folks like AustinEzra, and me. For that, I guess, I’m grateful.”

    I’m not. It may keep me preoccupied, but I don’t get paid for this. I do it because I care. I want people to understand. I want to be part of the solution. I do love this country, almost as much as my own mother. For country and mom, I pledge not to bash the CBO or to second guess their estimates. Care to join me?

    UPDATE: By the way, it is for the very reasons I expressed above that I stuck to the CBO’s estimates in my recent KHN column. There’s just no need to go further. The CBO has provided ample grist for the debate on what matters.

    • The problems with the score have nothing to do with second guessing their estimates. A revenue neutral long term care program does not reduce the deficit. This is basic arithmetic. The program is designed to have actuarially equivalent premiums and benefits, so there is no need to question any estimates.

      Claiming that revenues from the CLASS Act reduce the deficit is evidence of being either woefully uninformed or intentionally dishonest, yet pundit after pundit, Cohn and Ezra Klein included, keep making that claim. There is one reason it was included in the bill: the CBO scoring process counts cash in and cash out over a fixed 10 year period, so a program like the CLASS Act creates the illusion of deficit reduction in the early years.

      The exact same principle is at work with the additional Social Security revenues in the score, they are not a net savings to the government, but the timing of the cash flows makes it appear that they are.

      No one who actually understands both the CBO scoring process and the federal budgeting process can credibly claim that those things are actual deficit reduction.

      –“There really is no hope for progress of any kind if we can’t even agree to abide by the budget scoring of a non-partisan office”

      Austin, this is exactly the opinion held by those who are questioning the CBO score. When the process is gamed by tacking things onto the bill that very clearly do not represent actual savings, the entire non-partisan scoring process has been compromised. By this logic the Republicans could pass a bill spending $250B on a war with Iran, while also setting up a new federal life insurance program that is priced to break even but has an early premium surplus of $500B. The CBO would score it as reducing the deficit by $250B. The Democrats would say “we can’t go to war, we have to repeal this!”, and the Republicans would correctly say that the CBO score of repealing the bill would increase the deficit. This would of course be a farce, just as the current claims of PPACA reducing the 10 year deficit by $143B are a farce.

      I completely agree with you that we have to have an independent, non-partisan scoring process that we all agree to abide by, which is exactly why it is so important to not let the process be hijacked with trickery.

      • @AB – Well, the House had to suspend PAYGO to get around the CBO score. I’m not impressed.

        If there is a problem with how CBO scores things, fix it (not you, them). I look forward to the CBO reform bill, one that has bipartisan support. If none can be had then that’s a signal that the players like the status quo. In either case, they should stop whining and start working.

        I have written myself how the 10 year budget window is a farce. I would like to see CBO produce longer term estimates. And, in fact, they do, they’re just not used by Congress. But I have reproduced them many times on this blog. They’re really very informative. Why aren’t more people looking at them?

        Here’s another very good take that works within the CBO’s own products: http://wallstreetpit.com/58329-what-is-health-care-reform .

    • And for the record, this is not at all meant to bash the CBO or second guess their estimates. The CBO is doing exactly what they are supposed to do, and doing it well. But by definition, if they are doing their job well (meaning simply taking the inputs they are given and providing an unbiased projection of the result of those inputs) their scoring process is in danger of being abused. We can’t allow this to happen because if we do we lose out on having this credible independent scorekeeper, which would be a very sad thing.

    • @AB- The Class Act is just one part. Why concentrate on that part?


    • But that’s my whole point, there is not a problem with how the CBO scores things. The problem is with putting things into the bill that are not really saving the government money and misrepresenting that fact. It’s fine to put the CLASS Act in the bill if they wanted to pass it, but you can’t claim that it saves money.

      Your point about the Republicans having to suspend PAYGO only reinforces the issue: implicit in the claim that repealing the bill increases the deficit is the claim that the CLASS Act saves the government money, which no one can credibly state. Them having to suspend PAYGO is also a bit circular: they had to do so because of the trickery involved in the score.

      Relying on the CBO requires both parties to act in good faith, and not attempt to game the scoring process. No scoring process so reliant on estimates and assumptions is immune from trickery, so we need to hold our legislators accountable and not let them mislead us. Making these claims about the deficit impact of PPACA is misleading us.

      If the Democrats, Jon Cohn, Ezra Klein, et al were saying “The CBO scores the bill as reducing the deficit by $143B, but that includes $70B of CLASS Act revenue and $52B of SS revenue that does not actually represent a net savings, so a more realistic score would be $21B” I would not have a problem with it. But blindly accepting that score in the face of readily available evidence that it is flawed is like I said, either uniformed or dishonest. I’m not expecting anyone to completely disown the CBO and their scoring process, just to recognize these facts.

    • @steve, I’m concentrating on that one part because it represents half of the supposed savings in the bill, when the reality is it does not represent any savings at all. The program is designed to be completely break-even. But the program also requires you to pay premiums for 5 years before you can receive any benefits, so in the early years it takes in more revenue than it pays in claims. Since it breaks even in the long run, eventually it starts paying out more than it takes in, but that is beyond the 10 year window, so they pretend this early surplus is “savings”. It is not savings, it is a cashflow mismatch. It is no different than putting your groceries on a credit card and claiming you reduced your household budget.

      The same is true of the SS revenues in the bill. Those create future liabilities, the people who pay them are now entitled to higher benefits in the future. But those benefits are also conveniently outside the 10 year window.

    • I know, and those estimates are so uncertain that they are not very meaningful. Do you feel confident in a projection of health care spending out to 2085? I don’t feel confident in a projection beyond a few years.

      I think it is a good thing that the CBO scores things over a relatively short time frame. But this invites trickery like we’re seeing here.

    • I’ve dug into the numbers already. What I’m saying is that the counter-argument of “the bill reduces the deficit 20-30 years from now by an amount greater than any deficit in the CLASS Act or Social Security” is assigning (in my opinion) an unreasonably high level of certainty to projections far off in the future.

      I don’t think it is prudent to base our opinion of the bill on a projection of health spending that far ahead, and that’s part of why we only use 10 year CBO scores. And not only are we relying on these highly uncertain long-term projections, we’re using it as justification for spending a revenue source that is already accounted for . It’s a bit like going deep into debt on the assumption that 30 years from now you’re going to be really rich.

      Both revenue sources have a future liability associated with them. So if we spend that money, we’ve got a future deficit. I don’t find it sufficient to say “We’re raiding the CLASS Act and Social Security trust funds, but 30 years from now we’ll make enough changes to the health care system to pay it back.”

      • @AB – So what should CBO do differently? Stop talking about the bill and start talking about how to reform the system that produced it. That’s what I’m saying.

        I’ve proposed longer-range projections, uncertainty and all. What do you propose?

    • I don’t have a problem with the CBO, and I’m not suggesting they do something differently (other than possibly being more explicit about the fact that those two revenue sources are essentially borrowed money and not real deficit reduction).

      I propose that we have a more honest debate about the costs of reform. Like you’ve said before, this was a coverage bill, not a cost bill. Doing coverage without cost is expensive, regardless of whether one thinks it is the right thing to do. Coverage is also important, and affects tens of millions of people in the short term, so there is a good argument to be made that it is worth the cost. But we should honest about what that cost is, and being honest means not playing games with unrelated revenue sources like the CLASS Act and Social Security.

      To be clear, the Republicans are being disingenuous and dishonest, and making all sorts of specious arguments. But that doesn’t mean the Democrats and pundits on the left should do the same. Like I said above, if people were saying “The CBO scores the bill as reducing the deficit by $143B, but that includes $70B of CLASS Act revenue and $52B of SS revenue that does not actually represent a net savings, so a more realistic score would be $21B” I would not have a problem with it.

      I agree with you that the ongoing bickering over CBO scores distracts us from the real problem of figuring how the heck we’re going to fix our system, but that doesn’t mean we should let people lie about it either (nor should we let them game the scoring process), whether those people are Democrats or Republicans.

    • Sorry to get back so late. Was out trying to hire new doctors so I can increase health care spending. I have no problem with identifying where revenue is coming from. If you want to include in statements about the ACA that it balances its budget in the early years by doing things like the student loans revision. In my practice, I sometimes have to steal from column A to make column B work for a little while. However, the longer term projections are for even larger savings. Do I know whether that is true? Things could change a lot by then, including the Class Act. I think the best we can do is work with the numbers we have, and modify as we go along. Far as I can tell, that is what all financial entities do.


    • steve, you’re making my point for me. This is borrowed money, not deficit reduction. “Stealing from column A to make column B work” is not deficit reduction. The longer term projections are the least credible. Saying “we’ll borrow money today because 20 years from now things will be much better” is wishful thinking, not fiscal discipline.

      “Things could change a lot by then, including the Class Act.”

      If things will be different, the projection ought to reflect that. The CLASS Act is priced and designed to be break-even, and premiums are supposed to be adjusted to keep it that way. And the CLASS Act is only one of the problematic components, Social Security is just as much of an issue. Not a single person, not you, Austin. Ezra Klein, Jon Cohn, no one has yet come up with any credible justification for counting that revenue as deficit reduction.

      • @AB – You must address the long-term projections directly. You can’t just say they’re not credible. If you look at the baseline scenario, which accounts for EVERYTHING, the CLASS Act, Social Security, and all, it is balanced or nearly so in every year.

        If you’re saying that they’re rigged, that CBO made some heroic assumptions to make it come out that way, then point me to where that is stated. CBO has written up their methodology in great detail. It’s on their website. Point me to the document, page, and paragraph that you object to. I’m not prejudging that there isn’t a deep problem. Show it to me.

    • I’m not saying the long-term projections are rigged, and I’m not questioning CBOs methodology. I’m saying long-term projections about the health care spending are unreliable. Do you feel confident in forecasts of health care spending that far into the future?

      We don’t use 20 year or 30 year CBO scores. Yet that is the only way one could possibly defend counting that money, is if you believe you’ll pay for it by reducing spending decades into the future. And so the claim the of deficit reduction in the near term only makes sense if you are extremely confident in the accuracy of those 20-30 year forecasts.

      I think maybe I wasn’t clear in that last comment. When I said that if things will be different the projection ought to reflect it, I wasn’t suggesting the baseline scenario doesn’t include the CLASS Act or SS. I was addressing steve’s remark that “things could change a lot, including the CLASS Act”, which implies that there is uncertainty around the CLASS Act, and possibly Social Security, which could make it look more favorable. Once the SS taxes or LTC premiums have been paid the liability has accrued, so this is not really logical unless you think all those people are going to die off quicker than the SS actuaries project. And with CLASS, the program is supposed to break even, and premiums will be adjusted to ensure that it is. There’s no basis for assuming it will at any point be a net gain to the budget.

      My whole point here is just that I do not believe one can make confident assertions about exact levels of health care spending 20-30 years in the future, and if that is one’s basis for making the incorrect claim that these two revenue sources count as deficit reduction one is relying on highly specious assumptions.

    • And one other quick thing: when I say those long-term projections are not reliable it goes in both directions. Things could me much better or much worse. But there’s definitely much more uncertainty the farther out you go.

      This bill spends money on coverage early, and through various means tries to cut costs later. The deficit reduction from CLASS/SS is not “real”, in that it has liabilities attached to it. The “real” deficit reduction in the bill takes a long time to develop, well beyond the 10 year window, and much of it will be politically difficult. But trying to paint it as reducing the deficit in the near term is overselling it, and trying to take credit now for having done those politically difficult things that you haven’t done yet.