Keith Hennessey noticed something interesting in the CBO summer baseline update. Democrats worked hard to get the ObamaCare budget score to a $124 billion deficit reduction (which we know is misleading), but what the CBO did was combine spending and taxes of the legislation into one line item showing the net effect on the deficit.
Now, however, the CBO is telling the full story:
Only now does CBO tell us in a parenthetical:
Taking into account all of the provisions related to health care and revenues, the two pieces of legislation were estimated to increase mandatory outlays by $401 billion and raise revenues by $525 billion.
This is a very different picture. Imagine two scenarios of a lawmaker who was on the fence last March. He or she is a Blue Dog Democrat, or a Democrat from a fiscally conservative red district, and is deeply concerned that the legislation may be fiscally responsible. He is presented with two different statements from CBO:
- “CBO says these bills will reduce the budget deficit by $124 billion over the next decade.”
- “CBO says these bills will increase federal entitlement spending by $401 billion over the next decade, and will increase taxes by $525 billion over that same time period, for a net deficit reduction of $124 billion.”
Why would the CBO only now release this breakdown when it had the information before and normally doesn’t combine spending and taxes into a single item? Hennessey suggests that the CBO was pressured to not show the information at the time. That’s a pretty serious charge, but not an unreasonable one.
Hennessey has an important point here. Had the spending and taxes been shown separately, they might have had more negative impact with the public and members of Congress who were on the fence. People who read the bill and the budget score and followed the discussion closely were aware of how the CBO arrived at the score, but those people are probably not the majority. If CBO had done what it should have, perhaps there would have been a different outcome.
UPDATE: Hennessey has noticed a table in a March CBO letter that does separate spending from revenues, and he retracts his guess that the CBO had been pressured by Congress to combine the line items and bury the information. We certainly do not want to suggest any wrongdoing by the CBO, and never did (we only showed that Hennessey was making that case), but the way that much of the data was presented is certainly questionable, as Hennessey reemphasizes:
My underlying substantive point remains: I am concerned that Members, staff, and outsiders in both parties focus solely on deficit effects, to the exclusion of thinking first about the gross spending and revenue effects of legislation. We should care about the size of government (as measured by spending), and also about how we finance any given level of government (the balance between taxes and deficits). When we focus only on the deficit effect of legislation, we blur these two separable questions and confuse the discussion.
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