January 14, 2011
The recent public discussion about the potential effects of repealing the major health care legislation enacted last March has revealed some misunderstandings about CBO’s procedures in analyzing legislation. Let me try to explain a bit.
CBO’s estimates of the budgetary impact of legislation can take a number of different forms:
- The standard formal cost estimates provided by CBO are based on our line-by-line reading of the specific legislative language on which Members of Congress will be voting. An important example is our estimate from last March of the effects of enacting the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010.
- Sometimes, however, the pace of legislative activity does not allow time for a careful review of the specific language of a lengthy bill. Therefore, we sometimes provide preliminary analyses of legislation based on specifications given to us by committee or leadership staff. In those cases—for example, our preliminary analysis of health care legislation introduced in the House of Representatives in October 2009—we state clearly the limitations of that analysis compared with a standard formal cost estimate (in this case, noting that “the agency has not thoroughly reviewed the introduced legislation”).
- On still other occasions we provide a preliminary analysis even when we have reviewed the legislative language if Congressional action is imminent and we have not yet had time to complete a standard formal estimate. The most important recent example is our preliminary analysis of the Repealing the Job-Killing Health Care Law Act introduced in the House on January 5. In those cases as well, we are explicit about the preliminary and incomplete nature of the analysis.
One fundamental tenet of CBO’s work throughout the agency’s 35-year history is that analysis we have completed of legislative proposals that have been publicly released is itself made public. That is, we often work intensively and confidentially with committee staffs as Members of Congress develop legislation in private—but when that legislation becomes public, any analysis that we have completed is released publicly as well, and any analysis we complete later is released publicly as soon as it is completed. Therefore, Members of Congress and the public do not need to worry that any analysis we have done of public proposals can be suppressed or concealed in any way.
Another fundamental tenet of CBO’s work is that we take proposed legislation as it is written and do not attempt to predict the intent of future Congresses that might choose to modify that legislation. We see no plausible alternative to that approach. If, instead, CBO responded to legislation by saying “we think that future Congresses will probably change the law so it ultimately will not take effect as written,” the Congress would be understandably frustrated and confused. At the same time, we regularly show the effects of adopting alternative policies that have been discussed by the Congress, so that the impact of those alternative policies is clear. Such alternative projections appear regularly in our Budget and Economic Outlook and Long-Term Budget Outlook, as well as in special analyses requested by Members of Congress. In addition, when the Congress considers modifying previous legislation, CBO provides cost estimates for those modifications at that time.
A third fundamental tenet of CBO’s work throughout the agency’s history is that our analysis of legislation reflects our objective, impartial, nonpartisan judgment. To be sure, that judgment can be faulty, and no one understands better than the analysts at CBO the great uncertainty that surrounds the evolution of the budget and economy under current law as well as the great uncertainty that surrounds the effects of legislation being considered by the Congress. Our estimates of such effects depend on myriad projections of economic and technical factors over the next 10 years or longer, as well as on assumptions about the behavioral responses to federal policies by families, businesses, and other levels of government. All of those projections and assumptions are ours alone, based on our detailed understanding of federal programs, careful reading of the research literature, and consultation with outside experts— the projections and assumptions are not directed or influenced by the Congress in any way. Our goal is to develop estimates that are in the middle of the distribution of possible outcomes, as we judge them, and to explain clearly the basis for those estimates.
Last spring after the significant health legislation was enacted, I gave a presentation that summarized the most common critiques I had heard of CBO’s cost estimate and reviewed the ways in which we had tried to address those critiques during the debate over the legislation. I highlighted three specific areas of concern: first, that we had misestimated the effects of the changes in law; second, that budget conventions hide or misrepresent certain effects of the law; and third, that the law would be changed in the future in ways that would make budget deficits worse. For all three areas, I described the words we had written and analyses we had offered to illuminate these legitimate and important issues.
As with all of my major presentations, that talk was summarized in a blog posting that included the slides I had used. Given the current public debate on this topic, you might find that material interesting.