CBO Not As Easy As ABC, 1-2-3


As I noted yesterday, Congressional Democrats hoping to pass a health care reform bill seem to be hitting snags with the Congressional Budget Office. Their problem isn't the Senate bill, which is already set, but the language in the reconciliation legislation that would amend the Senate bill: As this helpful piece in the Post explains, reconciliation bills have special budgetary requirements that may be difficult to meet given the Democrats' other goals:

Because Democrats are using special budget rules, known as reconciliation, to protect the package from a Republican filibuster, the measure must reduce the deficit by at least $2 billion over the next five years and avoid increasing the deficit in any year thereafter. Under normal circumstances, that rule would require the bill simply to contain enough revenue-raising provisions to offset new spending. But, like so much else in the health-care debate, this time it is more complicated.

Instead of being measured against current law, the deficit-reduction potential of the "fixes" package will be measured against the Senate bill, which must be passed by the House before the Senate can approve the fixes. The Senate bill would trim $118 billion from the deficit over the next decade and hundreds of billions of dollars in the following 10 years. For the fixes package to comply with reconciliation rules, it must also promise significant long-term deficit reduction, aides said.

But virtually everything House Democrats want to achieve in their package costs money.

Imagine that! So what are our taxpayer dollars buying here?

For example, Obama and House leaders have promised to increase government subsidies to help lower-income people purchase insurance, to fully close the coverage gap known as the doughnut hole in the Medicare prescription drug program, and to extend to all states the deal cut with Nebraska Sen. Ben Nelson (D), under which the federal government would pay for a proposed expansion of Medicaid.

Meanwhile, House leaders want to dramatically scale back one of the most powerful deficit-reduction tools in the Senate bill: a 40 percent excise tax on high-cost insurance policies. Obama has proposed to delay implementation of the tax until 2018 and to limit the number of policies that would be subject to the tax. 

One of the tricks Democrats are hoping will get them the needed deficit reduction is packaging the reconciliation language with the student loan bill (which according to The Hill "would essentially cut private lenders out of federal student lending program"). That idea is for the the student loan bill's CBO-scored deficit reduction to help offset the costs of the reconciliation provisions. It's not entirely clear at this point how much scored deficit reduction the addition of the student loan overhaul would actually provide—old estimates that said it could result in as much as $50 billion in deficit reduction may be tossed out—but Democrats are clearly looking for any help they can get on this front. Still, as the Post piece notes, it may not be enough:

Those changes are unlikely to match the long-term savings proposed in the Senate bill, aides and lawmakers said, leaving House leaders scrambling to come up with additional sources of cash. Failure to comply with the reconciliation rules would imperil the package in the Senate and could cause big problems in the House, where the votes of many fiscally conservative Democrats hinge on the ability of health-care legislation to rein in soaring budget deficits.