"Congress used CBO to get the answer they wanted. I get that. I ran the CBO. They used me too."


Last March, as House Democrats were preparing for their final votes on the Patient Protection and Affordable Care Act, Douglas Holtz-Eakin published an op-ed in The New York Times arguing that, despite Congressional Budget Office scores indicating otherwise, the president's health care overhaul would in fact increase the nation's budget deficit by hundreds of billions of dollars over the long term. Since then, he's become one of the most prominent critics of the claim that the law will result in a smaller deficit, expanding his critique in co-written pieces for Health Affairs and, most recently, The Wall Street Journal.

Holtz-Eakin, who currently heads the American Action Forum, isn't just any critic: From 2003 to 2005, he ran the Congressional Budget Office himself. His time at the CBO gave him great respect for the office's capabilities and the quality of its work. It also gave him firsthand knowledge of the scoring process, its inherent limitations, and the ways that determined members of Congress can use the process to their political advantage.

I spoke with Holtz-Eakin earlier this week about why the CBO isn't to blame for the deficit projections associated with the health care overhauls, how the law's backers have responded to criticism of the official scores, and why, when it comes to legislation, the CBO isn't god—no matter how convenient it may be for legislators to say so.

Suderman: A lot of the PPACA's defenders seem to be accusing critics like you of trying to have it both ways on the CBO. On the one hand, you use their estimates pretty frequently for things like job losses associated with the law or projected spending growth of the new entitlement programs. On the other hand, you're saying that CBO's deficit numbers are probably wrong. How do you respond to that?

Holtz-Eakin: I have nothing but the highest respect and admiration for the quality of the estimates that CBO produces. Period. I have nothing but a deep understanding of the rules by which they must use those estimates, and the way the law was written in order to get the deficit reduction bottom line—by reading out some costs, using budget gimmicks, putting in unrealistic estimates of future Medicare reductions. None of that has anything to do with CBO's competence or professionalism. That's a congressional problem. Congress used CBO to get the answer they wanted. I get that. I ran the CBO. They used me too. So, I don't think it's having it both ways. I've always defended CBO's work. I'm complaining about the way that Congress wrote the law.

Suderman: To clarify, I think the complaint is not only that you are criticizing the CBO for doing a bad job. I think part of the criticism is saying that you can't criticize their numbers on the one hand, but then rely on their estimates when it's convenient.

Holtz-Eakin: I think you should use their numbers in an informed way. And that's all I'm asking. I'm trying to inform people in the way in which the particular bottom lines here have been developed.

Suderman: Similarly I'm hearing people complaining that criticism of the scoring leads to a reduction in the CBO's authority, therefore a more politicized and polarized and unreliable scoring process.  

Holtz-Eakin: That's nonsense. The CBO has no authority. People don't know what they're talking about. All scoring is done officially by the Budget Committee—they are the official scores in the House and the Senate. CBO is strictly advisory in all circumstances. And its role has been to advise the Budget Committees since 1974 on the appropriate budgetary impacts of legislation. It has been convenient for the Budget Committees to assert the CBO is a god, and to hide behind them. But it's not in fact correct.

Suderman: Some of the response to criticism of the CBO's scoring seems to stem from the notion that we're better off with a single neutral arbiter. But I've always felt that one of the best things about the CBO is that it serves as a check on the administration, and in particular the Office of Management and Budget. Is it accurate to say that competitive pressure already affects the projection process? Do you think more competitive pressure could help?

Holtz-Eakin: All monopolies are bad, and CBO was created to break the OMB monopoly. And in a similar fashion, while I don't want to have multiple official scorers, and a competition of that sort,  I do think it's helping to have multiple research entities opining on the budgetary cost of things. That's helpful, in the same way the Tax Policy Center is a useful competitive pressure to the Joint Committee on Taxation, and how Heritage has its Center for Data Analysis. These are all beneficial. The more numbers that are out there, the more people discussing the foundation of those numbers, the better off the process is.

Suderman: When the CBO goes about the scoring process, it often involves somewhat arbitrary decisions. Can you talk about that?

Holtz-Eakin: The first and foremost thing to recognize is that "scoring" is just that. It's not forecasting. It's scoring. And the analogy I always use is, in football a touchdown is six, kicking an extra field goal is one, and running it over is two. Why? I have no idea. But by having that set of rules for scoring, you can compare games across time, across teams, and across all sorts of situations, because you have a common thread of scores. So the most important thing about scoring is to apply the same rules to every bill. Every time a new iteration of the health care bill it was either more or less expensive. And we knew something like the relevant ordering of it. So that's its top priority.

That means that when CBO has to make a call, it should make that call in a similar fashion every time while you're debating legislation. Sometimes you have to make calls that you don't have much information about. In that sense they're are arbitrary. But I don't think that that's a bad thing, as long as it's done in a nice statistic fashion.

There's a second goal: to be not only consistent across legislation, but to be accurate in its forecast. CBO certainly tries to do that. But it operates in an environment where there's a ton of uncertainty. The most important pieces of legislation are the hardest, because they're new and by definition harder to evaluate.