The Volokh Conspiracy
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Taking Judicial Notice Of "Very Elite" Economic Predictions
Can the Court base its ruling in Cook on predictions of a recession?
I have been tracking the Affordable Care Act since its inception in 2009. And over this time, virtually every economic forecast about the law has proven to be wrong. There were estimates about how Obamacare would reduce the deficit, increase the number of Americans who are insured, reduce costs, and so on. None of these predictions from 2009 have proven accurate. And in fairness, a lot happened! Obamacare became a political football, the Supreme Court rewrote the Medicaid expansion, and the mandate penalty was repealed in 2017. The law was never allowed to go into effect as intended. But that is reality. Politics always intervenes in the real world.
The Congressional Budget Office is notorious for making predictions based on unstated assumptions that fail to account for foreseeable events. I have often wondered whether there is a liberal asymmetry here, where the CBO underestimates the benefits of spending more money, and overestimates the harms of spending less money. Liberal policies will always score better than conservative policies. But I lack the means to quantify this question. Still, despite all of these problems, CBO estimates are used to affect public policy.
The latest example in this saga has been the CBO's estimates concerning Obamacare enrollment. CBO predicted that if ACA enhanced subsidies were not renewed, enrollment would drop by more than 7 million. This forecast stimulated a vigorous debate in Congress, which nearly led to legislation. But, as things turned out, the estimate was not accurate. Not even close. The Wall Street Journal breaks down the numbers:
ObamaCare's annual open enrollment ended Thursday, and what do you know? The media-fueled panic over the expiration of the pandemic-era enhanced subsidies turned out to be a false alarm.
The Centers for Medicare and Medicaid Services (CMS) reported this week that 22.8 million Americans have signed up for ObamaCare plans as of January 3. That's down from 24.2 million last year. People could still sign up for plans on the federal exchange through Thursday, and some states have extended their open enrollment through the end of the month.
But even if there are few new sign-ups, enrollment is still running higher than it was in 2024—when the sweetened subsidies were available. The 1.4 million decline in sign-ups compared to 2025 enrollment is also less than was predicted. The left-leaning Urban Institute projected that ObamaCare's subsidized enrollment would drop by 7.3 million.
The Congressional Budget Office's ObamaCare baseline in 2024 assumed 18.9 million people would enroll in plans this year if the enhanced subsidies vanished. The budget gnomes have repeatedly underestimated ObamaCare enrollment and spending; they need to rework their models.
Again, this was an estimate of what would happen in a few months, and predictions were way off. I've become skeptical of all long-term economic forecasts.
That background brings me to oral argument in Trump v. Cook. There are legal arguments for and against Cook's removal, but economists have also chimed into this case. They claim that allowing the President to fire Cook for alleged misconduct could lead to a recession! Justice Barrett even asked about this risk:
JUSTICE BARRETT: General Sauer, can I ask you a question that's also related to the stay factors? Justice Sotomayor brought up the public interest here, and we have amicus briefs from economists who tell us that if Governor Cook is --if we grant you your stay, that it could trigger a recession. How should we think about the public interest in a case like this?
Solicitor General Sauer responded that the stock market actually went up after Cook was fired, despite predictions of doom.
GENERAL SAUER: Yeah. Two --two things to say about that. One is, if you look at what actually happened here, she was removed on August 25th and the stock market went up for the next three days. So we've already had a kind of natural experiment, so to speak, about whether or not the predictions of doom will really be implemented. Surely, that if investors are jittery or whatever the argument is, you would have seen that on August 25th, and you did not see that. In fact, you have the surprised
Justice Barrett said that the Court should not be in the business of predicting markets.
JUSTICE BARRETT: Well, I'll interrupt you there to say that I don't want to be in the business of predicting exactly what the market's going to do.
Yet, that is exactly the premise of Barrett's question.
GENERAL SAUER: I agree. And that's why I think the Court ought to consider all those amicus briefs and their sort of, you know, predictions of doom with a fairly jaundiced eye. What the Court has to do is weigh -essentially, you have those amicus briefs as a reflection of very elite opinion, elite opinion that what's happened here
There is a focus on "very elite." Indeed, nearly every economist on planet Earth favors absolute independence of the Federal Reserve. Talk about a liberal asymmetry! But those dispassionate economists are not the duly-elected leaders of our nation.
Can the court consider these forecasts in a stay posture?
JUSTICE BARRETT: But there's a risk, General Sauer.
GENERAL SAUER: Yes.
JUSTICE BARRETT: I don't want to be responsible for quantifying that risk. I'm a judge, not an economist. But, if there is a risk, doesn't that counsel in the stay posture, when the equities are at stake, caution on our part?
This line of questioning reminds me from the arguments raised in Bost. Courts should not make legal rulings based on predictions of how close political races will be, nor should they rule based on economic forecasts.
Sauer responded that the primary risk the Court should consider was the irreparable damage to the government by keeping Cook in place.
GENERAL SAUER: The governors set interest rates for ordinary Americans all across the country. And, here, there's the appearance of having played fast and loose or at least been grossly negligent in getting favorable interest rates.
The SG continued:
GENERAL SAUER: I think the Court has to weigh that risk against the risk that there will be a permanent damage to the Federal Reserve's credibility from allowing an officer, a governor, to remain in office who's engaged in this kind of behavior before she came in office. That's for herself.
JUSTICE BARRETT: So it's appropriate to take notice -
GENERAL SAUER: What's the message to ordinary Americans that comes out of that is the question for the Court and how do you weigh that against the elite opinion that's reflected in the amicus briefs. Obviously, President Trump's voice speaks to that concern of ordinary Americans. I think, when you balance the equities, what the Court ought to do is look at the merits, which are extremely strong for us, and then look at its traditional Nken stay factors. The Court says, when the government is a party, the irreparable harm to the government merges with the public interest. And, here, we have traditional irreparable harms, injuries to the President's ability to remove a principal officer of the United States.
The emphasized line will make progressive blood boil, but it is true. The elected President represents the people, and not so-called dispassionate economists.
The Court should get out of the business of relying on economic forecasts--especially from elite experts who have a vested stake in this case. Economists, like historians, have their biases.
