If policymakers actually followed through on their legislative dictates, Congressional Budget Office scoring would be a more reliable guide to the budget impacts of proposals working their way through Congress. The estimates would still have errors resulting from inadequate data and faulty assumptions about how individuals, firms, and other entities might react to a policy change. But the scores or long-term projections would not be purposely manipulated by the inclusion of provisions that have little hope of being implemented.
Case in point: CBO's estimate that repealing the Affordable Care Act (ACA) will increase the deficit by $230 billion through 2021. This is simply the reverse of CBO's original estimate of the impact of the major health care reform legislation with two more years added on. It has no more claim to being correct than the original. That's not an attack on CBO, it's a fact.
The estimate assumes that all future Congresses will do the bidding of the 111th Congress which passed the legislation early last year, but the odds of that occurring are vanishingly small. The question is, do Americans live in the world CBO estimated, or do they live in a less orderly world where politicians, businesses, and people don't always do what we think they should--or that the law says they must?
Regrettably, political artifice and irrationality are alive and well in our great country. The ACA is rife with provisions that have very little chance of implementation but that drove CBO's finding that the legislation would save money and lower the federal budget deficit. That was the reason former CBO director Doug Holtz-Eakin, former OMB assistant director Jim Capretta, and I wrote our recent article. Our conclusion is that repeal of ACA would reduce the deficit. We did not charge, as some seem to claim, that CBO is at fault for the gimmicks and deceptive accounting included in the law by congressional Democrats. CBO is required to estimate the impact of proposals that they don't think will actually be sustained over a long period of time--and they said so, citing Congress's unwillingness to impose cuts in Medicare payments to doctors that were mandated more than a decade ago.
Rather than accepting, as CBO must, that every sentence in ACA would be fully implemented in perpetuity, we asked what was most likely given Congress's track record. The past seven years of legislation to avoid cutting Medicare payments to physicians is ample proof that politicians--of all stripes--would rather spend the public's money than take difficult actions to save it. That is especially true if the tough actions have been imposed by a previous Congress that largely received credit for starting a new program. If the big Medicare fee cuts, which Medicare's chief actuary calls unsustainable, and the middle-class tax increases are not allowed to go through, more than $500 billion in deficit reduction from enacting the law is wiped out, and so is the illusion that the deficit will increase with repeal.
Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the AEI.