Tuesday, November 3, 2009

Past Ties Between White House and CBO Cause for Concern?

Yesterday, I cited an article from the AP which maintains that the health care bill, proposed by the House, would cost $1.2 trillion over a decade and would thus increase the federal deficit by at least $200 billion. This is in stark contrast with the Congressional Budget Office's optimistic forecast, which contends the health care bill would actually reduce the federal deficit by $104 billion over the 2010–2019 period.

Verum Serum, though, raises an important question about the CBO's objectivity in assessing the costs of health care reform.

Excerpted from Verum Serum:
Whether Democrats succeed in passing healthcare reform legislation in the coming weeks will, to a large part, depend on the final bill scoring by the Congressional Budget Office (CBO)... However, there is an interesting connection between the White House and CBO leadership which does not seem to be widely known, and which may be cause for concern.

The current Director of the CBO is Douglas Elmendorf, a highly-regarded, Harvard trained economist. As you may know, the CBO Director who preceded Elmendorf was Peter Orszag, who now heads up the White House Office of Management and Budget (OMB). Both Elmendorf and Orszag were senior fellows at the Brookings Institution prior to joining the federal government, but they share something else in common as well.

As it turns out, Orszag was the founding director of the
Hamilton Project at Brookings, a multi-year research initiative focused on economic policy to “benefit more Americans”. When Orszag left Brooking for the CBO in early 2007, economist Jason Furman took over the reigns of the Hamilton Project. Furman departed in June 2008 when he accepted a position as director of economic policy for the Obama campaign. Who took over for Furman? If you guessed Doug Elmendorf, then you are correct.

Notably, healthcare reform was a significant focus of the Hamilton Project. Furman ultimately authored a book (
Who Has the Cure? Hamilton Project Ideas on Health Care), and Elmendorf co-authored a paper with Furman which argued the benefits of “establishing universal health insurance”.

So you have three successive directors of a liberal-leaning policy initiative. Two of them are now very close economic advisers to the President. Orszag at the OMB, and Furman who is now Deputy Director of the National Economic Council. And then you have Douglas Elmendorf in charge at the CBO....
Ah yes, the good ol' reliable CBO......

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