If you follow politics for any length of time in the United States, you very quickly find yourself being asked to defend/attack the Congressional Budget Office’s scoring of a particular piece of legislation being debated in Congress – but what, exactly, is the bill scoring process the CBO goes through? Well, it turns out it is a much bigger topic than I can cover in a short piece here today, but I do have a few links (see Sources, below) from Douglas Holtz-Eakin, former head of the Congressional Budget Office (2003-2005), and currently head of the American Action Forum.
As I understand it, the basic mechanism for scoring a bill goes like this: the bill is drafted by congressmen who have the ability to load up the legislation with any assumptions/costs they choose to, and the CBO is bound to “score” the legislation as it is written, without bias towards the likelihood of certain assumptions/costs actually being correct/valid. Any ambiguities in the legislation are addressed by the Congressmen that submitted the legislation to the CBO, and again, the answers provided are taken without question and enumerated in the final score of the legislation.
As Mr. Holtz-Eakin noted in a recent New York Times Op-Ed piece:
The answer, unfortunately, is that the budget office is required to take written legislation at face value and not second-guess the plausibility of what it is handed. So fantasy in, fantasy out. [emphasis added]
For example, the Affordable Care Act that was passed into law in 2010 has as one of its assumptions that Medicare reimbursements would be cut according to the laws currently in place, but the CBO couldn’t alter that assumption based on the reality that the looming Medicare cuts in previous years were never implemented. Nope, the CBO had to take that assumption and factor those cuts in to the “score” of the Affordable Care Act.
Another example is the so-called “Bush Tax-cuts” which are set to expire at the end of December, 2012 – any budget legislation that is scored has to assume the cuts will end at the end of 2012, not matter how likely the CBO may think their extension.
It is important to understand the method the CBO employs when it scores a piece of legislation, the constraints imposed ont he CBO as well as the ability of legislators to “game” the system to arrive at the numbers they want for their legislation. As Mr. Holtz-Eakin noted in a recent interview:
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.
I hope to craft a longer piece, detailing the CBO scoring process in a more detailed manner, but for now, I hope the above helps you understand the scoring process the Congressional Budget Office undergoes, and how their policies can be subverted by legislators to get a “score” they want for their legislation.
nytimes.com: The Real Arithmetic of Health Care Reform