Abolish the Congressional Budget Office (CBO) NOW!

Opinion

Budget
Abolish the Congressional Budget Office (CBO) NOW!

USA – -(AmmoLand.com)- Imagine there is a group of people in Congress with more influence over whether laws are passed and rules are changed, than any official committee or subcommittee in the House and Senate.

Now, imagine the members of this powerful group are not even members of Congress – in fact, they’re not elected officials at all.

Finally, imagine this group operates in secret, refuses to explain its decisions in detail to anyone, and has shown a consistent bias against free market principles.

Unfortunately, you don’t have to imagine this scenario. It’s part of the sad reality of trying to govern in Washington under the influence of the Congressional Budget Office (CBO).

The CBO is tasked with providing budgetary and economic analysis about the impact of proposed legislation or rules issued by executive branch agencies. It is technically a nonpartisan agency, but it has historically shown a bias toward a left-wing economic worldview through its use of static scoring. This method assumes little to no behavior changes from market players due to changes in law.

Here’s a look at the CBO’s recent track record with scoring major legislation.

  • In 2003, the CBO released a wildly inaccurate analysis of the new, market-oriented Medicare Part D program. The office projected total costs from 2004-2013 to be almost double what bore out in reality. This $349 billion mistake was the result of CBO’s inability, or unwillingness, to anticipate the premium-lowering impact of robust competition between private sector plans.
  • In 2005, the CBO had to issue a $63 billion correction to its forecasts because it anticipated lost revenue from the 2003 Bush tax cut. The losses never materialized. The CBO ignored the growth the tax cuts generated in its analysis.
  • In 2010, the CBO was critical to the passage of Obamacare. It gave credence to White House claims that the law would lower the deficit and boost the economy. Then, in 2014, after the law was implemented, the CBO had to update its projections. The new analysis claimed the law would result in 2.5 million fewer jobs by 2024. Using these updated projections, Republican staff on the Senate Budget Committee estimated Obamacare would increase the deficit by $131 billion. (It later came out that CBO’s original projections were based on the same models that Obamacare’s chief architect Jonathan Gruber used to design the bill.)

Notice a pattern? The CBO consistently underestimates the positive impact from supply-side, market-oriented reforms while giving Keynesian, big government policies the benefit of the doubt.

Despite claims of reform and an attempt to incorporate more dynamic scoring, which anticipates the impact of policies in the marketplace, CBO projections are still sabotaging free market reforms.

The CBO arguably killed the Republicans attempt to replace Obamacare with better reforms of the individual marketplace. It estimated that the American Health Care Act would lead to 24 million fewer Americans with insurance coverage. This is totally at odds with what we have seen since the individual mandate was subsequently repealed in the Tax Cuts and Jobs Act – and many states have utilized section 1332 waivers to lower premiums with reinsurance systems similar to what would have been created in the Republican health care law.

And just last week, the CBO delivered another absurd estimate of a common-sense, market-oriented reform in health care. This time it was the Trump administration’s proposed rule to ban drug manufacturers from giving secret rebates to pharmacy benefit managers. Instead rebates would be passed to patients at the pharmacy counter.

I have written about this important reform before. In short, the rule would save patients money on out-of-pocket costs and remove a huge perverse incentive in the drug marketplace which incentives manufacturers to keep increasing the list price of drugs to offer bigger discounts to the middlemen in the supply chain.

When Health and Human Services released the proposed rule, it included an impact study of the change by Milliman, an actuarial and consulting firm which conducts analyses for players in the private health care sector.

Contrasting the reports by Milliman and the CBO is instructive.

The Milliman report notes that “it is critical to consider possible behavioral impacts” from the rule changes because “all stakeholders would likely change behavior as a result.” Then, instead of arrogantly trying to predict the exact combination of behavioral changes by each element of the drug supply chain, Milliman opted to present a range of scenarios which lawmakers could use to inform their decisions.

The CBO report, by contrast, posits almost no behavior changes from Part D plans or pharmacy benefit managers. It also assumes – without explaining its reasoning – that correcting the perverse incentives in Medicare Part D would not have spillover benefits to other markets. In other words, the CBO report assumes the least changes in behavior possible. This is static scoring in a nutshell.

The stark difference between the ideologically rigid and monopolistic approach of CBO and the professional private firm Milliman shows why it's time for CBO to go.

I have long called for the elimination of the CBO and its replacement with 3-5 outside firms which would provide competing analyses. Over time, it would become apparent which firms are the best at projecting economic impact. The firms that perform the best would keep getting business while the worst performers would get replaced.

This vigorous competition between outside firms being held accountable for their accuracy would produce better information and projections for lawmakers than the current CBO monopoly.

The bureaucrats at the CBO and the defenders of the status quo will no doubt disagree, but that makes sense. They’ve already shown they don’t understand market-oriented reforms.

Your Friend,
Newt


Newt’s World Ep 14: The War at Home

P.S. In this week's episode of my Newt's World podcast, I look at the struggles some of our veterans face once they return home from combat—including opioid addiction.


Newt Gingrich
Newt Gingrich

P.S. My new book, Trump's America: The Truth About Our Nation's Great Comeback is out and available for order.

About Newt Gingrich

Newt Gingrich is well-known as the architect of the “Contract with America” that led the Republican Party to victory in 1994 by capturing the majority in the U.S. House of Representatives for the first time in forty years. After he was elected Speaker, he disrupted the status quo by moving power out of Washington and back to the American people.

Gingrich Productions is a performance and production company featuring the work of Newt Gingrich and Callista Gingrich. Visit : www.gingrichproductions.com

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    DeansYour Worst NightmaretomcatDeplorable BillWild Bill Recent comment authors
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    Deans
    Guest
    Deans

    I was commenting on Newt and his intended audiences. I made no assumption about the readership here. If you want to make that connection that’s up to you. It’s also your right to ignore anything anyone says just because you don’t happen to like the opening argument – your loss not mine. I made my point and any rational thinker will see the logic. Whether you want to dispute my claim with facts and logic or just be offended is once again, up to you.

    Deplorable Bill
    Guest
    Deplorable Bill

    Somewhere it is written “When a government becomes destructive to these ends, it is in the right of the people to alter or abolish it and to create new government…” Most of us know where that statement is from. I have no doubt the founding fathers saw this one, the situation we are in now, coming! In every money pit eve created, absolute power breads absolute corruption.

    Arm up, carry on.

    Deans
    Guest
    Deans

    As always Newt volleys his idiocy at half-wits. Who else would expect people to predict the future with complete accuracy? The CBO is important because they actually hire professionals based on their abilities and experience as financial analysts. On the other hand, the ONLY qualification to be a congressman to win a popularity contest. So, if not for the CBO, there is no guarantee that budget proposals would ever be reviewed by anyone who can add more than three numbers. This is why politicians always need industry experts to advise them. And Newt, being one of those morons, is also… Read more »

    tomcat
    Guest
    tomcat

    Turning more responsibility over to the states might sound like a good idea. I sure wouldn’t want the states of California, New York, New Jersey or others running anything. They have all done well to run these states in the ground and that would not change one bit with more power, but would increase their leverage.

    Wild Bill
    Guest
    Wild Bill

    @Tcat, I see that another insulting little troll has found his way to Ammoland. He does not know former Speaker, author, and professor Gingrich, but concludes Newt broadcasts “idiocy”; knows no one on this site, but concludes the readership are “half wits”; and presumes that we would have any interest in anything he wrote after reading his lead sentence.

    tomcat
    Guest
    tomcat

    @ Wild Bill I see what you mean. He preaches that Gingrich doesn’t know what he is talking about but goes on to repeat the same thing Newt is saying. A hand full of wrong guesses, as he describes it, have cost the country many dollars. They operate similar to the weather service and get paid if they are right or wrong but the weather service has a harder job because of things that can affect the weather instantly. This dude seems to have a bone to pick with professor Gingrich but he failed to bring any facts to prove… Read more »

    Chuckbone56
    Guest
    Chuckbone56

    All I want the gov to do is keep the roads in good condition and the military strong. I will care for myself and family. With less tax dollars going out I could also help folks in need. Plus let those who dont want to work go hungry. Less government = more liberty!

    Deans
    Guest
    Deans

    I’ve always supported my family through hard work and never needed any help and it’s fun to brag about that. But the problem with saying less government = more liberty is that it’s not true. Our founders fought a revolution to liberate themselves from tyranny and you know what they did to prevent tyranny from happening again? They created a government. That’s right, the Republic and it’s constitution IS government! The colonies were in fact private private property owned by the King or the corporations he chartered, the colonists had no say because they had no representation, they had no… Read more »

    Doyle Shannon
    Guest
    Doyle Shannon

    The only way to rid our country of the underhanded deals of our Government is to return to the people the power of the vote. We have the technology to enable electronic voting for the individual voter. The people would have the power, through individual votes, to not elect the a**holes. and to get rid of at least some of the underhanded dealers of Government.

    Deans
    Guest
    Deans

    Excellent idea! And you’re right, we have the tech to do it. We could kill the Electoral Collrge scam right now!

    Your Worst Nightmare
    Guest
    Your Worst Nightmare

    Keep dreaming. If you remove the Electoral College then votes from middle America wont mean shit. Just a few radical blue coast states will decide all future elections.

    Deans
    Guest
    Deans

    So, you don’t want the big states to make all your decisions and that’s why you don’t want to let go of a system that gives the small states more representatives per capita than the big states. Well, that isn’t fair either…. So what do we do? Simple answer… Dissolve the union. If there is that much difference between the states, maybe they shouldn’t be united. Besides, the big states are getting pretty tired of carrying the weight of the little states… Every year, the biggest states give more money to the Federal Government than they take, while the smallest… Read more »

    Missouri Born
    Guest
    Missouri Born

    There is no such thing as a nonpartisan agency within the federal government, the last resident of the White House and his crew proved that point.

    JPM
    Guest
    JPM

    So many of the Federal Agencies are useless and even counterproductive and do not need to exist. Most of them are redundant (2 or more agencies doing the job one could do) or not needed at all, overpay the employees, especially the management, have way too much power over citizens and have budgets that are ridiculously overblown and should be eliminated (IRS, BATFE, BLM, CBO, etc.).

    Proctor
    Guest
    Proctor

    I fail to see how you solve the problem by replacing a crappy government bureaucracy with private companies that could easily be owned and influenced. How are you assuring that there will be true competition? Maybe the CBO should be dumped without a replacement and no more bogus budget “neutral” crap. Reps, states, and parties can choose their own method of projecting budgets and present their case in Congress.

    Deans
    Guest
    Deans

    I also don’t see how private business guarantees any improvement. It’s not a matter of government vs business, it’s a matter of effective people vs ineffective people. A company can be as corrupt and ineffective as any government given the right leaders. Trump is a great example… his private business lost billions of dollars and now that he’s president the republic is losing more money than ever. I still say that our politicians need industry experts to make effective decisions it’s just common sense. And people have to get over the fact that when every decision made based on expert… Read more »

    hippybiker
    Guest
    hippybiker

    I read in the Declaration of Independence “He has erected a multitude of New Offices, and sent hither swarms of Officers ie: bureaucrats to harass our people, and eat out their substance.”
    “ Meet The New Boss, Same as the old boss!”
    The Who

    George Steele
    Guest
    George Steele

    The fundamental principle of limited government, upon which the greatness of America was built, was destroyed in 1937 by the Helvering Decision, providing Roosevelt with the cover required to explode the size and scope of the state under an overly-broad reading of the “promote the general welfare” clause in the Preamble. While limited government had been under attack since Wilson and the progressives, and arguably since Lincoln, Helvering put the final nail in the coffin of our 9th and 10th Amendment strictures against overreach. With a conservative SCOTUS, perhaps a mechanism to overturn Helvering could start things in the opposite… Read more »

    DW
    Guest
    DW

    At the federal level we need to eliminate every single department that doesn’t actually add any value, which seriously means we could eliminate at least 50 – 60% of the federal gov’t. Reality is the gov’t should only be in the business of protecting the country and that is it. Everything else can be tanked and there shouldn’t be an issue. The states can and will do just fine managing themselves.

    Tionico
    Guest
    Tionico

    You had it right until you got to the bit “dosn’t add any value”. This is NOT in accord with the Constitution. How’s about eliminating ALL FedGov departments, agencies, etc, that do not directly implement or manage the few and clealry defined tasks of FedGov, per the Constitution? That list on the chopping block would include BATF, DHS, TSA, Education, STHSA, EOC, FDA, USDA, USFS, Energy, FAA, Railroad COmmisson, AMtrak, ALL highway matters beyond “Post roads” which could arguably mean the INterstate Highway System. but no more FedBux to states, counties, cities, etc. FBI, Air Traffic Controllers, NASA, NOAA, ICC,… Read more »

    Deans
    Guest
    Deans

    lol – I like how you’re so resolute until you get to the standing army part. Don’t be a wuss… if your going to cut everything not mentioned in the Constitution then cut the standing Army. BTW, the Air Force isn’t mentioned in the Constitution either. Personally, I think we could easily cut 60% of the military. We don’t need all that crap to defend ourselves. We spend more on defense than all the other nations put together and the only real reason for that is the business of selling arms. It has nothing to do with defending the nation.… Read more »

    Darkman
    Guest
    Darkman

    We need to Ban 80%of the Federal Government. Return control to the states along with all the tax dollars wasted by the Bureaucrats of the D.C. Machine.

    Wild Bill
    Guest
    Wild Bill

    @Dark, The leaches would merely bring their corruption to the state capitols. Corruption and corrupters always follow the money.
    The huge federal bureaucracy is the result of two centuries of party loyalty, rather than loyalty to the people and constitution. Parties are the corruptors.

    Tionico
    Guest
    Tionico

    That would be an improvement. Let those states that are well run deal with the corruption there. Those that refuse (CA, NY, IL, MD, CT, MA, NJ) will have to either crumble and fail on their own nickel without dragging the better states down the four inch black vertical pipe, or grow up and elect some state government officials that WILL deal with it.. or move to another state that takes care of things properly. At the FedGov level, the corruption is so deep and so huge it is impossible to get a handle on it and drain ghe swamp.… Read more »

    Darkman
    Guest
    Darkman

    At least they will be much closer to the voters and easier to access. As it is they hide hundreds/thousands of miles away in D.C. When they live next door to the people they Work For. It becomes much easier to exact the necessary pressure to get the desired result.

    m.
    Guest
    m.

    get rid of these useless a**holes