Paul Krugman has an interesting post up on how to read a CBO document. He highlights the fact that the CBO reports using the assumptions it is required to make, not any estimate of what is particularly likely to happen in the real world:
[snipped quote explaining the CBO process]
Since this is what folks like me were screaming from the proverbial rooftops during the battle over healthcare reform, when the supporters were highlighting the CBO's score to argue that it was going to reduce the deficit, I find this congenial. I wish that Krugman had walked his readers through this quite a bit earlier, of course, but better late than never.
But I could wish that he had gone over this topic just a wee bit earlier--like yesterday, when he argued that the Medicare Trustees report shows that we've done a whole bunch of deficit reduction:
[snipped quote saying reform will help health care costs go down in the long run]
As the Official Asymmetrical Information Husband noted yesterday, the Medicare Trustees are forced to assume that all these cuts will happen . . . even though the Medicare Trustees do not appear to believe any such thing: [snipped quote]
Well, if Mr. "Astro-turf" McArdle said something, it must be true. But if we are going to get a lot of Mr. McArdle quotes, and it seems we are, we should know his credentials. Here's an old bio from a post he wrote for Townhall:
Peter Suderman is a policy analyst, videographer, and blogger for FreedomWorks. He also serves as associate editor of Doublethink.
Awww, he posted at Townhall, the home of Ann Coulter and Chuck Norris! That's so cute.
Peter Suderman served as CEI's Assistant Editorial Director and Technology Analyst until March 2007, during which time he grew the position to incorporate his talent for multimedia editing and production. He is now living in New York City, writing film reviews for National Review Online, and continues to write regularly on technology, media, and culture.
Peter also serves as Associate Editor of Doublethink, the quarterly print magazine of the America's Future Foundation. He received a degree in English with a minor in Film Studies from the University of North Florida, where he worked as an editor and columnist at The UNF Spinnaker. His writing has appeared in The Washington Times, The Washington Examiner, National Review Online, Reason, The American Spectator, AFF Brainwash, and other publications.
I had no idea an English degree was so versatile. What the hell am I thinking, looking for a job teaching literature to schoolchildren when I could have gotten a job with the Treasury or a hedge fund instead?
Peter Suderman is an associate editor of Reason magazine, where he writes regularly on health-care, tech policy, and pop culture.
Before joining Reason, Suderman worked as a writer and editor at National Review, the Competitive Enterprise Institute, FreedomWorks, Doublethink, and Culture11. His writing has appeared in the Wall Street Journal, the New York Post, Newsweek.com, the Atlantic.com, the Washington Examiner, the Washington Times, The New Atlantis, The American Conservative, the Orange County Register, and numerous other publications. He lives in Washington, D.C.
I know that when I need economic advice I always turn to the entertainment section, to read what the movie reviewers think of national health care. And I'm sure the fact that Reason is supported by biomedical and pharmaceutical companies has absolutely nothing to do with P. Suderman's ardent distaste for national health care. But let's get back to the missus:
The head of CMS already made it very clear that he didn't think many of the cuts in PPACA would be made--not the physician cuts, but the other cuts to providers. And if this is true, of course, then PPACA will not reduce the deficit.
I wish Paul Krugman would do some explaining--about the source of his differential skepticism. For all that I admire Paul Ryan's courage in arguing that there ought to be some relationship between inflow and outgo, I'll believe the cuts when I actually see them. Which is the same way I feel about health care reform.
And lo, Megan McArdle's wish was Paul Krugman's command, for look at this:
August 7, 2010, 10:46 am CBO On Health Reform
I keep being asked whether a careful look at the CBO analysis of health reform would reveal whoppers comparable to the analysis of the Ryan roadmap. The answer is no.
Menzie Chinn had a good piece on this. A lot of the complaining involves the “doc fix”, the routine increases in Medicare payments required because the law consistently sets those payments too low. But that’s a fundamental logical fallacy. It’s true that the cost of the doc fix isn’t in the CBO score; that’s because it would have happened whether or not health reform passed. It’s not an incremental cost.
What complaints might you make about the scoring? Most of it is completely reasonable — for example, saying that we can save money by eliminating overpayments to Medicare Advantage, and that aid to hospitals that treat a lot of uninsured patients can be reduced once almost everyone is insured. The one thing you might worry about is the projected reduction in fee-for-service payments relative to baseline; achieving that would require that efficiency improvements thanks to evaluation of medical procedures for effectiveness actually materialize.
I think they will, and there’s a good chance that cost savings will be substantially larger than projected. But even if they aren’t, Menzie has it right: even if you discount the entire projected savings from lower payments, you still end up with an almost deficit-neutral bill.
The point is that while you can quarrel with some of the estimates — in both directions! — there’s nothing remotely comparable to counting only the deficit-reducing measures while taking the deficit-increasing measures off the table, or assuming drastic cuts in real per capita spending without a hint of how these are to be accomplished.
We will look at the assessments in our next post or posts, to judge for ourselves who understood what he or she read and who didn't. Most people are far too busy to break down multiple posts over multiple sites and must use a snap judgement regarding whom to believe. Unfortunately, authoritarians on the right will be more swayed by McArdle's appeal to authority than by Krugman's proven track record, which might not be infallible but is usually logical and fact-based.
Just because someone says something it doesn't mean it's true. We all know that and yet continue to trust people with bad track records if they say what we want to hear--that We are right and They are wrong.
*(It is Day 17 in the Countdown To Doom.)