Newsletter Article | May 25, 2017

What's a CBO Score and Why Does It Matter?

Any article concerning a CBO score is required by law to include the word “arcane” so here it is: A CBO score is an arcane part of the legislative process in which a nonpartisan Congressional office, the Congressional Budget Office, filled with economists and number-crunchers, does a cost-benefit analysis on pretty much any significant bill introduced in Congress.  The analysis is supposed to be the authoritative estimate of what a bill will do and how much it will cost. The score is the dollar figure cost or the savings: how much money will be needed to fund a new grant program, make puppies tax-deductible, or revise the nation’s healthcare system.  Scores are usually projected over ten years, and it can be difficult to come up with an accurate estimate that far out.  Critics will mention that CBO isn’t always right. 

Most of the time Congress waits for CBO to complete its analysis of a bill before voting on the bill.  This approach is designed so that the analysis can inform the decision about which way to vote.  But sometimes the analysis is time-consuming, and sometimes the score is not expected to cast the bill in a flattering light.  So sometimes Congress proceeds to vote before the CBO score is released. 

The House voted on the American Health Care Act three weeks ago and the CBO score on the final version of that bill was released yesterday.  Some House members say that the final version of the bill isn’t much different from the earlier version that they did have a score for, which is correct.  The latest estimate is for 23 million people to lose health insurance in ten years, compared to 24 million in the earlier estimate.  The latest estimate for how much money would be saved dropped from $151 billion over ten years to $119 billion in the new estimate.   

So now we know the best projection for the bill the House voted on and is sending to the Senate.  Does that really matter?  Because the consensus is that the Senate will make a lot of changes to the House bill.  Changes are likely because the House bill really is not very popular, because millions of people would lose their insurance, and because not enough Senators will vote for it.

The CBO score, however, now plays an important role.  The bill the Senate writes must have, again for arcane procedural reasons, at least $119 billion in savings over ten years (the House bill’s score!) for it to pass with a simple 50 vote majority.  Otherwise it would need 60 votes and therefore some support from Democrats.  So now the Republicans in the Senate, thanks to the CBO score, know what budget target they have to meet to pass a bill with only Republican support and they can get to work on the specifics of how to get there.  Until yesterday’s score came out they were just theorizing.  And once the Republicans come up with a bill in the next month or so, it will get its own score and we will know the costs and benefits of the Senate version.  CBO scores: arcane but much better than guessing.  

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