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Comprehensive Health Care Reform Is the Key to Our Economic Future

Health care reform is crucial, but a bill's cost is central to whether it's enacted. Luckily, Obama's budget guru knows how to change the price tag.
 
 
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"The history of health reform," explains Sen. Ron Wyden of Oregon, "is congressmen sending health legislation off to the Congressional Budget Office to die." That's not the history you often hear. Budget analyses do not make for gripping headlines. Editors want heroes and villains, narrative arcs and telling anecdotes. They do not want numbers. They do not want bureaucracies. But numbers, and the bureaucrats who decide them, can be quietly decisive in whether major policy reform lives or dies.

In the coming years, no bureaucrat will be as decisive as Peter Orszag -- the former director of the Congressional Budget Office who is now the head of Barack Obama's Office of Management and Budget -- and few bureaucracies will be as important as the CBO and the OMB. For every major policy and legislative fight, those organizations will decide the Number: the official price tag of a government program. And you can't do anything without the Number.

The work of government is fundamentally the work of raising money and spending it. But the basic questions -- how much money taxes will raise and how much money policies will cost -- are unanswerable. Imagine the difficulty of trying to price out a health-care plan that only exists on paper. What medical technologies will emerge in coming years? Will there be a recession that forces more Americans onto government subsidies? Will doctors stop overprescribing antibiotics? Will the next flu season be a bad one? Enlightened bureaucrats can take their best guess, but it is only a guess. Even so, you need the Number. Without the Number, you can't put together a budget. If you can't put together a budget, you can't run a government. So Washington operates atop a tacitly agreed-upon imprecision: The Numbers may be wrong, but they need to be accepted. Which means someone credible has to be responsible for them. In Congress, that someone is the CBO.

"In this town," says Henry Aaron, a senior economics fellow at the Brookings Institution, "it's not infrequent to hear people say it doesn't make any difference what it really costs. It only matters what CBO says it costs." It's the world's most consequential guessing agency. And over the past two years, Peter Orszag has been trying to ensure that it guesses in favor of health reform, rather than against it. the congressional budget office is the byproduct of a heated dispute between Richard Nixon and the 93rd Congress. Nixon wanted more federal money for defense than Congress was willing to appropriate. So he simply refused to spend the money Congress had earmarked for its own priorities. In budget lingo, he "impounded" it. By 1973, Nixon had held up about $15 billion in spending. Congress was not amused, and it passed a bill called the Congressional Budget and Impoundment Control Act of 1974. The legislation outlawed Nixon's gambit and, as a further gesture of disgust with the administration's chicanery, vastly strengthened Congress' institutional capacity to influence the budget.

Until then, Congress' role in the annual budget was responsive. The president proposed, and Congress critiqued. In 1974, that changed. The bill created the Budget Committees, ensuring, for the first time, that Congress would build a yearly budget of its own, asserting its priorities directly. That meant Congress would need to determine the cost of its own programs. Thus, it created the Congressional Budget Office.

Alice Rivlin, now a senior fellow at the Brookings Institution, was the first director of the CBO. But it wasn't an easy hire. "The Congress did something that was not very smart," Rivlin says, "and that they never did again. They had two search committees for the director, one in the House and one in the Senate." Rivlin was the Senate's choice. The House preferred Sam Hughes, then the deputy controller at the Government Accounting Office. "The chairman of the House Budget Committee was a congressman from Oregon named Al Ullman," Rivlin recalls. "And he was very committed to Sam Hughes, and I think rather sexist. He said over his dead body was a woman going to run this organization. People said things like that in those days."