Larry Lindsey, the first director of the National Economic Council under former President George W. Bush, defended his judgement that the Congressional Budget Office is "part of the swamp" on CNBC on Tuesday.
During the discussion on health care, Lindsey rebuked the CBO for being "consistently wrong" with its budget estimates, RealClearPolitics reported Wednesday.
Lindsey, an economist, is known for his controversial stance on the Iraq war budget in 2002. He shot down top Bush administration officials who estimated that the Iraq War would cost about $50 billion to $60 billion. Lindsey said the war could cost between $100 billion and $200 billion and was dismissed from the administration after a shake-up of the White House economic team later that year. The $200 billion estimate was later surpassed.
During the CNBC discussion with Donald Marron Jr., a former acting director of the CBO, Lindsey castigated the CBO for doing a "lousy job" of making estimates, particularly when it comes to health care reform.
"One of the biggest stumbling blocks, and I think this is the point that I sent you earlier, that we have a Congressional Budget Office that is really doing a lousy job of estimating things, particularly on health care reform," Lindsey said.
Lindsey explained why he is so critical of the CBO.
"A little bit of history here," Lindsey said. "They were way off in estimating the reforms, the benefits of the reforms in Part D, Medicare. When Obamacare came in, they estimated that by 2017 we would have 23 million people in the exchanges. We actually have 10 million people in the exchanges."
"In 2015, when they estimated what was going to happen as a result of a repeal of Obamacare, outright repeal, they said uninsured will go up by 22 million," Lindsey continued. "Well, we have something that is far from outright repeal. We have literally hundreds of billions of dollars in subsidies in the Senate bill, and lo and behold, they find it still is going to cost 22 million people their insurance."
He continued to explain the CBO's numbers, disagreeing with how the CBO classifies individuals who "lose insurance."
"And you know what the strangest thing is? They have a number in there that 15 million people are going to lose insurance because they're not required to get it. And that requires 5 million people dropping out of Medicaid," Lindsey said. "So the CBO really thinks that people are going to give up free insurance if they're not required to take it? The numbers, unfortunately, these numbers are getting in the way of sound public policy and we really need to sort of step back."
"Taking their numbers as gospel just like taking DoD numbers as gospel about defense spending is a really silly way to go," he added. "Although technically nonpartisan, the CBO by its very nature is part of the swamp."
"CBO is not part of the swamp," Marron responded, defending the organization he once directed. "The CBO is a bunch of very professional ... folks trying to do their best to figure out the effects of all the ideas Congress comes up with."
In addition to serving as acting director of the CBO in 2006, Marron was a member of the president's Council of Economic Advisers in the Bush and Obama administrations.
"They're carrying out God's work trying to inform policymakers about the tradeoffs that they face," he added. "Without something like the CBO, you'd be in a situation where people would be making up their numbers, quoting things out of context, and it's incredibly useful to have an organization that's trying to give us the big picture of what the effects of policy changes are going to be."
Lindsey fired back, asking Marron about what he sees as the CBO’s consistently inaccurate estimates.
"Don, wouldn't you agree that the CBO has been consistently wrong on health care? They have been," Lindsey said. "They have been consistently wrong for the last 15 years in all of their health care estimates. How is it that they can come up with the same number of uninsured when you repeal the law as when do you something like the Senate did which has billions of dollars in subsidies? It just doesn't make sense. It is not sensible numbers, period."
Marron responded that the estimates have in fact varied in some instances, arguing that the CBO analyzes each particular situation independently.
"It's simply not true that CBO gives you the same number regardless of what you send it," Marron said.
The friendly banter ended with a wager proposed by Lindsey.
"I'll bet you one thousand bucks for every million that they [the CBO] are under 49, and I will give you one thousand bucks for every million they're over 49," Lindsey offered. "If you're willing to take that bet, I'm willing to put my money where my mouth is."
It has not been confirmed whether Marron formally accepted the wager.