How the CBO would estimate your grocery list
So long as I'm recommending Lori Montgomery's profile of CBO's Phil Ellis, this is a pretty good explanation of how the CBO does its work:
Much of what the CBO does is akin to trying to forecast your grocery bill in 10 years. First, it establishes a baseline: Your history of spending $200 a week at Safeway projected into the future with adjustments for inflation and expected demographic trends (i.e., more children, larger pets). Then it factors in proposed policy changes: Say you want to eat only organic and enroll your husband in Jenny Craig. Costs for meat, produce and dairy would go up, but spending on toothpaste and Saran Wrap would be unaffected. Meanwhile, the extra $70 a week for diet food would be partially offset by lower spending on Cheetos and frozen pizza.
The CBO has plenty of data to help make such calculations, including projections for inflation and the price of organics. But it would have to make some judgment calls: Is it reasonable to assume that Krispy Kremes are off the table? Or is it safer to budget for a dozen doughnuts once a quarter? And even the most careful estimate can be blindsided: What if the baby you projected to arrive in 2012 turns out to be twins in 2010?
The other piece of this is that CBO can't call you a liar, even if it thinks you're lying. Imagine you're something of a food faddest. You've gone on Atkins and tried to eat local and attempted to rid the house of butter. But it never sticks: Within three or four months, you're always back to normal. Or maybe your husband never abides by the diet, even if you hew closely to its limits. The CBO might know that history, but they can't take it into account. It's not for them to tell you what you'll do.
That's pretty much what's been happening with Medicare doctor payments (also known as the "sustainable growth rate"): Congress has set a schedule for itself, and even though it keeps exempting itself from that schedule, CBO has to pretend that Congress will make incredibly draconian cuts in doctor's payments any day now. Everyone knows it's absurd, but it's a convenient fiction for Congress. Jon Cohn has more on that.
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