{"id":524455,"date":"2010-04-12T13:01:40","date_gmt":"2010-04-12T17:01:40","guid":{"rendered":"http:\/\/blogs.reuters.com\/james-pethokoukis\/?p=3654"},"modified":"2010-04-12T13:01:40","modified_gmt":"2010-04-12T17:01:40","slug":"is-elmendorf%e2%80%99s-cbo-too-pessimistic-or-is-orszag%e2%80%99s-omb-too-optimistic","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/524455","title":{"rendered":"Is Elmendorf\u2019s CBO too pessimistic or is Orszag\u2019s OMB too optimistic?"},"content":{"rendered":"<p>White House budget chief Peter Orszag thinks his old colleagues at the Congressional Budget Office are being too pessimistic over the potential budget savings of healthcare reform (via <a href=\"http:\/\/thehill.com\/homenews\/administration\/91527-orszag-cbo-underestimates-savings-from-obamas-healthcare-bill\">The Hil<\/a>l):<\/p>\n<blockquote>\n<p>&#8220;I think if anything, the deficit impact may well turn out to be larger than what was projected by the Congressional Budget Office for two reasons,&#8221; Orszag said at an event sponsored by the Economic Club of Washington.\u00a0&#8221;One, if you look at the history of projections on major pieces of legislation, they&#8217;ve tended to be too conservative rather than too optimistic,&#8221; he said. &#8220;And second, the scoring largely does not take into account this evolution toward paying for quality, which I think in this decade will begin to pay off.&#8221;<\/p>\n<\/blockquote>\n<p>Me: Interesting, the <a href=\"http:\/\/www.imf.org\/external\/pubs\/ft\/wp\/2010\/wp1062.pdf\">International Monetary Fund<\/a> thinks Orszag&#8217;s Office of Management and Budget might be too optimistic about its overall fiscal forecasts. This from the folks at <a href=\"http:\/\/www.economics21.org\/commentary\/health-care-bill-and-bond-markets\">e21<\/a>:<\/p>\n<blockquote>\n<p>The IMF working paper makes a compelling case that the Office of Management and Budget (OMB) uses unrealistically low interest rates in its forecasts of future debt and deficit levels, assumes too rapid a recovery, and overstates the speed at which countercyclical entitlement expenditures will fall in response to economic growth. As the IMF explains (page 14), \u201caging and health related spending are not the key drivers of this debt build-up.\u201d Indeed, policy choices are.<\/p>\n<p>Optimism is nothing new. As the IMF explains, \u201cthe past record of budget projections shows a strong tendency for \u2018optimistic\u2019 budget forecasts.\u201d With the exception of 1993 to 1997, OMB projections have underestimated the growth of deficits and debt. What\u2019s different about the Obama team\u2019s projections is the magnitude of their optimism. The IMF estimates that to stabilize debt below 70% of GDP would require a fiscal adjustment of about 3.5% of GDP. In nominal terms, that would require some combination of spending cuts and tax increases equal to roughly $600 billion in 2014 alone.<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>White House budget chief Peter Orszag thinks his old colleagues at the Congressional Budget Office are being too pessimistic over the potential budget savings of healthcare reform (via The Hill): &#8220;I think if anything, the deficit impact may well turn out to be larger than what was projected by the Congressional Budget Office for two [&hellip;]<\/p>\n","protected":false},"author":1063,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-524455","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/524455","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1063"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=524455"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/524455\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=524455"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=524455"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=524455"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}