There are many reasons to be unhappy with the Congressional Budget Office, but the least persuasive reason has to be that the CBO’s projections “stop us from channeling spending toward needed public works.” Unfortunately, that’s the one Envestnet head of global strategy Zachary Karabell leads with in a long opinion piece in the Washington Post. The problem, Karabell argues, is that CBO projections are not always very accurate, and the nonpartisan agency’s claims about how much government programs will cost make people worry about those programs. As a result, we are “incapable of assessing the savings and other potential benefits of certain types of spending.”
Karabell, who has a new book out about macro statistics, is well situated to underscore the weakness of CBO forecasts. I have not read the book yet, but it is said to be a sharp critical look at the Keynesian pseudoscience of calculating GDP, unemployment and other big statistics that seem authoritative but are in fact as bogus as the “wind chill factor” by which weathermen purport to tell you how the measurable temperature feels to a clothed human. That sounds like just the book we need in this era when nobody can quite quantify the full extent of our economic stagnation beyond noting that everything sucks.
Many paragraphs down in this article, there are some gems of statistical skepticism that presumably came from the book. The belief that “economic systems are like machines or scientific experiments” is a fiction. The CBO’s dire forecast of Medicare Part D’s cost has not yet come true. (It was supposed to cost kajillions but only cost bazillions.) The CBO can’t game out future legislative changes to government programs. Few long-term predictions of any kind ever come true. And the U.S. economy is too complex for any central authority to measure, let alone predict.
Karabell might also have mentioned that a strictly numerical habit leads to anti-contextual jpegs like this one, which at the moment has 26,000 likes on Facebook:
But, this being an opinion piece for the WashPost, the real argument is that government benevolence must not be constrained. According to Karabell, the trouble with estimating how much a new program will cost is that, at some unknown time in the future, it might make people hesitant to increase the rate of government largesse.
“[W]e have reached a point where we can maintain spending on entitlements and defense but have no creative or dynamic means to invest in the long-term future of the country at a national level at precisely a time when we need it dearly and when societies around the world are doing so heavily and actively,” Karabell writes. (I’ll give you a hint as to the forward-looking country Karabell names as an example: It’s that one between North Korea and Mongolia.)
So what shiny new spending initiatives have been blocked by those CBO sourpusses? Karabell reaches all the way back to the fabulous fifties, citing President Dwight Eisenhower’s Federal Aid Highway Act as the kind of thing the CBO might have talked down because of its $25 billion price tag, had the CBO existed back in those halcyon days.
OK, but the CBO has been around since 1974. Surely its dollars-and-cents focus must have doomed the creation of the federal Departments of Education and Energy? The CBO’s shortsighted idea of national greatness must be why Bill Clinton couldn’t push through Americorps, why the massive farm bills of 2005 and 2007 didn’t pass, and why every president since Ronald Reagan has been unable to pass economic “stimulus” packages of various sizes, right? Why I’ll bet that gloomy CBO is why Medicare Part D went down, the United States did not invade Iraq, and Obamacare ended up as just a beautiful dream.
No? All those things actually happened, you say? Then what is all this scrupulous, shovel-ready spending that the CBO has blocked? Maybe Karabell will name some in a future column. Until then, Washington’s excessive caution about spending your money is pretty far down on the list of things you need to worry about.