The Corner

Wonk City

In a rather amazing post on the White House blog, President Obama’s OMB director, Jack Lew, comes to the defense of the original Boehner bill, arguing that its use of the January (rather than March) CBO baseline was in line with what all the negotiators had agreed to throughout the process, and therefore insisting that in fact the Boehner bill should be scored as cutting $1.2 trillion and not $850 billion. He’s wrong, I think, but in a revealing and important way. Lew writes:

While we disagree with the approach that Speaker Boehner chose to take in this bill, there is one thing that we all still agree on, and that is the size of the problem. Both the House Republican budget proposal unveiled by Congressman Ryan on April 5 and the President’s fiscal framework that he introduced on April 13, set as our goal deficit reduction of $4 trillion. Since both of these plans were introduced before the agreement on appropriations for FY 2011, the baseline used for them did not reflect the spending cuts enacted this year in that legislation. Indeed, throughout our weeks of talks, all parties have worked off a January baseline because we all recognized that we needed to start from the same place.

 

That is why it would be confusing to judge the current proposal’s savings from the “adjusted March 2011 baseline” which CBO released in May. Conveniently, CBO notes the January baseline numbers in its analysis, and pegs the savings from the Boehner plan at $1.1 trillion. Furthermore, an additional adjustment was also assumed in the talks for the projected costs of Pell Grants under a special Congressional rule. That adjustment brings the savings up to $1.2 trillion.

 

Don’t get me wrong: there is a lot in Speaker Boehner’s plan that we do not like and actively oppose. But, as this debate continues and intensifies in the coming days, it’s important that we compare apples to apples, and make sure that we are all understanding the facts.

This doesn’t really make sense, of course. The March CBO baseline is more recent and current than the January one, and it makes sense to use that one now, even if the Biden talks and subsequent negotiations used an earlier baseline (which led the architects of this bill, working off their prior efforts, to do the same). Republicans are right, therefore, to be re-writing their bill to match the later baseline. 

 

But the more interesting question is why would Jack Lew write this, and essentially defend Boehner and his bill? I think the most plausible reason is that Democrats have just realized that the Reid bill, which the White House is backing, has made the same mistake, so that Reid’s cuts would also be scored as lower than its authors claim by CBO (probably at exactly the same level as the original Boehner bill). With House Republicans accepting CBO’s correction and re-writing their bill with deeper cuts to suit the later CBO baseline, Reid’s bill suddenly becomes a much weaker player in all this unless he also makes deeper cuts, which the Democrats are obviously not inclined to do.

 

In that sense, this baseline confusion could well strengthen Boehner’s hand. He has another chance here to design the bill in a way that addresses some of the concerns that House conservatives have raised today—that is, in a way that relies less on back-loaded caps, and that more generally just has effectively deeper caps but on its face is the same bill at the same levels that congressional leaders informally agreed to over the weekend. The same structure and the same level of cuts, but using the later baseline, gives him a chance to produce a stronger bill but one that should have no less of a chance of shaping the Senate debate and the ultimate outcome if it passes the House.

 

Boehner is right to use the opportunity to re-write the bill, and hopefully his team will re-write it along these lines. Reid may have no choice but to follow. And whether he does or not, the debate will have taken a rightward step that makes passage of the Boehner bill even more appealing and important…and perhaps also more likely.

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