The Corner

Peter Orzag Surprised by Rent-Seeking In Congress

There is an interesting profile of the Office of Managment and Budget’s director, Peter Orzag, on page one of the Wall Street Journal this morning. Because the growing resistance to the president’s health-care plan and its gigantic cost, the administration is sending its 40-year-old OMB director to Congress to convince lawmakers that costs won’t spin out of control.

I am actually quite sure that Orzag believes in his message. That’s why he is so stunned when lawmakers start telling him what their true priorities in this fight are:

The battle heated up in June, when Mr. Orszag visited Capitol Hill to discuss health care with a small group of House Democrats. The meeting started well, with one lawmaker after another echoing his message that spending controls were critical to any health-care overhaul, according to two administration officials.

Then one member said her top priority was winning higher payments for oxygen suppliers, the officials say. Mr. Orszag was taken aback. Officials had been trying for years to cut payments to suppliers of oxygen and other medical equipment, which critics say are inflated. Yet when a new competitive bidding process was set to take effect last year, industry supporters in Congress were able to delay the plan. They are still fighting to block changes.

Here is a suggestion to Mr. Orzag. Next time he goes to the Hill, he should first read the massive about of articles and books produce by public-choice economists. Gordon Tullock, James Buchanan, and others have devoted their lives to the study of lawmakers’ incentives and to the political process. What they found is that lawmakers are no angels.

Read the article here.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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