The Center for American Progress is touting a budget identity:

According to the Congressional Budget Office, the Affordable Care Act is fully funded, strengthens the Medicare trust fund, and reduces the federal deficit.

After reading the CBO report, I wonder about this characterization. The legislation states that provider payments will be reduced. The CBO assumes that this will happen. But of course reality often intrudes, which is why the CBO constructs an “alternative baseline” designed to reflect a realistic assessment of the budgetary landscape will evolve in the future. Kevin Drum explains:

If, for example, Congress “fixes” the alternative minimum tax every year without fail, then CBO assumes it will continue doing this even if Congress never permanently changes the underlying law. Ditto for several other things that Congress tends to deal with on an ad hoc basis every year.
But this year CBO has done something new: it has assumed that virtually none of the cost savings in the recently passed healthcare reform bill will take effect.

This is presumably new because PPACA is new. Drum cites Brad DeLong’s colorful objection, in which he presents the views of a stylized Democrat and a stylized Technocrat. First, the Democrat:

We understand the current-law baseline–it says that PAYGO and health-care reform do what their enabling laws say that they do, and that they bend the deficit curve, and get us to near balance. They are, as CBO agrees, the largest long-run deficit-reducing policy changes in American history. We are proud of that–the task now is to make sure that the health-care spending restraint they apply is smart restraint, that cuts fat and not meat and bone out of our health care system.
But the alternative fiscal scenario… We don’t understand. It’s as if CBO has decided that every single cost-saving and revenue-increasing provision of the PPACA is going to be repealed on December 31, 2020 at the end of its ten-year budget window, and that thereafter we are going back to pre-March business-as-usual. I understand that the alternative baseline is supposed to take current law and add to it those legislative changes that CBO believes will have overwhelming congressional support when they come to the floor. But how is total repeal of the cost-saving and revenue-increasing provisions of the PPACA supposed to have overwhelming congressional support? Yes, there is the example of the Medicare doc fix. But the doc fix is an anomaly–nearly every other payment change over the past generation has, once enacted, stuck and not been repealed due to political pressure.

Describing the doc fix as an “anomaly” seems odd, in light of its significance. But of course this is the view of the partisan Democrat, and so that is to be expected. The Technocrat writes:

This alternative fiscal baseline scenario… it clearly needs to be better motivated. It’s no longer what it was originally–that we all know that the R&D tax credit and the Medicare doc fix are permanent policies, and we all know that the only reason congress extends them for a year at a time and only a year at at time is that threatening businesses and doctors with their expiration is a marvelous fund-raising tool, so let’s be honest budgetarily and include in our baseline all the things that we inow congress will do because congressional support for the underlying policies is overwhelming.
Now the alternative fiscal scenarios is… something else. There is now an 8% of GDP wedge between the 75-year fiscal balances as calculated by current law and by the alternative scenario. Lots of the changes from current law in the alternative baseline are things that do not have overwhelming congressional support now, and that it is not clear why anybody should think that they will have overwhelming congressional support in 2020 let alone 2050.
The alternative baseline is now based on judgments about the strength of the doctors’ lobby and about the configuration of American rent-seeking politics rather than being merely an attempt to construct an honest baseline. It’s not clear to me that CBO has the expertise to make such judgments. It is clear to me that if it is going to make them, it needs to back tyhem up much more comprehensively than it has done. [Emphasis added.]

This is peculiar. What exactly is the difference between asserting that the R&D tax credit and the post-BBA97 Medicare doc fix are permanent policies on the basis of a clear-eyed understanding of the strength of the doctors’ lobby and the configuration of American rent-seeking politics and asserting that we’re likely to see a new post-PPACA10 “doc fix,” given that the chief Medicare actuary has strongly suggested that the planned reductions in Medicare expenditures risk “jeopardizing access to care for beneficiaries“? Historical evidence strongly suggests that upping inadequate provider payments will still prove politically irresistible in ten years.

One almost gets the impression that The Technocrat doesn’t understand that the parallels between the two realistic assumptions are actually very strong — indeed, you’d almost think that The Democrat and The Technocrat were the same person.

So let’s review: an alternative baseline that makes the Obama administration’s vitally politically important assumption that the doc fix is settled policy is acceptable. But an alternative baseline that casts doubt on the political realism of planned Medicare cuts is not acceptable.

Drum continues his post:

The CBO does itself a disservice if it starts getting too heavily involved in political calculations like this. They’ve already made their best estimates about what effect healthcare reform will have on the federal budget, and if they want to change those estimates they should do so openly. But simply assuming that a future Congress will kill all cost savings measures with no special evidence to back that up? That’s just not their job. CBO is supposed to be an honest broker, not a Washington Post op-ed columnist.

The trouble is that this would mean that the entire notion of an alternative baseline would have to be abandoned. It’s not clear that Drum fully appreciates the limitations of the CBO’s methodology, and how this limitations are a necessary sacrifice given the need to fast, coherent analysis. The methods employed by the CBO are designed to generate an internally consistent portrait of the impact of a particular piece of legislation relative to alternatives. This means imposing somewhat arbitrary limits, including no effort to assess the macroeconomic impact of implicit marginal tax rates, etc.

I agree that we could use a broader assessment of the impact of PPACA. I don’t think it’s fair to criticize CBO for issuing an analysis during the legislative debate that reflected this institutional limitations. It’s also unfair to criticize them for constructing a new alternative baseline based on their assessment of the relevant political and historical realities. That is a fundamentally different job from scoring the legislation.