July 17, 2025 • 9 mins
It’s reasonable to believe that the CBO has overestimated the debt and deficit impact of the OBBA.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
You have questions, Brian has answers. It's time for today's
Q and A of today. This is the Brian mud
Show Today's Q and A. How accurate is CBO scoring?
Speaker 2 (00:15):
This is brought to you by Melissa and Ashes check
mark collections each day.
Speaker 3 (00:18):
Future and listener questions sent by one of these methods.
Speaker 2 (00:21):
You may email me Brian Mud at iHeartMedia dot com,
hit the up on social at Brian Mud Radio Me.
Also use the iHeartRadio talk back feature. I would love
it if you would love us, if you'll go into
the app, make us your number one preset, and then
the Brian Mudshow podcast number two preset that we were
always there for you for free on demand.
Speaker 3 (00:38):
Nice and easy. Happy day.
Speaker 2 (00:40):
And while you're in there, look for a little microphone
button too, see it, tap it You may lay down
a message right there, maybe for a future A Q
and A.
Speaker 3 (00:48):
Today's note? Is this very nice one? I appreciate Brian.
Speaker 2 (00:51):
I continue to enjoy the benefit of your insights and
analysis of important issues. Thanks so much for what you
do so well well, thank you for being there. My
question is as follows, The CBO scores the fiscal impact
of many bills. The most recent score is that the
One Big Beautiful Bill will result in a two point
four trillion dollar increase to the federal deficit it for
(01:13):
ten years. Of course, there are countless assumptions that go
into these projections. If we look at Obamacare ten years ago,
the CBO projected a one hundred and thirty seven billion
dollar reduction in the federal deficit for twenty sixteen through
twenty twenty five. My questions are, is there a credible
study that reveals the true impact on the deficit from Obamacare?
(01:33):
Did it really reduce the deficit or did it increase
the deficit?
Speaker 3 (01:36):
And by what amount?
Speaker 2 (01:38):
Along the same line, based on your analysis, is the
CBO projection on the One Big Beautiful Bill or any
other CBO projection credible. Okay, it's a great question, And
though it's not the easiest to answer either aspect of
it the CBO's record on scoring of the Not So
Affordable Care Act or projecting their credibility as a pertaining
(02:00):
to the recently one One Big Beautiful Bill Act that
was signed, I do have info that provides likely answers,
and I'm going to start with the CBO's record on
estimating the impact of Obamacare, and answer to your question
about whether there's a credible study on the deficit impact
(02:21):
of the ACA, the answer is yes. In twenty eighteen,
just one year after the CBO rescored the tenure impact
of the ACAS as likely to reduce the deficit by
one hundred and thirty seven billion.
Speaker 3 (02:35):
As you noted, there was.
Speaker 2 (02:37):
A study from the Mercitas Center at George Mason University
provided altogether different results.
Speaker 3 (02:44):
They saw things very differently.
Speaker 2 (02:45):
According to the study, the ten year impact of the
ACA would be an increase of quote, at least three
hundred and forty billion dollars to federal deficits over the
next ten years and more than one point one five
trillion to net federal spending. Big difference than budget deficit reduction. Right. So,
(03:07):
in explaining the vast difference between the studies findings and
the CBO scoring, they address this head on. The author noted,
under existing scorekeeping conventions, CBO must evaluate the healthcare law
relative to a specific hypothetical budget baseline scenario. That point
of comparison differs from actual law in some important respects.
(03:31):
The score keeping convention dates back to the nineteen eighty
five Deficit Control Act, and represents neither actual law nor
historical practice. In contrast, this study asked and answered how
the healthcare law has changed the federal fiscal situation relative
to actual prior law. It specifically takes into account the
(03:53):
payments that Medicare would be allowed to make both before
and after the passage of the okay. So the straightforward
answer may still sound a bit confusing, but the best
way to think about the differences could be explained by
the CBO adhering to dated standards. Basically, the CBO hasn't
(04:14):
changed with the times, reflecting the impact of actual law
as mentioned by the study, or practical law as in
the practical application of laws. And this is instructive as
we're talking about a megabill scoring like the one big
potentially esthetically policing bill or the one big Cute.
Speaker 3 (04:32):
Act as kind of cute.
Speaker 2 (04:34):
The one big kind of cute Act as Joel refers
to it now, So you might imagine the if the
CBO is using an outdated scoring process for a healthcare law,
it's likely to be off base with overall scoring too.
So about that to the Congressional Budget Office's credit, While
they're often wrong in their projections, they're self reflective. So
(04:58):
every year the CBO produces a report entitled the Accuracy
of CBO's Budget Projections for a fiscal year, and then
whatever the fiscal year is, So the most recent report
comes down each January. So we got it this past
January for the twenty twenty four fiscal year. And according
to the CBO's findings, they underestimated revenues to the federal
(05:19):
government by one percent, but they also underestimated outlays by
six percent, So the net effect was underestimating the federal
deficit by one point one percent for the year. How
about the year before that was much worse. They were
off by three point nine percent. So you get the point.
(05:39):
When you look at where the historical errors have been greatest,
you see a theme. The CBO tends to provide rosier
debt and deficit assessments than actually ends up happening. And
that might sound particularly alarming when you consider that the
CBO has scored the One Big Beautiful Bill Act as
adding trilli and debt over the next ten years. There's
(06:03):
a big old butt, however, one with two t's. I'm
looking back at the CBO scoring record. I was able
to find one window of time since nineteen eighty five
in which the CBO overestimated the debt and deficit impact
of a significant piece of legislation. What do you think
(06:24):
that might be? What was the one that they actually
got it wrong going the other way where they said
it was going to be much worse for debt and
deficit spending than projected. It happened to be none other
than President Trump's twenty seventeen Tax Cutting Jobs Acts. The
original CBO projection for the impact of the TCJA over
(06:44):
ten years, which was twenty eighteen and twenty twenty seven,
had the law adding two point twenty nine trillion dollars
to the federal debt. However, when it was rescored most recently,
with the impact of the first seven law of the
law considered, the deficit impact had been lowered to one
(07:06):
point eight nine trillion. In other words, the law through
the first seven years of impact has produced three hundred
billion dollars less in deficits than originally projected. And that's
even more remarkable when you consider that this encompass is
a period that included a once in a century or
more pandemic that obviously screwed all kinds of things up
(07:27):
royal the economy dramatically impacted debt and deficits. And yet
even then it came in three hundred billion dollars better
than CBO had projected. So the CBO overestimated the impact
of Trump's twenty seventeen tax because largely why because they
underestimated the impact they would have on economic growth and
(07:50):
thus the additional tax revenue produced by it. And if
you're taking a look at okay, so what about the BBB,
it is.
Speaker 3 (07:59):
Very likely they've done it again. And here's why.
Speaker 2 (08:02):
The CBO did say, yeah, you know what, this new
law making the tax cuts from twenty seventeen permanent, But
then with these new tax cuts and some of these
other policies, they will be pro growth. They did say
it would add to GDP net but only by one
half of one percent over ten years, not one half
(08:24):
of one percent every year. One half of one percent
more growth we would get because this pass over ten years.
By way of comparison, the Tax Cut and Jobs Act
was shown to have added more than that number, zero
point seven percent to GDP growth just within the first
year alone that it existed. Remember when Trump said we
(08:45):
can get growth back above three percent again, and people
laughed on them, and we did it so the last
time it did better in the first year than CBO
is suggesting this whole package is going to do over
a decade. Given these facts, it is very reasonable to
believe that the CBO has way overestimated the debt and
(09:06):
deficite impact of the One Big, Beautiful Bill Act.
You have questions, Brian has answers. It's time for today's
Q and A of today. This is the Brian mud
Show Today's Q and A. How accurate is CBO scoring?
Speaker 2 (00:15):
This is brought to you by Melissa and Ashes check
mark collections each day.
Speaker 3 (00:18):
Future and listener questions sent by one of these methods.
Speaker 2 (00:21):
You may email me Brian Mud at iHeartMedia dot com,
hit the up on social at Brian Mud Radio Me.
Also use the iHeartRadio talk back feature. I would love
it if you would love us, if you'll go into
the app, make us your number one preset, and then
the Brian Mudshow podcast number two preset that we were
always there for you for free on demand.
Speaker 3 (00:38):
Nice and easy. Happy day.
Speaker 2 (00:40):
And while you're in there, look for a little microphone
button too, see it, tap it You may lay down
a message right there, maybe for a future A Q
and A.
Speaker 3 (00:48):
Today's note? Is this very nice one? I appreciate Brian.
Speaker 2 (00:51):
I continue to enjoy the benefit of your insights and
analysis of important issues. Thanks so much for what you
do so well well, thank you for being there. My
question is as follows, The CBO scores the fiscal impact
of many bills. The most recent score is that the
One Big Beautiful Bill will result in a two point
four trillion dollar increase to the federal deficit it for
(01:13):
ten years. Of course, there are countless assumptions that go
into these projections. If we look at Obamacare ten years ago,
the CBO projected a one hundred and thirty seven billion
dollar reduction in the federal deficit for twenty sixteen through
twenty twenty five. My questions are, is there a credible
study that reveals the true impact on the deficit from Obamacare?
(01:33):
Did it really reduce the deficit or did it increase
the deficit?
Speaker 3 (01:36):
And by what amount?
Speaker 2 (01:38):
Along the same line, based on your analysis, is the
CBO projection on the One Big Beautiful Bill or any
other CBO projection credible. Okay, it's a great question, And
though it's not the easiest to answer either aspect of
it the CBO's record on scoring of the Not So
Affordable Care Act or projecting their credibility as a pertaining
(02:00):
to the recently one One Big Beautiful Bill Act that
was signed, I do have info that provides likely answers,
and I'm going to start with the CBO's record on
estimating the impact of Obamacare, and answer to your question
about whether there's a credible study on the deficit impact
(02:21):
of the ACA, the answer is yes. In twenty eighteen,
just one year after the CBO rescored the tenure impact
of the ACAS as likely to reduce the deficit by
one hundred and thirty seven billion.
Speaker 3 (02:35):
As you noted, there was.
Speaker 2 (02:37):
A study from the Mercitas Center at George Mason University
provided altogether different results.
Speaker 3 (02:44):
They saw things very differently.
Speaker 2 (02:45):
According to the study, the ten year impact of the
ACA would be an increase of quote, at least three
hundred and forty billion dollars to federal deficits over the
next ten years and more than one point one five
trillion to net federal spending. Big difference than budget deficit reduction. Right. So,
(03:07):
in explaining the vast difference between the studies findings and
the CBO scoring, they address this head on. The author noted,
under existing scorekeeping conventions, CBO must evaluate the healthcare law
relative to a specific hypothetical budget baseline scenario. That point
of comparison differs from actual law in some important respects.
(03:31):
The score keeping convention dates back to the nineteen eighty
five Deficit Control Act, and represents neither actual law nor
historical practice. In contrast, this study asked and answered how
the healthcare law has changed the federal fiscal situation relative
to actual prior law. It specifically takes into account the
(03:53):
payments that Medicare would be allowed to make both before
and after the passage of the okay. So the straightforward
answer may still sound a bit confusing, but the best
way to think about the differences could be explained by
the CBO adhering to dated standards. Basically, the CBO hasn't
(04:14):
changed with the times, reflecting the impact of actual law
as mentioned by the study, or practical law as in
the practical application of laws. And this is instructive as
we're talking about a megabill scoring like the one big
potentially esthetically policing bill or the one big Cute.
Speaker 3 (04:32):
Act as kind of cute.
Speaker 2 (04:34):
The one big kind of cute Act as Joel refers
to it now, So you might imagine the if the
CBO is using an outdated scoring process for a healthcare law,
it's likely to be off base with overall scoring too.
So about that to the Congressional Budget Office's credit, While
they're often wrong in their projections, they're self reflective. So
(04:58):
every year the CBO produces a report entitled the Accuracy
of CBO's Budget Projections for a fiscal year, and then
whatever the fiscal year is, So the most recent report
comes down each January. So we got it this past
January for the twenty twenty four fiscal year. And according
to the CBO's findings, they underestimated revenues to the federal
(05:19):
government by one percent, but they also underestimated outlays by
six percent, So the net effect was underestimating the federal
deficit by one point one percent for the year. How
about the year before that was much worse. They were
off by three point nine percent. So you get the point.
(05:39):
When you look at where the historical errors have been greatest,
you see a theme. The CBO tends to provide rosier
debt and deficit assessments than actually ends up happening. And
that might sound particularly alarming when you consider that the
CBO has scored the One Big Beautiful Bill Act as
adding trilli and debt over the next ten years. There's
(06:03):
a big old butt, however, one with two t's. I'm
looking back at the CBO scoring record. I was able
to find one window of time since nineteen eighty five
in which the CBO overestimated the debt and deficit impact
of a significant piece of legislation. What do you think
(06:24):
that might be? What was the one that they actually
got it wrong going the other way where they said
it was going to be much worse for debt and
deficit spending than projected. It happened to be none other
than President Trump's twenty seventeen Tax Cutting Jobs Acts. The
original CBO projection for the impact of the TCJA over
(06:44):
ten years, which was twenty eighteen and twenty twenty seven,
had the law adding two point twenty nine trillion dollars
to the federal debt. However, when it was rescored most recently,
with the impact of the first seven law of the
law considered, the deficit impact had been lowered to one
(07:06):
point eight nine trillion. In other words, the law through
the first seven years of impact has produced three hundred
billion dollars less in deficits than originally projected. And that's
even more remarkable when you consider that this encompass is
a period that included a once in a century or
more pandemic that obviously screwed all kinds of things up
(07:27):
royal the economy dramatically impacted debt and deficits. And yet
even then it came in three hundred billion dollars better
than CBO had projected. So the CBO overestimated the impact
of Trump's twenty seventeen tax because largely why because they
underestimated the impact they would have on economic growth and
(07:50):
thus the additional tax revenue produced by it. And if
you're taking a look at okay, so what about the BBB,
it is.
Speaker 3 (07:59):
Very likely they've done it again. And here's why.
Speaker 2 (08:02):
The CBO did say, yeah, you know what, this new
law making the tax cuts from twenty seventeen permanent, But
then with these new tax cuts and some of these
other policies, they will be pro growth. They did say
it would add to GDP net but only by one
half of one percent over ten years, not one half
(08:24):
of one percent every year. One half of one percent
more growth we would get because this pass over ten years.
By way of comparison, the Tax Cut and Jobs Act
was shown to have added more than that number, zero
point seven percent to GDP growth just within the first
year alone that it existed. Remember when Trump said we
(08:45):
can get growth back above three percent again, and people
laughed on them, and we did it so the last
time it did better in the first year than CBO
is suggesting this whole package is going to do over
a decade. Given these facts, it is very reasonable to
believe that the CBO has way overestimated the debt and
(09:06):
deficite impact of the One Big, Beautiful Bill Act.
Popular Podcasts
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.