February 05, 2004

The Clown Show Continues: How Is Josh Bolten Like Andrew Fastow?

Budget watcher Stan Collender writes that if Eliot Spitzer had jurisdiction over OMB and HHS, Josh Bolten, "Tommy" Thompson and their political staffs would be on trial for fraud. Moreover, Bolten and company have taken OMB's analytical reputation--which we in the Clinton administration spent eight years rebuilding--and flushed it down the toilet:

Budget Battles (02/03/2004): The report... that the estimated cost of the first 10 years of the prescription drug bill has increased by 33 percent... to about $535 billion... should be formally and officially investigated. Did the Bush administration manipulate federal budget accounting to serve its own political needs?

Budget re-estimates are usually routine.... But... [this] revision was so large and happened so soon after the legislation was signed into law that it is hard to imagine that someone at the Office of Management and Budget [and many people at HHS] did not know when the bill was being considered.... When did OMB have even a hint that the cost would be far more than $400 billion? Did higher-ups in the administration squelch any such mention of that higher cost so that House Republican conservatives -- who held the bill's fate in their hands, were balking at $400 billion and almost certainly would have voted against the program if they had known the higher cost estimate -- could be persuaded to support it?...

The legislation was passed in late November... someone at OMB had to be working on a cost estimate while the bill was being considered. They would not have had time... if they had waited for the legislation to be passe... before beginning this complicated analysis... unlikely that the cost estimate... would have been left to an unsupervised... examiner. Her or his supervisor, and probably at least the supervisor's supervisor, would have been involved in some way....

[T]his is the latest in a series of revisions that make it hard to take OMB's numbers... seriously.... The increased cost estimate for prescription drugs is the equivalent of pouring jet fuel on the fire that has erupted over the past few weeks between the White House and conservative Republicans on increased government spending.... [T]he questions... are so important that everyone... should insist on as full an accounting as possible... congressional hearings and possibly a General Accounting Office investigation.

And OMB and the White House should be grateful that... Eliot Spitzer [doesn't] have jurisdiction.

Posted by DeLong at February 5, 2004 07:10 AM | TrackBack | | Other weblogs commenting on this post

I like what someone said in another thread: Lying is their core competency.

Posted by: Tim on February 5, 2004 07:49 AM


Point is, there is a line between massaging the numbers and lying. Some specific person crossed that specific line in this specific case. Journalists could be asking: who, what, (we know why), when, where...

Posted by: Matt on February 5, 2004 08:01 AM


Government accounting is an oxymoron. The fact that future liabilities for social security and medicare are off balance sheet is such a huge distortion that everything else pales by comparison.

Posted by: Arnold Kling on February 5, 2004 08:04 AM



An oxymoron is quite different from a contradiction -- although the component parts of an oxymoron are necessarily contradictory. The easy way to keep it straight is to remember that oxymoron is to contradiction roughly as synthesis is to antithesis, in the Hegelian sense of these words.

The destruction of the meaning of language is an early step toward slavery.

One flying prune.

Posted by: Granny Grammar, Prune-Faced Grammarian on February 5, 2004 08:40 AM



President's Budget Contains Larger Cuts In Domestic Discretionary Programs than Has Been Reported - 2/5/04

The budget books the Administration released this week omit information on the President's proposed funding levels for programs in years after 2005, but the OMB documents that underlie the budget show the Administration is proposing cuts in domestic discretionary programs that reach $50 billion a year by 2009.

Posted by: anne on February 5, 2004 08:57 AM


I have to wonder though, would the price difference have mattered much to Congress. They don't seem to have any problem spending money. What difference would a $100 billion make to them. Not much, I think.

That said, I agree that this administration was born and bred in the "cook the books" mentality that led to Enron. Rememer Cheney's and his ringing endorsement of Anderson becuase they go "over and above the just sort of normal by-the-book auditing arrangement."

par for the course

Posted by: section321 on February 5, 2004 09:03 AM


One of the larger crimes of Republicans in general and Bushies in particular is the systematic destruction of the reputation of excellent and dedicated public servants, such as OMB analysts. I don't think this is an accident, I think they regard the destruction of government as the cherry on top of the trillion-dollar giveaway sundae.

Posted by: CalDem on February 5, 2004 09:21 AM


One of the larger crimes of Republicans in general and Bushies in particular is the systematic destruction of the reputation of excellent and dedicated public servants, such as OMB analysts. I don't think this is an accident, I think they regard the destruction of government reputation as the cherry on top of the trillion-dollar giveaway sundae.

Posted by: CalDem on February 5, 2004 09:22 AM


Two points:

1) Whenever the Clinton Administration did a Social Security reform proposal, they would have the Social Security actuaries cost it out _ahead of time_ so they would know the impact on Trust Fund solvency, etc. I find it inconceivable that Bush administration didn't do the same thing here with the CMS actuaries (Centers for Medicare & Medicaid Services) before the President actually signed the bill.

2) The chief CMS actuary, Rick Foster, who is ultimately responsible for the cost estimates, is an extremely stand-up guy who cannot be pushed around. He's a civil servant who can't be fired for political reasons, held the same role in the latter years of the Clinton administration, and knows that he would trash his reputation forever if he caved in to political pressures. So there's no way he would have fudged the estimates.

So I guess that leaves one option:

The Bush administration made a political decision that they didn't want a public cost estimate. So they either told CMS not to do one (extremely unlikely), or they did one, and told CMS not to publicize it (much more likely). The actuaries likely would view the latter path as a political decision, and therefore wouldn't have raised a big fuss about it, although I'm sure they would have disapproved.

Posted by: Dave on February 5, 2004 09:40 AM



Yes, indeed. Let us not forget that the (self-proclaimed) party of small government makes denigration of public servants a big part of their anti-government rhetoric. Say these things often enough and you begin to believe them. When OMB staffers disagree with their bosses, well what do you expected from narrow-minded, lazy, same-old-analysis-ever-time hacks? No need to listen.

Posted by: K Harris on February 5, 2004 09:51 AM


If you go to the post on the CBO response to the president's budget numbers for prescription drugs, the CBO points out that OMB is using different assumptions that account for the difference(mostly numbers of enrollees). Quite frankly, CBO assumptions make more sense. The question is why OMB did not notice that its numbers were so out of line with CBO and initiate a conversation on model assumptions? At the same time, Bush administration officials seemed to be caught off guard that their own numbers were 30% higher than the CBO.

Maybe it really is as Cheney claims, "Deficits don't matter." If deficits don't matter, then the budget really does not matter. All that matters is who gets what piece of pie and who pays the bill. The diner will not go out of business and the next owner can clean up the mess.

The budget matters even less if you are a supply side ideologue that thinks the numbers and the models are all wrong and truly believes that the tax cuts will evenutally boost the economy so that revenues will swamp the deficit. If you believe that, why should deficits matter?

Posted by: bakho on February 5, 2004 10:36 AM


But the CBO is standing by its $400 billion projection. Its staff seems to have identified the differences in the assumptions they have made v. the assumptions made in the $530 billion recent estimate. Two divergent thoughts. The White House and CBO staffs have legitimate differences of opinion on these matters - which would be at least a pleasant surprise that the WH staff was finally free to publish good work. Or the WH told its staff to fudge its numbers upwards, which would really be a shock. Then again, maybe Bush wants to paint a bleak picture now that he has tax cuts in place and he wants to squeeze domestic programs? It all does leave me scratching my head for an explanation.

Posted by: Harold McClure on February 5, 2004 10:46 AM


Almost all of the difference between the Bush administration and CBO estimate is due to differences in the methodology used to project the cost of the Part D Drug benefit and the Medicare Advantage program

The assumptions made in the CBO estimates appear to be more reasonable.

1) Higher participation rates are assumed in the Bush administration's estimates. CBO based the 87% on historical experience with Medicare beneficiaries in other programs. Who knows what the Bush administration's participation rates were based on?

2) The Bush administration estimate assumes full participation immediately. This is unrealistic and never happens with the phase-in of a new program. CBO ramps up over three years.

3) The Bush adminstration uses per capita costs 4% high than CBO. I don't know why since they are both supposedly based on basline estimates of Medicaid spending on waiver programs to provide prescription drugs.

I don't know why the Bush administration would want to alarm people by suggesting that the initial CBO estimates were too low, but,at first glance, the methodology used by CBO seems to be better.

Posted by: Kosh on February 5, 2004 12:52 PM


Umm- " I don't know why the Bush administration would want to alarm people by suggesting that the initial CBO estimates were too low". Of course the CBO estimates are better because no one in the WH cares about their own budget numbers.

You miss Collender's point. Bush administration developed their numbers before the legislation passed. Collender is the #1 budget champion. Collender believes they cannot have left a number so important to an unconnected underling. In Stan's view the budget is too important to have done that. But Collender is wrong. That is exactly what they did. Collender is also wrong in believing that the budget numbers are of importance to the top of the administration.

The political people and Bush himself were unaware of their own budget numbers. They used whatever the CBO was using and NEVER BOTHERED TO CHECK THEIR OWN NUMBERS.

Bush then blames Snow and Bolton for not telling him his own numbers were different. Meaning they were ASLEEP AT THE WHEEL and did not bother to check either. That can only means that they place little importance on their own budget numbers.

Collender thought they were doing bait and switch. Collender is wrong. He gives them too much credit.

Brad is correct. It is a CLOWN SHOW. This is not Clinton, the policy wonk. This is Bush. He does not even know the numbers in his own budget. Of course, he didn't know the numbers in his own tax cut during the debate with Gore in 2000 either. Why should he need to know the numbers now??

Brad posts a memo from Larry Lindsey saying that no one from the campaign ran the Bush tax cut numbers through a revenue model. In 2001, Bush is about to make a decision to go ahead with tax cuts. Lindsey is not sending O'Neill chickens*it. Lindsey is is a downright PANIC because he has to meet with Bush to decide how much tax cut Bush can afford and not deficit spend, but Lindsey does not have the numbers.

Bush ends up with too much tax cut, but lucky for him, Congress scales it back just enough to balance. Just plain luck because the decision to go ahead was made without bothering to formally analyze the numbers.

My conclusion is that Bush has a piece-meal policy process that does not consider the effects that one policy will have on another. They have no long term strategy for the country. Every decision fits a short term political calculus. If they had a long term strategy the budget would be a priority. For Bush, the budget is a political tool.

It is clear that the CEO president does not understand what the economists are telling him or for that matter, understand why a president would need economists. "Hey, move those academic guys out of the WH!!" "Budget? We have a budget?"

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