Larry Lindsey: Congressional Budget Office "Part Of The Swamp"

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Larry Lindsey, the first National Economic Council Director under President George W. Bush, called the Congressional Budget Office (CBO) "part of the swamp" in an appearance on CNBC Tuesday to talk about tax reform and the Senate health care fight. Lindsey admonished the actuarial arm of the legislative branch for being "consistently wrong" in their budget estimates when it comes to healthcare.

Lindsey is known for shooting down former Secretary of Defense Donald Rumsfeld's estimate that the Iraq War wouldn't cost more than $50 billion. Lindsey, in 2002, said the war could be a $200 billion expenditure. Lindsey was soon dispatched from the administration after going public with his assessment.

"The economy needs supply side oriented tax reform. It's the only way the economy is going to grow going forward. It's necessary to get investment restarted. It's necessary to get productivity up. And if they don't do that, they won't get the growth that is estimated in those numbers and so growth is a necessary it's usually not sufficient but it's a necessary condition for achieving any kind of budget control," Lindsey said.

The economist lambasted the CBO for doing a "lousy job" of estimating things, particular health reform."One of the biggest stumbling blocks and I think this is the point that I sent you earlier, that we have a Congressional Budget Office that is really doing a lousy job of estimating things, particularly on health care reform," Lindsey said.

"Taking their numbers as gospel just like taking DoD numbers gospel about defense spending is a really silly way to go," he said.

"A little bit of history here," Lindsey began, "they were way off in estimating the reforms, the benefits of the reforms in Part D, Medicare. When Obamacare came in, they estimated that by 2017 we would have 23 million people in the exchanges. We actually have 10 million people in the exchanges.

"In 2015, when they estimated what was going to happen as a result of a repeal of Obamacare, outright repeal, they said uninsured will go up by 22 million. Well, we have something that is far from outright repeal. We have literally hundreds of billions of dollars in subsidies in the Senate bill and lo and behold they find it still is going to cost 22 million people their insurance. And you know what the strangest thing is they have a number in there that 15 million people are going to lose insurance because they're not required to get it. And that requires 5 million people dropping out of Medicaid. So the CBO really thinks that people are going to give up free insurance if they're not required to take it? The numbers, unfortunately, these numbers are getting in the way of sound public policy and we really need to sort of step back, CBO is fine. But taking their numbers as gospel just like taking DoD numbers gospel about defense spending is a really silly way to go," he said.

Lindsey is asked to expand on the following comment he made about the "the swamp" including the CBO: "Although technically nonpartisan the CBO by its very nature is part of the swamp."

"CBO is not part of the swamp. The CBO is bunch of very professional... folks trying to do their best to figure out the effects of all the ideas Congress comes up with," Donald Marron Jr., a former acting director of the Congressional Budget Office, said in response.

Marron was also a member of the President's Council of Economic Advisers in the Bush and Obama administrations.

"They're carrying out God's work trying to inform policymakers about the tradeoffs that they face," he added. "Without something like the CBO you'd be in a situation where people would be making up their numbers, quoting things out of context, and it's incredibly useful to have an organization that's trying to give us the big picture of what the effects of policy changes are going to be."

"Don, wouldn't you agree that the CBO has been consistently wrong on health care? They have been. They have been consistently wrong for the last 15 years in all of their health care estimates. How is it that they can come up with the same number of uninsured when you repeal the law as when do you something like the Senate did which has billions of dollars in subsidies? It just doesn't make sense. It is not sensible numbers, period," Lindsey said.

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