CBO and IMAC

So, I just got the news, and clearly this kind of news does not break through the normal media channels, because it is kind of wonk-tastic. The tip goes to Ezra Klein, who has a great analysis.

The CBO has released a report discussing IMAC. OMB responded and there seems to be a fight brewing.

I love CBO, and I almost always defend them. However, in this instance, it has gotten weird, because CBO admits that it cannot plug in numbers, and yet seeks to do that. In some sense too it may be driven by a Congress trying to balance numbers.

Oddly too, the Administration's heartburn over the proposal, which I still think is good even if one must better examine the details of how you implement it, may also arise from the fact that now it might have to do the unthinkable, tax ESI. CBO itself has stated that they can more concretely calculate these numbers and has hinted that it would be favorable.

However, the Obama attacked this idea on the trail, although one should realize that McCain's plan did not have all the other safety features that the current bills or any other proposals have in place, which makes a great deal of difference. Unions would blow up at the idea (wrongly so, in my opinion). The administration would have to raise taxes on a group that it promised not to raise taxes on. So the politics gets more dicey.

I think in the end Orszag comes out right in this matter, but Congress must take the CBO's estimates. But, in a perverse way, this could lead to some inclusion of ESI in income.

Update: Jon Cohn has an excellent viewpoint too on this matter.