CBOhhhh, that's what they do

Planet Money

NPR

Business, News

4.6 • 29.8K Ratings

🗓️ 1 March 2023

⏱️ 24 minutes

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Summary

If you are a congressperson or a senator and you have an idea for a new piece of legislation, at some point someone will have to tell you how much it costs. But, how do you put a price on something that doesn't exist yet?

Since 1974, that has been the job of the Congressional Budget Office, or the CBO. The agency plays a critical role in the legislative process: bills can live and die by the cost estimates the CBO produces.

The economists and budget experts at the CBO, though, are far more than just a bunch of number crunchers. Sometimes, when the job is really at its most fun, they are basically tasked with predicting the future. The CBO has to estimate the cost of unreleased products and imagine markets that don't yet exist — and someone always hates the number they come up with.

On today's episode, we go inside the CBO to tell the twisting tale behind the pricing of a single piece of massive legislation — when the U.S. decided to finally cover prescription drug insurance for seniors. At the time, some of the drugs the CBO was trying to price didn't even exist yet. But the CBO still had to tell Congress how much the bill would cost — even though the agency knew better than anyone that its math would almost definitely be wrong.

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Transcript

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0:24.7	This is Planet Money from NPR.
0:30.0	If you are a senator or a member of Congress and you have some great idea about a new piece
0:35.8	of legislation, at some point someone will have to say, okay, this is how much your amazing
0:44.5	piece of legislation would cost.
0:46.2	Yeah, and back in the day, it used to be that the White House gave you that cost estimate.
0:51.7	But in the 1970s, there were some members of Congress who started to say, how do we know
0:57.4	we could trust the White House office of management and budget?
1:01.2	This was when Richard Nixon was in the White House.
1:04.6	This is pre-water gate, but already trust was not exactly at an all time high between
1:09.4	the legislative and executive branches.
1:12.0	Congress wanted its own nonpartisan agency independent of the White House to tell them
1:18.1	how much proposed legislation would cost.
1:20.4	And since they were Congress, they could just pass a law to create that.
1:25.5	And so in the summer of 1974, they did.
	...

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