Peter Orszag and Company on SCHIP and PAYGO
Peter Orszag of the Congressional Budget Office weighs in:
Yesterday, CBO released a letter to Senator Baucus on the number of uninsured children who are eligible for Medicaid or SCHIP. Some empirical studies have found that there are between 5 million and 6 million such children. In contrast to those studies, a recent estimate suggests a much smaller number, 1.1 million children, lack health insurance but are eligible for Medicaid or SCHIP. The CBO letter notes:
In summary, CBO regards the estimates of between 5 million and 6 million children who are uninsured and eligible for Medicaid or SCHIP as more appropriate for considering policies aimed at enrolling more eligible children in those programs...
This morning, CBO testified before the House Budget Committee on PAYGO issues. My testimony... made the following points:
The Budget Enforcement Act's PAYGO requirement, as well as the law’s discretionary spending limits, helped to enforce multiyear fiscal goals and prevent fiscal deterioration. When the budgetary situation and policy priorities changed, however, the PAYGO requirement and discretionary spending caps were often superseded or ignored.
Although PAYGO may help to prevent a deterioration in the fiscal picture, it only applies to new policy changes rather than the effects of existing policy. Consequently, PAYGO by itself does not address the nation’s long-term fiscal imbalance, which is driven mostly by growth in the cost of health care.
Any PAYGO system requires a set of scoring rules, concepts, and baseline requirements. One key question is whether a statutory PAYGO requirement should apply to both mandatory spending and revenue legislation. If the primary objective of a PAYGO requirement is to avoid deterioration in the fiscaloutlook, no differential treatment between mandatory spending and revenue changes would seem to be warranted. Including changes in revenue legislation within the PAYGO requirement, however, might impede other policy objectives. (A related issue involves the treatment of expiring spending and revenue provisions. The existing approach generally ensures that the cost of extending a temporary policy past its initial expiration manifests itself either when the policy is initially adopted or when it is extended. That objective is crucial to the integrity of the process but can be achieved in a variety of ways.)
Both the House and the Senate already have nonstatutory PAYGO rules in place. Those rules generally are enforced against individual bills or amendments as they are considered. A different approach to PAYGO could provide a mechanism for enforcing overall budget totals at the end of the Congressional session. A statutory PAYGO requirement could establish additional enforcement mechanisms, like sequestration, that cannot be embodied in House or Senate rules...