Elizabeth Warren on weaponized budget models
In yesterday’s essay, I broke down the new series from The American Prospect on the hidden ideology and power of budget models, these being complex statistical systems for weighing legislative proposals to determine if they are “economically sound.” The assumptions baked into these models are intensely political, and, like all dirty political actors, the model-makers claim they are “empirical” while their adversaries are “doing politics”:
https://pluralistic.net/2023/04/03/all-models-are-wrong/#some-are-useful
If you’d like an essay-formatted version of this post to read or share, here’s a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
https://pluralistic.net/2023/04/04/cbo-says-no/#wealth-tax
Today edition of the Prospect continues the series with an essay by Elizabeth Warren, describing how her proposal for universal child care was defeated by the incoherent, deeply political assumptions of the Congressional Budget Office’s model, blocking an important and popular policy simply because “computer says no”:
https://prospect.org/economy/2023-04-04-policymakers-fight-losing-battle-models/
When the Build Back Better bill was first mooted, it included a promise of universal, federally funded childcare. This was excised from the final language of the bill (renamed the Bipartisan Infrastructure Bill), because the CBO said it would cost too much: $381.5b over ten years.
This is a completely nonsensical number, and the way that CBO arrived at it is illuminating, throwing the ideology of CBO modeling into stark relief. You see, the price tag for universal childcare did not include the benefits of childcare!
As Warren points out, this is not how investment works. No business leader assesses their capital expenditures without thinking of the dividends from those investments. No firm decides whether to open a new store by estimating the rent and salaries and ignoring the sales it will generate. Any business that operates on that basis would never invest in anything.
Universal childcare produces enormous dividends. Kids who have access to high-quality childcare grow up to do better in school, have less trouble with the law, and earn more as adults. Mothers who can’t afford childcare, meanwhile, absent themselves from the workforce during their prime earning years. Those mothers are less likely to advance professionally, have lower lifetime earnings, and a higher likelihood of retiring without adequate savings.
What’s more, universal childcare is the only way to guarantee a living wage to childcare workers, who are disproportionately likely to rely on public assistance, including SNAP (AKA food stamps) to make ends meet. These stressors affect childcare workers’ job performance, and also generate public expenditures to keep those workers fed and housed.
But the CBO model does not include any of those benefits. As Warren says, in a CBO assessment, giving every kid in America decent early childhood care and every childcare worker a living wage produces the same upside as putting $381.5 in a wheelbarrow and setting it on fire.
This is by design. Congress has decreed that CBO assessments can’t factor in secondary or indirect benefits from public expenditure. This is bonkers. Public investment is all secondary and indirect benefits — from highways to broadband, from parks to training programs, from education to Medicare. Excluding indirect benefits from assessments of public investments is a literal, obvious, unavoidable recipe for ending the most productive and beneficial forms of public spending.
It means that — for example — a CBO score for Meals on Wheels for seniors is not permitted to factor in the Medicare savings from seniors who can age in their homes with dignity, rather than being warehoused at tremendous public expense in nursing homes.
It means that the salaries of additional IRS enforcers can only be counted as an expense — Congress isn’t allowed to budget for the taxes that those enforcers will recover.
And, of course, it’s why we can’t have Medicare For All. Private health insurers treat care as an expense, with no upside. Denying you care and making you sicker isn’t a bug as far as the health insurance industry is concerned — it’s a feature. You bear the expense of the sickness, after all, and they realize the savings from denying you care.
But public health programs can factor in those health benefits and weigh them against health costs — in theory, at least. However, if the budgeting process refuses to factor in “indirect” benefits — like the fact that treating your chronic illness lets you continue to take care of your kids and frees your spouse from having to quit their job to look after you — then public health care costings become indistinguishable from the private sector’s for-profit death panels.
Child care is an absolute bargain. The US ranks 33d out of 37 rich countries in terms of public child care spending, and in so doing, it kneecaps innumerable mothers’ economic prospects. The upside of providing care is enormous, far outweighing the costs — so the CBO just doesn’t weigh them.
Warren is clear that there’s no way to make public child care compatible with CBO scoring. Even when she whittled away at her bill, excluding millions of families who would have benefited from the program, the CBO still flunked it.
The current budget-scoring system was designed for people who want to “shrink government until it fits in a bathtub, and then drown it.” It is designed so that we can’t have nice things. It is designed so that the computer always says no.
Warren calls for revisions to the CBO model, to factor in those indirect benefits that are central to public spending. She also calls for greater diversity in CBO oversight, currently managed by a board of 20 economists and only two non-economists — and the majority of the economists got their PhDs from the same program and all hew to the same orthodoxy.
For all its pretense of objectivity, modeling is a subjective, interpretive discipline. If all your modelers are steeped in a single school, they will incinerate the uncertainty and caveats that should be integrated into every modeler’s conclusions, the humility that comes from working with irreducible uncertainty.
Finally, Warren reminds us that there are values that are worthy of consideration, beyond a dollars-and-cents assessment. Even though programs like child care pay for themselves, that’s not the only reason to favor them — to demand them. Child care creates “an America in which everyone has opportunities — and ‘everyone’ includes mamas.” Child care is “an investment in care workers, treating them with respect for the hard work they do.”
The CBO’s assassination of universal child care is exceptional only because it was a public knifing. As David Dayen and Rakeen Mabud wrote in their piece yesterday, nearly all of the CBO’s dirty work is done in the dark, before a policy is floated to the public:
https://prospect.org/economy/2023-04-03-hidden-in-plain-sight/
The entire constellation of political possibility has been blotted out by the CBO, so that when we gaze up at the sky, we can only see a few sickly stars — weak economic nudges like pricing pollution, and not the glittering possibilities of banning it. We see the faint hope of “bending the cost-curve” on health care, and not the fierce light of simply providing care.
We can do politics. We have done it before. Every park and every highway, our libraries and our schools, our ports and our public universities — these were created by people no smarter than us. They didn’t rely on a lost art to do their work. We know how they did it. We know what’s stopping us from doing it again. And we know what to do about it.
Have you ever wanted to say thank you for these posts? Here’s how you can: I’m kickstarting the audiobook for my next novel, a post-cyberpunk anti-finance finance thriller about Silicon Valley scams called Red Team Blues. Amazon’s Audible refuses to carry my audiobooks because they’re DRM free, but crowdfunding makes them possible.
[Image ID: A disembodied hand, floating in space. It holds a Univac mainframe computer. The computer is shooting some kind of glowing red rays that are zapping three US Capitol Buildings, suspended on hovering platforms. In the background, the word NO is emblazoned in a retrocomputing magnetic ink font, limned in red.]
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Hello, a union of childcare workers is fighting demolition of their daycare center by the university of Ottawa! If you felt like sharing their petition I'd appreciate it, TY! https://timeforchildcare.nationbuilder.com/garderie_bernadette
"This is a stunning blow to the workers and families of the Bernadette Centre, as well as to the campus community. The University of Ottawa administration made this decision without consulting university workers or students. Access to bilingual child care that is affordable and on campus is an important issue for student and campus workers alike. Since learning of the closure, campus unions and associations have requested to meet with the administration and discuss the impacts this will have on the wider campus community. The administration has refused.
We, the undersigned, urge the university administration to reverse its decision to no longer provide space for a child care centre on campus after the Brooks building is demolished. We call upon the university to provide a new space to allow the Garderie Bernadette Child Care Centre to continue its operations. If the university truly cares about its community, it will strive to ensure that the necessary services are accessible and available to its members."
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Challenge #04017-J364: Chaos in the Domicile
The parental is injured and their companion friend is trying to get a rambunctious 4 yr old into the bath. -- Anon Guest
"No, no, no, no, NO!" Kindergartener Eyn ran squealing through their domicile, bouncing off of anything and everything, including their Prime Rennie, Quie.
Who was currently flopped on the family couch, on heavy medication, and waiting enough energy to make it all the way to the matrimonial sleep nook. "Ow!" She missed the grab. "Menace... Mama's already had a horrible day."
"I'm not taking a bath!"
[Check the source for the rest of the story]
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Challenge #03770-J117: Big Chaos
Small Human Child: "For some reason, I always do a chaos if I'm not next to Rennie at bed time."
Small Child's Parent: "It's true. You don't want to see it. I didn't want to see it last night. Can you play quietly until I'm ready to go to bed?"
SHC: "Maybe." -- Escla
Companion Ghayth considered the very small Human currently playing with their KidReader(tm)[1]. They were peacefully guiding a digital effigy on a randomly-generated world. Chopping trees and digging up things and taking scans of the flora and fauna.
They didn't seem to be that threatening, but these were also Humans. Whatever a 'chaos' was, Ghayth didn't want to witness it. "How bad of a destruction radius are we talking about?"
"I was cleaning glitter and sticky stuff out of the vent filters for two months," said Human Url, petting her kid's shoulder. "That's a chaos I never want to repeat."
[Check the source for the rest of the story]
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