StarBulletin.com

When the budget director talks, people will listen


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POSTED: Tuesday, November 17, 2009

WASHINGTON—Most people have never heard of Douglas W. Elmendorf. But all of official Washington is waiting to hear what he has to say.

Elmendorf, a mild-mannered economist with a Harvard Ph.D., runs the Congressional Budget Office, the nonpartisan agency charged with assessing how legislation, like President Barack Obama's proposed health overhaul, would affect the federal budget. His detailed analyses—“;scores”; in Washington argot—are highly educated guesswork but are more or less the final word, making him a combination oracle and judge on many of the biggest issues of the day.

Now Congress is awaiting Elmendorf's judgment on a health bill that the Senate hopes to begin considering soon. He is in the thick of analyzing whether the bill, being drafted by Sen. Harry Reid, D-Nev., the majority leader, in close consultation with the White House, accomplishes what it promises at its advertised cost. In search of a favorable outcome, Reid has been submitting variations to Elmendorf for weeks.

A thumbs-up from Elmendorf could speed the process along, helping Obama fulfill his hope of signing a bill into law this year. A thumbs-down on any of the critical questions—how much the bill costs, how many people it covers, whether it reins in the runaway growth of health spending—could leave the White House and Democrats scrambling.

Democrats, who have been chafing at his calculations, sound nervous.

“;He's a good person, you know, but how they evaluate costs and benefits is very frustrating,”; said Sen. Christopher J. Dodd, D-Conn. “;They can tell you how much a treadmill costs, but they're unwilling to calculate what the benefit is if somebody actually uses it, loses weight and therefore reduces premium costs. So you get a kind of one-dimensional view of budgeting.”;

Elmendorf—bearded, bespectacled and cautious to a fault—shuns publicity and almost never appears on television, except for the occasional hearing shown on C-Span. He and his team of number crunchers occupy the cramped fourth floor of a government building that once housed FBI fingerprint files. His own office has a view of the freeway.

His work has earned him respect on both side of the aisle. Yet he also has critics who complain that he is making it harder for Democrats to pass health legislation by using methods that tend to exaggerate cost and underestimate savings.

Elmendorf said he is simply following the agency's time-honored approach to producing “;independent, objective analysis”; and “;letting the chips fall where they may.”;

Yet for a quiet man who thinks carefully about everything—he courted his future wife by inviting her to a baseball game, after calculating that games offer precisely enough activity to fill in conversation lulls—Washington's health care cauldron is an uncomfortable place to be. He is a Democrat who left partisan politics to join the budget office in January, and he is irking old friends.

“;I get e-mail messages and read blog postings that think I'm a brilliant hero, and I also get blog postings and e-mail messages that think I'm a stupid traitor, and I've learned to let that roll off my back,”; he said in a rare interview about himself.

When Elmendorf informed Congress in July that its draft bills at the time would not provide “;the sort of fundamental change”; necessary to rein in runaway spending, Republicans were ecstatic. The Washington Examiner, a conservative newspaper, hailed Elmendorf as a “;geek with guts.”; Democrats reacted with alarm. Obama invited Elmendorf, along with other experts, to the White House to talk about cost containment, a move that prompted Republicans to accuse the president of trying to compromise Elmendorf's independence. Peter R. Orszag, the White House budget director (and Elmendorf's predecessor) used his blog to take his old agency to task.

“;Even a very good referee will occasionally make bad calls,”; Orszag said in an interview, adding, “;I was one of the people who strongly recommended he replace me.”;

Unlike Orszag, who sought aggressively to raise the agency's profile, Elmendorf, 47, prefers to remain in the background. The son of a computer programmer and a teacher, he became an economist, he said, because “;it was a rigorous way of looking at social issues.”; He has deep policy experience; in addition to working at the Federal Reserve and the Treasury Department, he had a stint at the budget office, during the Clinton-era health care debates of 1993 and 1994.

Back then, the agency's director was Robert D. Reischauer, whose analyses of the Clinton-era legislation were so unpopular among Democrats that he was referred to as the “;skunk at the garden party.”; It has since become a budget office tradition for the new director to be presented with a stuffed toy skunk; Elmendorf keeps his on his office bookshelf.

While the agency's analyses carry great weight in Washington, they have at times been off the mark, and not everyone accepts them. Jon R. Gabel, a senior fellow at the National Opinion Research Center at the University of Chicago, said the budget office overestimated the cost of health reform on three occasions: in the 1980s, when Congress changed the way Medicare paid hospitals; in 1997, when Congress passed a balanced budget act; and in 2003, when Congress passed a Medicare prescription drug bill.

“;The budget office's cautious methods may have unintended consequences,”; Gabel has written, by leading “;Congress to think that politically unpopular cost-cutting initiatives will have, at best, only modest effects.”;

David Cutler, an economist at Harvard and Elmendorf's close friend, agrees. He said the budget office was “;doing a great disservice”; by ignoring evidence about how to reduce cost savings. He and Elmendorf have known each other since their student days; Cutler said the relationship is suffering.

“;It's a bit painful,”; Cutler said, “;which is sad.”;

Hearing this, Elmendorf grows quiet, though unapologetic. “;Obviously,”; he said, “;I can't lead CBO to reach conclusions to make particular friends of mine happy.”;

Elmendorf said he wished there was not so much “;personalization of what CBO does around me.”;

To relax, he coaches his twin daughters' soccer team on weekends; the girls, Caroline and Laura, 14, say that when things get really rough, their father spends more time than usual with the family dog, a black Labrador retriever named Hobie. Perhaps tellingly, Elmendorf showed up for his interview with a Band-Aid on his left forefinger—a result, the very careful budget director confessed, of an overly enthusiastic dog-human interaction.