Has the day of the Congressional Budget Office come and gone?

By ·June 12, 2017
Wellesley College

The Issue:

In an interview with the Washington Examiner in May, the Director of the Office of Management and Budget, Mick Mulvaney, asked whether the Congressional Budget Office (CBO) — Congress’ own budget analysis agency — has outlived its usefulness. Mulvaney was unhappy with the CBO’s estimate that the ObamaCare repeal bill that passed the House of Representatives would leave 23 million more people uninsured in 10 years time. He suggested that the CBO has “some sort of bias in favor of a government mandate” and raised the question of whether it is “really feasible to think of [the CBO] as a nonpartisan organization.” Following from those concerns, Mulvaney argued that CBO has too much authority in congressional budget decisions and that Congress should not rely on CBO “scores” of bills.

The goal of the Congressional Budget Office is to evaluate the budget and economic implications of policy changes through a neutral lens.

The Facts:

  • The Congressional Budget Office was established four decades ago partly as a response to conflict between the executive and legislative branches. Its goal is to evaluate the budget and economic implications of policy changes through a neutral lens. The Congressional Budget Office was established in 1974 as part of the Congressional Budget Act (Pub. L. 93-344) and began operations in 1975. The Act was an effort by Congress to reassert its constitutional authority over the budget in response to concerns about the control exerted by presidential administrations over federal budgeting in the 1960s and early 1970s. The Budget Act established new procedures for the congressional budget process, including the creation of the House and Senate Budget Committees as well as the creation of the CBO (University of Maryland economist Philip Joyce has written a full history of the CBO). Importantly, the Director of the CBO is appointed by the Congressional leadership, specifically, the Speaker of the House and the president pro tempore of the Senate, with advice from the House and Senate Budget Committees. The current Director, Keith Hall, was appointed in 2015 by Speaker Paul Ryan and president pro tempore Orrin Hatch — both Republicans.
  • Budget issues — such as the prospective revenue and economic growth effects of changes to the tax code — are complex, and policy makers in Congress and the Administration as well economists and other analysts can disagree about the numbers. This is precisely why CBO is so important and why Congress established the agency in the first place. Its role is to serve as an unbiased referee, to cut through the advocacy and noise surrounding complex issues and provide the best analysis possible given available research and information. The CBO hires technically skilled staff and never makes policy recommendations. The agency has filled this role under Directors appointed by both Democratic and Republican congressional leaders, and its work is widely recognized as non-partisan.
  • Given the complexity and controversial nature of the issues CBO analyzes, their work has, at times, frustrated Presidents and members of Congress from both parties. Such frustration is not new and is almost as old as the agency itself, as highlighted in a 2015 working paper by Philip Joyce. For example, the CBO criticized the Carter Administration in the 1970s for an overly optimistic assessment of the effects of its energy policy. Another example: early in the Reagan Administration, the CBO criticized the administration’s analysis that its policies would balance the budget by 1984. And, in an earlier incarnation of the health care debate in the early 1990s, the CBO disagreed with the Clinton Administration about the budget implications of its health care proposal; the CBO said it would boost the deficit while the administration said the plan would reduce the deficit. Such disagreements have continued to the present day, though, with the benefit of hindsight, CBO often turned out to be more right than wrong on big issues.

What this Means:

Mulvaney’s attack on CBO’s credibility stems, no doubt in part, from his frustration that the agency’s analysis of the House’s ObamaCare repeal bill has become such an important piece of the argument against the bill. While it might be politically useful to undermine the integrity of the agency providing that analysis, his charge of “partisanship” at the CBO rings a bit hollow given that the agency’s head was recently appointed by Republicans in Congress. But, his attack also fits with a broader effort to push the country even further away from relying on factual analysis in policy making. In this time of “fake news” and questions about the accuracy of information reported in the media, the nation needs, more than ever, the best possible unbiased, non-partisan analysis of complex issues. The CBO provides just such analysis.


Economic Statistics / Governance
Written by The EconoFact Network. To contact with any questions or comments, please email [email protected].
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