Why does anyone trust the CBO?
In recent months, Republicans have seemed impervious to outside pressure. They don’t fear the president. They don’t fear the debt ceiling. They don’t fear the market. But on Tuesday afternoon, when the Congressional Budget Office announced that House Speaker John Boehner’s proposal for raising debt ceiling would save significantly less money than promised, the Republican response was instantaneous. They backed down. Immediately.
The non-partisan CBO found that Boehner’s debt-ceiling plan would save only $850 billion during the next decade, falling considerably short of the $1.2 trillion figure that the House GOP had been touting. By contrast, the CBO estimated that Senate Majority Leader Harry Reid’s proposal would save $2.2 trillion. Amid the deadlocked negotiations in Congress, the CBO’s finding rapidly became the abiding authority: Within hours, Boehner had postponed a vote on his bill, anticipating mass defections, and vowed to rewrite his proposal to deliver the promised savings. On Wednesday afternoon, the CBO calculated that Boehner’s revised plan with bigger cuts would save $915 billion — news that quickly seemed to resuscitate the proposal.
As in previous high-stakes debates, the CBO has become a key arbiter in the legislative process as lawmakers scramble to react to its analyses. But how has a small agency of budget analysts gained such authority on Capitol Hill, effectively helping to determine whether a bill lives or dies?
Congress originally created the CBO through the 1974 Congressional Budget Act. That law, which followed President Richard Nixon’s aggressive efforts to unilaterally cut congressional spending, was developed to help Congress assert itself more forcefully in the budget process. Until then, Congress relied on the budget expertise of the executive branch, and the newly created CBO was intended to give legislators an independent source of information.
The CBO director — currently Doug Elmendorf — is appointed by the House speaker and Senate president pro tempore, though in practice, the office follows the recommendations of its respective budget committees. But CBO directors greenlighted by both Democrats and Republicans have managed to retain the agency’s reputation for nonpartisan analysis — in part by demonstrating their willingness to put forward inconvenient truths to the very party that appointed them.
Though they’ve regularly contested the CBO’s findings, legislators have deferred to its authority more often than not. Their frustrations are rarely attributed to bias on the part of the number crunchers, but to the agency’s methodological caution: The CBO uses existing evidence and historical analogues when judging legislation, and some say that makes the agency too cautious when assessing new approaches. If the CBO’s conclusions didn’t matter, that would perhaps go unnoticed. But the agency’s “scores” have become a crucial turning point for many bills, and legislators routinely rewrite them around the CBO’s models.
On several high-profile occasions, the CBO’s numbers have almost single-handedly doomed some of Congress’s biggest priorities, regardless of which party had brought in the agency’s director at the time. In 1994, under the leadership of Democratic appointee Robert Reischauer, the CBO decided to include the cost of individual premiums in its evaluation of President Bill Clinton’s health-care proposal. As a result, the estimated cost of the bill skyrocketed, and the plan’s GOP opponents quickly grasped upon the CBO score as ammunition — a moment that many onlookers considered the beginning of the end for Clintoncare, to the Democrats’ chagrin.
Similarly, in 2003, CBO director Douglas Holtz-Eakin, a Republican appointee, experimented with using “dynamic scoring” for the tax cuts included in President George W. Bush’s budget. The approach, favored by many Republicans, would include the economic growth that tax cuts would likely generate when calculating their cost, rather than simply counting them as lost revenue. To the GOP’s great disappointment, “dynamic scoring” hardly had an effect on the CBO score of Bush’s tax cuts, which didn’t come close to paying for themselves.
Such experiences have left both parties frustrated with the CBO. But they’ve also strengthened the CBO’s credibility by proving the agency’s political independence and willingness to defy the expectations of both parties, regardless of which party has appointed its director.
The CBO’s profile and influence have arguably risen even further in recent years as the national debate has revolved increasingly around the question of government spending, making the cost and savings attached to legislation even more consequential. Within an increasingly polarized political environment — one that’s fed a growing distrust of institutions once seen as impartial — the CBO’s role as a objective authority has endured.
Such power has led some to question whether the CBO has an undue amount of influence on Washington politics and policymaking. “You know you’re not God,” Senate Finance Committee Chairman Max Baucus (D-Mont.) told Elmendorf during a 2009 congressional hearing. But some observers think those complaints say more about the frustration of dealing with an honest agency than about the agency itself. “It’s easy to say ‘the CBO made me do it,’ but they’re just providing information,” says Philip Joyce, a public policy professor at the University of Maryland and former CBO staffer. “People can use that information however they want to.”
Elmendorf, for his part, agrees. Whether legislation passes “depends on the judgment of members of Congress,” he told The Postin 2009. “We’ll provide information that helps them make that judgment. But the decisions are theirs.”