Douglas W. Elmendorf

Director of the Congressional Budget Office (since January 2009)

(Jahi Chikwendiu/TWP)

Why He Matters

Elmendorf may be the most important financial analyst in America: his client list is all 535 members of the U.S. Congress. His job is to "score" or provide a cost estimate of important legislation wending its way through the House and Senate. His cost analysis can often make or break a bill's future.

Succeeding Office of Management and Budget Director Peter Orszag, Elmendorf joined the Congressional Budget Office (CBO) as the struggling economy was at the top of the political agenda. Like Orszag, he hails from the liberal think-tank the Brookings Institution and was the former director of the Hamilton Project, a pro-free trade and anti-deficit centrist Democratic group led by Orzsag and former Clinton Treasury Secretary Robert Rubin.

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Background

At a Glance

Career History: Director of the Hamilton Project at the Brookings Institution (2008 to 2009); Senior fellow at the Brookings (2007 to 2009); Chief of the macro-economic analysis team at the Federal Reserve Board (2002 to 2007)
Hometown: Poughkeepsie, N.Y.

Alma Mater: Princeton University, A.B. (economics), 1983; Harvard University, M.A. (economics), 1985; Harvard, PhD (economics), 1989
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Path to Power

Hailing from upstate New York, Elmendorf spent his early career as an academic and educator. He went to Princeton University as an undergraduate, studying economics, and then headed to Harvard University to obtain his master's and Ph.D. in the same subject. After graduating in 1989, he stayed at Harvard for five years, working closely with economics professor Martin Feldstein, the director of the Council of Economic Advisers (CEA) under President Reagan.

Career Civil Servant

In 1993, Elmendorf started his career as a civil servant, working for the CBO office for the first time. He spent a year as an associate analyst before joining full-time in 1994 as a principal analyst where Elmendorf focused on health- care issues and the economic effects of budget deficits. Working under CBO Director Robert D. Reischauer, Elmendorf worked on a team that concluded President Bill Clinton's health-reform package would cost much more than originally thought. This analysis helped cripple the Clinton overhaul.

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The Issues

Joining the CBO in late December 2008, Elmendorf is responsible for providing estimates of the cost of legislation on the federal budget.

A few of his first tasks: weighing in on the $787 billion economic stimulus package and weeks later, a $410 billion 'omnibus' bill, which allocated funds for the federal government through September 2009. The CBO was tasked with evaluating the long-term effects of these mammoth measures, while explaining their impact on the budget to lawmakers on the Hill.

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Elmendorf is also tasked with scoring the yearly budget plans passed by Congress. In March 2010, Elmendorf released the CBO's score of Obama's 2011 budget proposal. In the score, the CBO predicted that the country's public debt level would grow from $7.5 trillion in 2009 to $20.3 trillion by 2020, under Obama's plan. In April 2010, Elmendorf spoke more openly against the country's growing debt level, saying under current plans the deficit is "unsustainable."

The Bailout

Although the CBO is a non-partisan entity, Elmendorf worked two years at Brookings. While there, he spent much of his time opining on the mortgage collapse, and the appropriate response by the government. While he only called for the nationalization of banks as a last resort, Elmendorf did support a bailout of struggling financial institutions.

In a paper titled "The Great Credit Squeeze," Elmendorf along with co-authors Martin Neil Baily and Robert E. Litan, laid out important steps in an attempt to stabilize the financial system quickly, and to assure nothing similar repeats itself. The paper recommended helping banks and mortgage finance companies like Fannie Mae and Freddie Mac, but also suggested ways to aid struggling homeowners facing foreclosure. Some of the short-term stabilization options the authors proposed included equity investment by the government, "outright nationalization" of Fannie and Freddie and allowing judges the power to reduce mortgage payments.

The three authors also outlined long-term recommendations for changes to the financial system to make it more stable. The three long-term changes they suggested were:

Make financial instruments, like derivatives and certain mortgages, more transparent.
Prevent financial institutions from leveraging themselves to the degree many did prior to the 2008 collapse of the credit markets.
Increased government supervision of financial institutions.

Health-Care Reform

In October 2009, after months of debate, the U.S. House submitted a health -care reform bill for a cost estimate or "score" from the CBO. Elmendorf and his team concluded that the House version of the bill would cost $1.2 trillion over ten years while insuring 36 million Americans who don't currently have health insurance. The CBO also concluded the bill would reduce the deficit by $50 billion to $120 billion over 10 years.

House Leader Nancy Pelosi brought the bill to the floor shortly after the CBO analysis. On November 7, 2009, the House passed the bill by a vote of 220 to 215.

Later in November 2009, the Senate submitted its own bill for scoring. The CBO concluded that the Senate bill would cost $849 billion over 10 years, while insuring 31 million more Americans. The Senate bill would reduce the deficit by $130 billion over the next decade and $650 billion over 2019 to 2029.

In March 2010, the CBO scored the final health care bill passed by Congress and signed by the president. The CBO estimated a total cost of $940 billion over ten years. In May 2010, Rep. Jerry Lewis (R-Calif.) asked the CBO to score additional discretionary spending measures that arise throughout the ten years, pending Congress' approval. If Congress passes these measures, then the total cost of the bill will rise to more than $1 trillion over the ten years, according to the CBO.

The Network

Elmendorf has spent years working in government, and has had an opportunity to work closely with a variety of senior officials in the Obama administration. In the waning years of the Clinton administration, Elmendorf worked under Clinton Treasury Secretary Lawrence Summers - Summers now heads Obama's National Economic Council (NEC).

In 2002, Elmendorf moved to the Fed, working under Alan Greenspan.

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Additional Resources