The Congressional Budget Office (CBO) is under attack again.
Trump’s Director of the Office of Management and Budget (OMB), Mick Mulvaney, recently said that “the time of CBO has probably come and gone,” noting that there are plenty of other places, including the OMB itself and Washington think tanks, that can estimate the costs of policies. Mulvaney is far from the first official to disagree with the CBO’s numbers, but he is one of very few people who want to get rid of the CBO altogether. He joins former House speaker Newt Gingrich, who has been trying to gut the CBO for decades. In fact, a 1995 argument by Gingrich that the agency should be cleaned out prompted The Washington Post, in an editorial, to remind readers of the important role that CBO had played as “an excellent skunk” at the “congressional picnic.”
The problem for Congress — even a Republican-dominated Congress — is that the CBO is useful. The CBO was created intentionally to strengthen the Congress in its battles with the president, which have happened both when the president and Congress are dominated by different parties and when there is unified rule.
The CBO is the product of fights over budgets
The CBO was created as part of the congressional Budget and Impoundment Control Act of 1974, which looked to resolve what Allen Schick has called the “seven-year budget war” over who shaped the budget process. This act reasserted Congress’s role in budgeting, including budget committees in each house, and a new agency — the CBO — that would serve as a nonpartisan source of numbers and analysis. Without the CBO, Congress would have had to depend on OMB — which works directly for the White House — for economic and budgetary figures which it needs to participate in budget making.
The first director, Alice Rivlin, was appointed in February 1975 and had to build the agency, including its capacity to estimate costs and make forecasts, from scratch. Rivlin also made the crucial decision that CBO would not make policy recommendations, as she was concerned that doing so might make the nonpartisan role untenable. Rivlin, who was a lifelong Democrat, described herself as a “card carrying middle of the roader.”
The eight subsequent directors (five nominal Republicans — including current director Keith Hall — and three nominal Democrats) have followed Rivlin’s lead as centrist and professional voices in budget and economic debates. My own research on CBO — based on the only book-length history of the agency — suggests that the CBO has put Congress on a more equal footing with the president, changed how policymaking works through cost estimates, and helped federal budget making become more open and transparent.
The CBO has helped Congress challenge the arguments of presidents
Since its early days, the CBO has poured cold water over the optimistic policy arguments of Democratic and Republican presidents. Jimmy Carter’s energy policy and Ronald Reagan’s supply side economic estimates both fell victim to CBO analyses. When Reagan tried to get Senate Republicans to remove Alice Rivlin as director (the law provides that either chamber can remove a CBO director by majority vote), Majority Leader Robert Dole and Senate Budget Committee Chairman Pete Domenici refused, understanding that such an action would be an attack on the independence of Congress.
The CBO has continued to cause controversy over presidential policy initiatives. It challenged Clinton administration estimates of the fiscal effect of its “reinventing government” revisions and George W. Bush administration claims about the cost of adding a prescription drug benefit to Medicare. The Obama administration and CBO clashed over the employment effects of the Affordable Care Act and the job effects of a proposed increase in the minimum wage. In both cases, the White House went on the offensive to challenge the CBO analysis.
It has helped Congress estimate the costs of legislation
The CBO provides Congress with an objective source of information on the cost of individual pieces of legislation. Before it was created, the committees or groups proposing changes in policy often estimated the costs and were sometimes exuberantly optimistic.
For the past quarter-century, health reform estimates have been the most visible source of disputes with the White House, culminating in the current fights over the American Health Care Act. CBO estimates previously helped kill President Bill Clinton’s health reform, and led President Barack Obama to change his policy proposal so as to keep his pledge to only sign a deficit-neutral bill. These high-profile estimates, however, are only the tip of the iceberg: CBO does more than 600 formal cost estimates per year. The main consequence is not to help Congress challenge the executive but to understand the costs of its own legislative actions, and change legislation when it is likely to have unexpected costs.
It has improved transparency in budgeting
This also means that the CBO helps improve budget transparency and access to high-quality, objective information. While educating Congress was a goal of CBO from the beginning, neither the drafters of the law nor the initial leadership of CBO could have anticipated the role that the agency now plays in broader public education, particularly through the media. The Internet has made CBO analyses much more widely available. The news media and the general public now have access to them at the same time as the committees that requested them. Increasingly, CBO is looked to as the source in Washington for what political scientist Walter Williams has called “honest numbers.” My own research confirms that career OMB staff sometimes use the fact that there will be a CBO estimate to try to talk their political masters out of “cooking the books.”
Much of the current debate is misplaced
Many current and historical criticisms of the CBO focus on the question of whether its predictions are accurate. This concern is misplaced — while the CBO has a good record overall, predicting is hard. The bigger questions concern bias — what the CBO is trying to do is to provide objective and unbiased budgetary and economic estimates, in a context where many other actors have incentives to fudge the numbers to get the policies they prefer. In an era where the phrase “alternative facts” has slipped into our collective lexicon, it is hard to overstate the importance of the kind of nonpartisan analysis that the CBO is attempting to provide. In the era of “alternative facts,” objective and unbiased analysis is especially important.
Eliminating, or even weakening, the CBO would also weaken Congress. The CBO is a tool that both Republican and Democratic congresses have used to assert congressional authority against the attempts of presidential administrations to have their own way. It is not surprising that Mulvaney decries that role, as many other OMB directors have before him. Republican members of Congress may, instead, look ahead to the future. If, for example, President Trump were to be defeated by a Democrat in 2020, they might want a strong CBO to challenge policy proposals with poorly thought-out fiscal consequences, and hence preserve congressional prerogatives under the separation of powers.
Philip Joyce is professor of public policy and senior associate dean at the University of Maryland’s School of Public Policy.
This article is one in a series supported by the MacArthur Foundation Research Network on Opening Governance that seeks to work collaboratively to increase our understanding of how to design more effective and legitimate democratic institutions using new technologies and new methods. Neither the MacArthur Foundation nor the Network is responsible for the article’s specific content. Other posts in the series can be found here.