Congressional Budget Office

The Congressional Budget Office (CBO) is a federal agency within the legislative branch of the United States government that provides budget and economic information to Congress. [1] Inspired by California's Legislative Analyst's Office that manages the state budget in a strictly nonpartisan fashion, the CBO was created as a nonpartisan agency by the Congressional Budget and Impoundment Control Act of 1974.

Whereas politicians on both sides of the aisle have criticized the CBO when its estimates have been politically inconvenient,[2][3] economists and other academics overwhelmingly reject that the CBO is partisan or that it fails to produce credible forecasts. There is a consensus among economists that "the CBO has historically issued credible forecasts of the effects of both Democratic and Republican legislative proposals."[4]

Congressional Budget Office
CBO logo
Logo of the CBO
Agency overview
FormedJuly 12, 1974
HeadquartersFord House Office Building, 4th Floor
Second and D Streets, SW
Washington, D.C. 20515
Employees235
Annual budget$46.8 million
(FY 2011)
Agency executives
Websitewww.cbo.gov

History

The Congressional Budget Office was created by Title II of the Congressional Budget and Impoundment Control Act of 1974 (Pub. L. 93-344), which was signed into law by President Richard Nixon on July 12, 1974.[5] Official operations began on February 24, 1975, with Alice Rivlin as director.[6]

The CBO's creation stems from a fight between President Richard Nixon and a Democratic-controlled Congress. Congress wanted to protect its power of the purse from the executive.[3][7] The CBO was created "within the legislative branch to bolster Congress’s budgetary understanding and ability to act. Lawmakers' aim was both technical and political: Generate a source of budgetary expertise to aid in writing annual budgets and lessen the legislature’s reliance on the president's Office of Management and Budget."[3] Since its creation, the CBO has since supplanted the OMB "as the authoritative source of information on the economy and the budget in the eyes of Congress, the press, and the public."[6]

Mission

The Congressional Budget Office is nonpartisan, and produces "independent analyses of budgetary and economic issues to support the Congressional budget process."[8] Each year, the agency releases reports and cost estimates for proposed legislation, without issuing any policy recommendations.

With respect to estimating spending for Congress, the Congressional Budget Office serves a purpose parallel to that of the Joint Committee on Taxation for estimating revenue for Congress, the Department of the Treasury for estimating revenues for the Executive branch. This includes projections on the effect on national debt and cost estimates for legislation.[9]

Operations

Section 202(e) of the Budget Act requires the CBO to submit periodic reports about fiscal policy to the House and Senate budget committees to provide baseline projections of the federal budget. This is currently done by preparation of an annual Economic and Budget Outlook plus a mid-year update. The agency also each year issues An Analysis of the President's Budgetary Proposals for the upcoming fiscal year per a standing request of the Senate Committee on Appropriations. These three series are designated essential titles distributed to Federal Depository Libraries and are available for purchase from the Government Publishing Office. The CBO often provides testimony in response to requests from various Congressional committees and issues letters responding to queries made by members of Congress.

Divisions

The Congressional Budget Office is divided into eight divisions.[10]

  • Budget Analysis
  • Financial Analysis
  • Health, Retirement, and Long-Term Analysis
  • Macroeconomic Analysis
  • Management, Business, and Information Services
  • Microeconomic Studies
  • National Security
  • Tax Analysis

Director

Ford House Office Building, Washington, DC (2006)
Ford House Office Building

The Speaker of the House of Representatives and the President pro tempore of the Senate jointly appoint the CBO Director after considering recommendations from the two budget committees. The term of office is four years, with no limit on the number of terms a director may serve. Either house of Congress, however, may remove the director by resolution. At the expiration of a term of office, the person serving as Director may continue in the position until his or her successor is appointed. The list of directors of the CBO are:[11]

Name Term start Term end
Alice Rivlin February 24, 1975 August 31, 1983
Rudolph G. Penner September 1, 1983 April 28, 1987
Edward Gramlich (Acting) April 28, 1987 December 1987
James L. Blum (Acting) December 1987 March 6, 1989
Robert Reischauer March 6, 1989 February 28, 1995
June E. O'Neill March 1, 1995 January 29, 1999
James L. Blum (Acting) January 29, 1999 February 3, 1999
Dan Crippen February 3, 1999 January 3, 2003
Barry B. Anderson (Acting) January 3, 2003 February 5, 2003
Douglas Holtz-Eakin February 5, 2003 December 29, 2005
Donald B. Marron Jr. (Acting) December 29, 2005 January 18, 2007
Peter R. Orszag January 18, 2007 November 25, 2008
Robert A. Sunshine (Acting) November 25, 2008 January 22, 2009
Douglas Elmendorf January 22, 2009 March 31, 2015
Keith Hall April 1, 2015 present

Reception

Whereas politicians on both sides of the aisle have criticized the CBO when its estimates have been politically inconvenient,[2][3] economists and other academics overwhelmingly reject that the CBO is partisan or that it fails to produce credible forecasts.

A March 2017 survey of leading economists shows a consensus behind the notion that "adjusting for legal restrictions on what the CBO can assume about future legislation and events, the CBO has historically issued credible forecasts of the effects of both Democratic and Republican legislative proposals."[4] According to MIT economist David Autor, the "CBO has a good track record with a very difficult assignment. It errs, but not systematically or with partisan intent."[4] According to Yale economist Christopher Udry, "There is no credible evidence of partisan bias."[4] Economist Walter E. Williams wrote in 1998 that the CBO was well-regarded for its "honest numbers" on fiscal and economic matters.[6] According to the Los Angeles Times, "the CBO’s analyses and forecasting are regarded as good or better than others doing similar work... economists say that the CBO’s economic projections generally compare favorably against other outfits, and its long-term budget estimates have been fairly accurate."[2]

According to George Washington University political scientist Sarah Binder, the CBO "has emerged over its history as a neutral analyst of congressional budgets and cost estimates for proposed legislation."[3] The agency has "a nonpartisan staff culture".[3]

Historically, the House Budget Committee and Senate Budget Committee have insulated the CBO from external pressures and attempts to politicize or weaken the office.[6] Professor Philip Joyce of the University of Maryland School of Public Policy writes:

This is quite surprising, in a sense, given the partisan nature of the Congress. It is not necessarily that these partisans have embraced nonpartisanship as a positive end in itself, however. Rather, the Budget Committees (and especially their leadership and staff) have recognized that a weak CBO (one that does not have a reputation for objective analysis, and whose conclusions are viewed as partisan) is not in their interest. A weak CBO weakens the Budget Committees, and indeed weakens Congress as a whole in its inevitable battles with the executive over budget and economic policy.[6]

See also

References

  1. ^ O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in Action. Upper Saddle River, New Jersey: Pearson Prentice Hall. p. 388. ISBN 0-13-063085-3.
  2. ^ a b c Lee, Don (2017-03-14). "What is the CBO, and can you trust its numbers on the Republican healthcare plan?". Los Angeles Times. ISSN 0458-3035. Retrieved 2017-03-23.
  3. ^ a b c d e f Sarah Binder (March 15, 2017). "This is why the Congressional Budget Office will likely survive Republican attacks". Washington Post.
  4. ^ a b c d "The CBO". Initiative on Global Markets (IGM), University of Chicago Booth School of Business. March 21, 2017.
  5. ^ Adam Kelsey (March 13, 2017). "What the CBO does and how it gets its numbers". ABC News.
  6. ^ a b c d e Philip Joyce, The Congressional Budget Office at Middle Age, Working Paper #9, Hutchins Center on Fiscal & Monetary Policy, Brookings Institution (February 17, 2015).
  7. ^ "The Congressional Budget Office, explained". Vox. Retrieved 2017-03-23.
  8. ^ "Introduction to CBO" (PDF). Congressional Budget Office. Retrieved March 15, 2017.
  9. ^ "Introduction to CBO". 21 February 2011.
  10. ^ "Staffing and Organization". Congressional Budget Office. Retrieved 19 February 2014.
  11. ^ "Congressional Budget Office: Appointment and Tenure of the Director and Deputy Director" (PDF).

Further reading

External links

Agricultural Act of 2014

The Agricultural Act of 2014 (H.R. 2642; Pub.L. 113–79, also known as the 2014 U.S. Farm Bill), formerly the "Federal Agriculture Reform and Risk Management Act of 2013", is an act of Congress that authorizes nutrition and agriculture programs in the United States for the years of 2014-2018. The bill authorizes $956 billion in spending over the next ten years.The bill passed in the United States House of Representatives on January 29, 2014, and the United States Senate on February 4, 2014 during the 113th United States Congress. U.S. President Barack Obama signed the bill into law on February 7, 2014. The bill is considered two years late, since farm bills are traditionally passed every five years. The previous farm bill, Food, Conservation, and Energy Act of 2008, expired in 2012.

Alice Rivlin

Alice Mitchell Rivlin (March 4, 1931 – May 14, 2019) was an American economist and budget official. She served as Vice Chair of the Federal Reserve, Director of the White House Office of Management and Budget, and founding Director of the Congressional Budget Office. Rivlin was an expert on the U.S. federal budget and macroeconomic policy. She was a senior fellow at the Brookings Institution and visiting professor at Georgetown University. Rivlin also co-chaired, with former Senator Pete Domenici, the Bipartisan Policy Center's Debt Reduction Task Force.

Dan Crippen

Dan Crippen (born March 18, 1952, in Canistota, South Dakota) is the executive director of the National Governors Association. He is a former Director of the Congressional Budget Office and Assistant to the President for Ronald Reagan. Crippen most recently served on NASA's Aerospace Safety Advisory Panel. He graduated from the University of South Dakota (B.S. 1974) and Ohio State University (M.A. 1976; Ph.D. 1981).

Donald B. Marron Jr.

Donald Baird Marron Jr. is an American economist, professor and policy advisor and director of the nonpartisan Urban-Brookings Tax Policy Center in Washington, D.C. He is the son of the economist and financier Donald B. Marron Sr.

Douglas Elmendorf

Douglas William Elmendorf (born April 16, 1962) is an American economist who is the dean and Don K. Price Professor of Public Policy at Harvard Kennedy School. He previously served as the Director of the Congressional Budget Office (CBO) from 2009 to 2015. He was a Brookings Institution senior fellow from 2007 to 2009, and briefly in 2015 following his time at the CBO, and was a director of the Hamilton Project at Brookings.

Douglas Holtz-Eakin

Douglas James "Doug" Holtz-Eakin (born February 3, 1958) is an American economist. He was formerly an economics professor at Syracuse University, Director of the Congressional Budget Office, and chief economic policy adviser to Senator John McCain's 2008 presidential campaign. Holtz-Eakin is currently president of the American Action Forum policy institute, a conservative think tank.

Edward Gramlich

Edward M. Gramlich (June 18, 1939 – September 5, 2007) was a professor of economics at the University of Michigan and a former member of the Board of Governors of the Federal Reserve.

Gramlich graduated from Williams College in 1961 and received a master's degree in 1962 and a Ph.D. in economics in 1965 from Yale University. He joined the Federal Reserve as a research economist from 1965-1970, and was a senior fellow at the Brookings Institution from 1973-1976. He then taught economics and public policy at the University of Michigan from 1976 to 1997, including a term as dean of the Gerald R. Ford School of Public Policy, and returned to Michigan as a professor in 2005.

He was appointed to the Federal Reserve System by President Bill Clinton in 1997 and resigned in August 2005. For much of his term, he was the Chair of the Board's Committee on Consumer and Community Affairs.

He was also the chairman of the Air Transportation Stabilization Board, which was created by Congress after the 9/11 attacks raised concerns about the survival of the U.S. airline industry. Gramlich had also chaired several other lesser-known stabilization boards created by Congress. In an April 2003 speech to the National Economists Club, he concluded that such boards are an ineffective way to help struggling industries because of the time it takes before help arrives and because the industries that are in need of help often have far deeper problems that the stabilization boards cannot fix.

“If Congress wants to bail out an industry in a hurry, it should bail it out. It takes time to act in this program, which means it’s probably not a good program for [emergency] scenarios”, Gramlich told the club.

Gramlich was also formerly the chairman of the Neighborhood Reinvestment Corporation and was seen as an expert on subprime lending after his years as a banking regulator at the Federal Reserve.

Gramlich had other government experience as well, serving as chairman of the Quadrennial Advisory Council on Social Security from 1994 to 1996 and as deputy director, and then acting director, of the Congressional Budget Office in 1986-1987. He also conducted research in 1992 on the economics of major league baseball and wrote a popular textbook on benefit-cost analysis that is in its second edition.

Gramlich highlighted the problems with subprime mortgages prior to the 2007-09 financial crisis. His book, "Subprime Mortgages: America's Latest Boom and Bust" (2007) ISBN 978-0877667391 was published before the crisis was widely recognized and he had spoken out about them earlier.

Gramlich and his wife, Ruth had two children, Sarah and Robert, both married, and six grandchildren.

Ford House Office Building

The Ford House Office Building is one of the four office buildings containing U.S. House of Representatives staff in Washington, D.C., on Capitol Hill.

The Ford House Office Building is the only House Office Building that is not connected underground to either one of the other office buildings or to the Capitol itself, and the only House Office Building that does not contain offices of members of Congress. Instead, it primarily houses committee staff and other offices, including the Architect of the Capitol, the Congressional Budget Office, and the Commission on Security and Cooperation in Europe.

Keith Hall (economist)

Keith Hall is the Director of the U.S. Congressional Budget Office. Hall had been the Commissioner of the U.S. Bureau of Labor Statistics from January 2008 until January 2012. Hall previously worked at the Department of Commerce, Department of Treasury, the U.S. International Trade Commission, and the White House Council of Economic Advisers.

Laffer curve

In economics, the Laffer curve illustrates a theoretical relationship between rates of taxation and the resulting levels of government revenue. It illustrates the concept of taxable income elasticity—i.e., taxable income changes in response to changes in the rate of taxation. The Laffer curve assumes that no tax revenue is raised at the extreme tax rates of 0% and 100%, and that there is a rate between 0% and 100% that maximizes government taxation revenue. The Laffer curve is typically represented as a graph that starts at 0% tax with zero revenue, rises to a maximum rate of revenue at an intermediate rate of taxation, and then falls again to zero revenue at a 100% tax rate. However, the shape of the curve is uncertain and disputed among economists. Under some assumptions, such as revenue being a continuous function of the rate of taxation, the maximum illustrated by the Laffer curve is a result of Rolle's theorem, which is a standard result in calculus.One implication of the Laffer curve is that reducing or increasing tax rates beyond a certain point is counter-productive for raising further tax revenue. A hypothetical Laffer curve for any given economy can only be estimated and such estimates are controversial. The New Palgrave Dictionary of Economics reports that estimates of revenue-maximizing tax rates have varied widely, with a mid-range of around 70%. There is a consensus among leading economists that a reduction in the US federal income tax rate would not raise annual total tax revenue.The Laffer curve was popularized in the United States with policymakers following an afternoon meeting with Ford Administration officials Dick Cheney and Donald Rumsfeld in 1974, in which Arthur Laffer reportedly sketched the curve on a napkin to illustrate his argument. The term "Laffer curve" was coined by Jude Wanniski, who was also present at the meeting. The basic concept was not new; Laffer himself notes antecedents in the writings of the 14th-century social philosopher Ibn Khaldun and others.

Lenny Skutnik

Martin Leonard Skutnik III (born 1953 in Mississippi, known as Lenny) is a retired employee of the United States Congressional Budget Office

who, on January 13, 1982, saved the life of Priscilla Tirado following the crash of Air Florida Flight 90 into the frozen Potomac River, Washington, D.C. As passengers were being rescued, Tirado was too weak to take hold of the line dropped from a helicopter. Skutnik – one of hundreds of bystanders – dove into the icy water and brought her to the river bank.U.S. President Ronald Reagan invited Skutnik to attend the 1982 State of the Union address on January 26, 1982, where he sat next to First Lady Nancy Reagan. Reagan praised Skutnik as follows:

Just two weeks ago, in the midst of a terrible tragedy on the Potomac, we saw again the spirit of American heroism at its finest: the heroism of dedicated rescue workers saving crash victims from icy waters.

And, we saw the heroism of one of our young government employees, Lenny Skutnik, who, when he saw a woman lose her grip on the helicopter line, dived into the water and dragged her to safety.

Skutnik received a standing ovation from the audience. Since then, others invited to sit in the Presidential gallery and honored in the president's speech have often been called Lenny Skutniks.Skutnik received the United States Coast Guard's Gold Lifesaving Medal, the Carnegie Hero Fund Medal, and various other tributes.

In 2010 he retired from his position as a printing and distribution assistant for the Congressional Budget Office.

Peter R. Orszag

Peter Richard Orszag (born December 16, 1968) is an American banker and economist. He is the CEO of Financial Advisory at Lazard, effective June 2019. He was previously the firm’s Head of North American M&A and Global Co-Head of Healthcare.Orszag previously served as a Vice Chairman of Corporate and Investment Banking and Chairman of the Financial Strategy and Solutions Group at Citigroup. Before joining Citigroup, he was a Distinguished Visiting Fellow

at the Council on Foreign Relations and a contributing columnist for the New York Times Op-Ed page. Prior to that, he was the 37th Director of the Office of Management and Budget under President Barack Obama and had also served as the Director of the Congressional Budget Office.

Orszag is a member of the National Academy of Medicine of the National Academies of Sciences. He serves on the Boards of Directors of the Peterson Institute for International Economics, the Mt. Sinai Hospital, the Russell Sage Foundation, New Visions for Public Schools in New York, and Ideas42.

Robert A. Sunshine

Robert A. Sunshine is an American government official. He is Senior Adviser to the Director of the Congressional Budget Office, having served as the Deputy Director of the CBO from 2007 to 2016 and Acting Director from November 2008 to January 2009.

Robert Reischauer

Robert Danton Reischauer (born 1941) is an economist and one of the two public trustees of the Social Security and Medicare trust fund. He is a nationally known expert on the federal budget, health reform, Medicare, and Social Security. Most recently (2000-2012) he served as president of the Urban Institute, a think tank based in Washington D.C. He is the son of Japan scholar Edwin O. Reischauer.

Stanley L. Greigg

Stanley Lloyd Greigg (May 7, 1931 – June 13, 2002) served one term as a Democratic member of the U.S. House of Representatives from northwestern Iowa. He was elected to fill the vacancy left by the retirement of Republican Charles B. Hoeven in 1964 but lost to Republican Wiley Mayne two years later in 1966. He was one of the victims of the Watergate break-in.

Stolen Valor Act of 2013

The Stolen Valor Act of 2013 (Pub.L. 113–12; H.R. 258) is a United States federal law that was passed by the 113th United States Congress. The law amends the federal criminal code to make it a crime for a person to fraudulently claim having received a valor award specified in the Act, with the intention of obtaining money, property, or other tangible benefit by convincing another that he or she received the award.

The current federal law is a revised version of a previous statute struck down by the Supreme Court of the United States in United States v. Alvarez. In Alvarez the Supreme Court ruled the arrest and prosecution of a citizen for wearing unearned military awards, who did so without criminal intent, violates their constitutional right to freedom of speech.

United States Senate Committee on the Budget

The United States Senate Committee on the Budget was established by the Congressional Budget and Impoundment Control Act of 1974. It is responsible for drafting Congress's annual budget plan and monitoring action on the budget for the Federal Government. The committee has jurisdiction over the Congressional Budget Office. The committee briefly operated as a special committee from 1919 to 1920 during the 66th Congress, before being made a standing committee in 1974.

United States federal budget

The United States federal budget comprises the spending and revenues of the U.S. federal government. The budget is the financial representation of the priorities of the government, reflecting historical debates and competing economic philosophies. The government primarily spends on healthcare, retirement, and defense programs. The non-partisan Congressional Budget Office provides extensive analysis of the budget and its economic effects. It has reported that the U.S. is facing a series of long-term financial challenges, as the population of the country ages and healthcare costs continue growing faster than the economy, leading to the debt held by the public (a partial measure of national debt) exceeding GDP by 2030. The United States has the largest external debt in the world and the 14th largest government debt as % of GDP in the world.

Veterans' Access to Care through Choice, Accountability, and Transparency Act of 2014

The Veterans' Access to Care through Choice, Accountability, and Transparency Act of 2014 (H.R. 3230; Pub.L. 113–146), also known as the Veterans Choice Act, is a United States public law that is intended to address the ongoing Veterans Health Administration scandal of 2014. The law will expand the number of options veterans have for receiving care and grant the United States Secretary of Veterans Affairs more power to fire senior executives. The Veterans Health Administration scandal of 2014 began with the discovery that there was on-going systematic lying by the Veterans Health Administration about the wait times veterans experienced waiting to be seen by doctors. By June 5, 2014, Veterans Affairs internal investigations had identified a total of 35 veterans who had died while waiting for care in the Phoenix VHA system. Another audit determined that "more than 57,000 veterans waited at least 90 days to see a doctor, while another 63,000 over the last decade never received an initial appointment."The bill was introduced into the United States House of Representatives during the 113th United States Congress under the name "Pay Our Guard and Reserve Act" as one of the October 2013 mini-continuing resolutions passed by the House during the United States federal government shutdown of 2013. It became law on August 7, 2014.

The law includes access to healthcare at non-VA hospitals for rural veterans, as well as vast increases in staffing and facilities at existing VA medical centers.

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