Looking Behind the Fuss over the CBO

The Congressional Budget Office, created in the Nixon era, has become a headline-grabber with its dramatic scoring on the number of Americans who would lose health insurance under various GOP health care plans.

The Congressional Budget Office, created in the Nixon era, has become a headline-grabber with its dramatic scoring on the number of Americans who would lose health insurance under various GOP health care plans.

GOP health care legislation has elevated the Congressional Budget Office (CBO) from an obscure arm of government to front-page news and a subject for snarky presidential tweets.
 
The ferocity of attacks on CBO’s integrity and accuracy prompted all eight former CBO directors to send a letter to Congress protesting the assaults, which most recently came from House Speaker Paul Ryan who called the scoring of Republican health care legislation “bogus.” A House member has filed an amendment to a major spending bill that would trim $15 million from CBO’s $48.5 million budget and result in a loss of 89 CBO jobs.
 
CBO was created in 1974 amid a fight between President Nixon and a Democratically controlled Congress over congressional competence to write budgets. CBO was made nonpartisan to produce independent analysis of budgetary and economic issues in support of the congressional budget process. The agency also provides cost estimates for legislation, but it offers no recommendations on policy questions.
 
CBO directors have been both Democrats and Republicans. Current CBO Director Keith Hall, a Republican who took over in 2015, served on President George W. Bush’s Council of Economic Advisers and was a critic of the Affordable Care Act, also known as Obamacare. Vermont Senator Bernie Sanders called Hall “outside the economic mainstream.” When a GOP-controlled Congress installed Hall, it came with a direction to embrace dynamic scoring when evaluating the macroeconomic effects of legislation.
 
“CBO’s approach produces consistent comparisons of competing legislative proposals and unbiased projections of the impact of policy changes,” the former directors wrote.
 
The directors concede “even nonpartisan and high-quality analysis cannot always generate accurate estimates,” but they add that CBO estimates are “more accurate, on average, than estimates or guesses by people who are not objective and not as well informed as CBO’s analysts.” They noted CBO is transparent in its analytic techniques to make estimates and often turns to outside experts for advice.
 
The current fight over CBO was ignited with its scoring of various GOP health care bills to replace parts of Obamacare. Those scores showed huge drops in the number of Americans who would be covered by private health insurance and Medicaid. President Trump, administration officials and congressional leaders have questioned the accuracy of the predictions.
 
Mick Mulvaney, director of the Office of Management and Budget, singled out a CBO analyst and questioned her objectivity because she previously worked at the Department of Health and Human Services under President Clinton. Douglas Holtz-Eakin, a Republican former CBO director who signed the letter, posted a tweet calling Mulvaney’s characterization a “disgrace.” Mulvaney subsequently apologized.
 
Republican sensitivities about CBO estimates on health care legislation date back to the Affordable Care Act, which critics note sharply under-estimated the cost Medicaid expansion and over-estimated the number of Americans who would enroll in the individual health insurance exchanges. Critics say CBO has a poor track record of predicting consumer behavior. Democrats have quarreled with CBO estimates, too.
 
Supporters believe that CBO continues to serve the purpose of giving a nonpartisan analysis of legislation that may not please either side of the political aisle, but arms congressional budget writers with a tool they can use to defend the constitutional prerogative of controlling the public purse. MIT economist David Autor says, "CBO has a good track record with a very difficult assignment. It errs, but not systematically or with partisan intent."
 
The kerfuffle over the CBO may be reprised as the Trump administration and congressional Republicans bring up tax legislation later this year. That process is guided by CBO’s cousin, the Joint Committee on Taxation, which scores tax proposals and effects on federal government deficits.