As Congress and President Obama raced to avoid defaulting on the
nations debt in the last week before the August 2, 2011, deadline,
the Congressional Budget Office (CBO) dealt a sharp setback to the
debt-reduction bill advanced by House Speaker John Boehner. CBO
trimmed Boehners estimated savings of $1.2 trillion over 10 years
to $850 million, forcing House Republicans to revise their plan.
Congress and the president ultimately reached agreement with one
day to spare, but only after CBO certified that the package would
reduce the debt by at least $2.1 trillion over the next decade.
CBO was established by the Budget Act of 1974 to provide Congress
with the budget expertise and independent analyses that would give
legislators greater capacity to counter presidential budget power.
In The Congressional Budget Office: Honest Numbers, Power, and
Policy, University of Maryland professor Philip G. Joyce explains
how CBO has metif not exceededthose expectations. He posits that
the CBO serves not only as a check on presidential authority, but
it also subjects legislative initiatives to tough scrutiny, as
evidenced in this years battle over the debt ceiling.
A budget expert who worked in CBOs special studies division from
1991 to 1995, Joyce is well positioned to give us a definitive,
comprehensive review of CBO and its impact on federal policymaking.
The Congressional Budget Office tells an important story of a
federal agency that works: CBO is respected for professional
excellence, non-partisanship, and its willingness to speak truth to
power. In a time of widespread dissatisfaction with government, CBO
provides a welcome reminder that government agencies can set and
maintain high standards.
Case Studies Trace CBOs Role
Joyce chronicles the history of this important office in a careful,
thorough, and methodical fashion, based on archival research and
interviews with more than 60 people (including six of CBOs eight
directors) who have played central roles in national budget debates
since the 1970s. He traces CBOs role in macrobudgeting (economic
and budget forecasting), microbudgeting (cost estimates for
legislation), and policy analysis. He uses the Clinton and Obama
health-care reform plans as case studies of CBOs involvement and
influence in shaping major national policy decisions.
Joyce tells a sober yet uplifting story of leadership and vision,
recounting how CBOs founding director, Alice Rivlin, made critical,
probing, and even-handed analysis an intrinsic part of the
institutional culture. While some powerful members of Congress
envisioned CBO as a number-crunching staff arm of the newly-created
budget committees, Rivlin insisted on a broader role, applying CBOs
economic and budget expertise to a wide range of policy issues.
CBOs skeptical 1977 analysis of President Carters energy policy
established CBO as an influential player in federal policy
analysis. Appointed by Congressional Democratic leaders, Rivlin
also built up CBOs credibility from the outset by casting the same
critical eye on the policies of Presidents Ford, Carter, and
Although a determined leader like Rivlin can make the difference
between mediocrity and excellence, subordinates and successors must
follow in her path. Joyce explains in detail the contributions made
by other senior employees, by the different units of CBO, and by
subsequent directors who ensured continuity in staff,
organizational structure, and analytic methods. The similar
policies followed by Republican appointees Rudy Penner, June
ONeill, Dan Crippen, and Douglas Holtz-Eakin, and Democratic
appointees Robert Reischauer, Peter Orszag, and Douglas Elmendorf
allowed CBO to cement a reputation for neutral expertise, immune to
The Congressional Budget Office thus serves as a case study of how
vulnerable public institutions can be. In tracing CBOs history over
more than three decades, Joyce highlights key points when CBO
directors could have bowed to pressure from political mastersbut
none did. For example, both ONeill (appointed in 1995) and Crippen
(appointed in 1999) resisted Republican demands for dynamic scoring
(in essence, assuming economic-growth effects from tax cuts). CBO
has been fortunate to have a string of strong, highly respected
directors who charted an independent course. At the same time, a
strong institutional culture can nurture and protect professional
competence: CBOs long history of neutral expertise means that any
attempt to politicize the office would probably trigger strong
internal and external resistance.
Joyce weaves together many examples and anecdotes from CBOs history
to illuminate CBOs role in federal policy debates. In 1981, CBO was
much more pessimistic about the impact of President Reagans
economic plan than the administration, and anticipated the large
federal deficits that would ensue (actual deficits, though, were
greater than CBO projected).
In the mid-1980s, CBO estimates forced Congress to face up to the
large costs generated by the bailout of failed savings and loans.
When President Bush and congressional leaders negotiated a
five-year deficit-reduction package in 1990, CBOs projections of
the distributional impact were decisive in shaping the final
CBO also played a role, although unintended, in facilitating the
tax cuts proposed by President George W. Bush in 2001, when CBO
projected a $5.6 trillion surplus over 10 years. Although CBO
warned that this estimate was subject to considerable uncertainty,
Congress and the president quickly squandered the surplus before it
ever materialized. Tax cuts, economic recession, the Iraq and
Afghanistan wars, and homeland security programs launched after the
terrorist attacks of September 11, 2001, quickly returned the
federal government to its familiar deficit position.
Deficit Concerns Shape Federal Policy
The books case studies of the Clinton and Obama healthcare reform
plans attribute CBOs important role not only to its credibility,
expertise, and statutory mandate, but also to the persistent
deficit concerns that have shaped federal policy since the 1980s.
Both Presidents Clinton and Obama vowed that their health plans
would not add to the deficit, placing CBO at the center of a
perfect analytical storm, as Joyce states.
CBOs pivotal role is illustrated by its verdict on the two plans.
CBO delivered a blow to the Clinton plan by treating the
transactions of the proposed healthcare alliances as part of the
federal budget (helping opponents castigate the plan as more big
government) and estimating that it would increase the deficit in
its first five years. By contrast, CBO helped seal a successful
outcome for the Obama plan by projecting that it would save $143
billion over 10 years.
Joyce points out that the Obama decision to develop the plan by
working through the congressional committee process (which allowed
for informal feedback from CBO) led to a more favorable score than
the Clinton plan, which was drafted through an internal
administration process led by First Lady Hillary Clinton and then
dropped in the lap of Congress. Joyce acknowledges the limits on
CBOs influence as well as the perverse results that sometimes ensue
from its scorekeeping duties.
Although CBO sounded the alarm about the risks to the federal
treasury from government-sponsored enterprises (GSEs) like Fannie
Mae, Freddie Mac, and Sallie Mae as early as 1985, CBOs warnings
fell on deaf ears, partly due to the political power and
influence-peddling of the GSEs and the reactive nature of
Congressional policymaking. The federaltakeover of Fannie Mae and
Freddie Mac in 2008 has cost taxpayers almost $400 billion. Joyce
also reminds us that policy is often contorted and distorted to fit
within budget constraints, but CBO only serves as the umpire,
rather than making the rules.
A Fiscal Paradox
Joyce addresses an important paradox: if CBO is such an effective
institution, why is the federal budget process so dysfunctional?
The problems are legion. In the face of swelling deficits and
publicly held debt that threatens to exceed the gross domestic
product, Congress routinely fails to enact appropriations on time
or approve a budget resolution (one of the main procedural reforms
of the 1974 Budget Act), the cost of entitlements continues to
rise, and budget brinksmanship seems endemic.
The type of information CBO provides is only necessary, not
sufficient, Joyce argues. Many of CBOs experiencesfrom its work on
GSE reform, to its admonitions to Congress to address the nations
long-term fiscal challengessuggest that only external political
imperatives result in progress toward solutions. CBO produces
high-quality information, but elected officials must use it.
In a bitterly partisan time marked by declining confidence in
government (and other important institutions), bastions of
excellence like CBO may be more important than ever. As Joyce
states, Neutral competence shines light on alternatives. In
complicated public policy choices, transparency about assumptions
is the foundation of neutrality. Over its 35 years, (CBO) has
modeled precisely the transparency indispensable to reasoned debate
and deliberation. Reasoned debate is not possible if only
conclusions are aired: it requires revelation of assumptions to
draw those conclusions.
The Congressional Budget Office is important reading for those who
care about government institutions and their ability to serve the
public faithfully. CBO shows us that government agencies can
exemplify neutral competence, and provides a model of how we might
create and sustain other first-rate government organizations.