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What does the Congressional Budget Office do? (with Philip Joyce)

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The topic of this episode is, “What does the Congressional Budget Office do?”

My guest is Professor Philip Joyce. He is the senior associate dean at the University of Maryland School of Public Policy, where he also is a professor of public policy. There, Philip Joyce teaches and researches public budgeting, performance measurement, and intergovernmental relations. He's the author of many publications — far too many to recite, but I will mention one that is germane to today's podcast. Phil is the author of the book The Congressional Budget Office: Honest Numbers, Power, and Policymaking (2011), which makes him an ideal guest to answer the question, “What does the Congressional Budget Office do?”

Kevin Kosar:

Welcome to Understanding Congress, a podcast about the first branch of government. Congress is a notoriously complex institution, and few Americans think well of it, but Congress is essential to our republic. It’s a place where our pluralistic society is supposed to work out its differences and come to agreement about what our laws should be. And that is why we are here: to discuss our national legislature and to think about ways to upgrade it so it can better serve our nation.

I’m your host, Kevin Kosar, and I’m a resident scholar at the American Enterprise Institute, a think tank in Washington, DC.

Professor Joyce, welcome to the podcast.

Philip Joyce:

It's great to be with you.

Kevin Kosar:

Let's start simply. The Congressional Budget Office, AKA, “CBO.” When did Congress create it and why?

Philip Joyce:

CBO was created in 1974. You have to sort of go back in time if you can. Well, probably a lot of people can't go back that far in time that are listening to this podcast, but I can. As you recall, in 1974, at least early 1974, Richard Nixon was president. There was something that became referred to as the imperial presidency, and it essentially involved President Nixon being viewed at least by many people in the Congress as overstepping his bounds, doing things like withholding funds that the Congress had appropriated. So the Congress was trying to reassert its role in the budget process. And it did this by passing something called the Congressional Budget and Empowerment Control Act of 1974, which did basically three things. It created the budget committees; it created the budget resolution, which is the blueprint that the Congress establishes for the budget; and it created CBO.

Why did it create CBO? It created CBO in particular to provide the Congress with its own source of information on the budget and the economy. And why did it need to do that? Because the alternative was to rely on the Office of Management and Budget, which was attached to the president — and not just any president, but Richard Nixon. So the idea that the Congress was going to reassert its role in budgeting, but have to rely on Richard Nixon's OMB for information, just didn't make a lot of sense to a lot of people in the Congress.

The other thing I think it's important to note up front is that according to the law, this was all to be done on a nonpartisan basis, which means that CBO doesn't work for the party in control of the Congress. It works for the Congress as a whole, and tries very hard to make sure that it is responsive to both political parties.

Kevin Kosar:

Yes, I should elaborate a touch further for listeners who are not familiar with this period of time, the early ’70s. After being pushed around and eclipsed by a burgeoning executive branch, one that often didn't play straight and sometimes transcended the law in its activities, Congress decided to reassert itself. It took the Legislative Reference Service and beefed it up into the Congressional Research Service. They created the Office of Technology Assessment. It wrote a new law on budgeting, and of course it created Congressional Budget Office, all as part of a means for it to reassert itself as the first branch.

Now, you started to mention the nature of the agency as nonpartisan, which leads to the next question: The people who work at CBO, are they civil servants or political appointees, or do you have some of both?

Philip Joyce:

Well, this is really an interesting question, because they are not technically civil servants. In fact, this makes them different from many of the employees of the Government Accountability Office, who are actually federal civil servants. The way I describe CBO staff is that CBO staff are to the CBO director as congressional staff are to a member of Congress or a congressional committee. That is, the director of CBO is actually appointed by the Congress. The director of CBO has the power to hire and fire all CBO staff. So, theoretically, a new director of CBO could come in and wipe out the whole place and start over. Now, nobody has ever done that, because it's not in their interest to do that, because you'd be losing a lot of institutional knowledge. But the fact is, they are not technically civil servants. They have their own personnel system. But they very much behave as nonpartisan civil servants would behave. So I would say in that sense, you can think of them as being the equivalent of civil servants, but they're not technically civil servants.

Now, in terms of where they come from, it depends on where you look in CBO. I think there is an impression that CBO must be chock-full of economists, and that there's nobody else but economists in CBO. But that's not really true. It depends on where you look in CBO. The directors of CBO — there have been 10 of them — have almost exclusively been economists. Many of the people in CBO's policy divisions — these are divisions that are organized around long-term economic and budget issues — are PhD economists. But on the other hand, the Budget Analysis Division (and we'll talk more I think in a little while about what they do), which is the largest in CBO and the main division supporting the annual budget process — that's mostly made up of staff who have master's degrees in fields like public policy or public administration, or sometimes are people that have significant experience in the executive branch and then move to CBO.

Kevin Kosar:

Just to paint a contrast for our listeners, when you think about the individuals who staff, say, an individual member of the House of Representatives' personal office, those are folks who frequently get their jobs because they are members of the political party, and they are individuals who've worked on that member's campaign or perhaps worked in other congressional offices — frequently for a member of the same party. So their skillsets are much more in the political realm. CBO, that's not the basis for hiring people there, whether you are good at politics, right?

Philip Joyce:

Yeah, that's right. Well, not only that, it's probably a detriment if you're really good at politics. Or, I would say, to put it differently, if you have a sort of strong political bent — CBO is not the place to go if you're a policy advocate, because you're not really there to advocate policy. You're really there to think objectively about what the effects of policy are.

As you know, I wrote a book on CBO, and one of the interesting things that I found was that early on, when Alice Rivlin, who was the first director, who is a giant of public service, was setting the place up — and I think the way the place behaves today is very much still in her image — they had to make a decision early on: Were they going to accept references from members of Congress for CBO staff? Were they going to accept members of Congress basically saying, There's this great guy in my district or this great woman in my district, I think you should hire them? They decided that they were not going to refuse to accept those, but they also were not going to be driven by them. They wanted to communicate very clearly to the Congress that they got to decide who worked at CBO based on merit and qualifications, not based on whether they happen to be attached to some important member of Congress or not.

Kevin Kosar:

Yeah. I think that was a really prescient, smart insight by Alice Rivlin, because ultimately CBO is funded by Congress. And if the impression spreads in Congress that it's basically a tool of the majority, well, that pretty much throws into doubt anything that CBO publishes, and invites retribution. And I should add as little footnote, in the early 1990s, there was an accusation leveled at the Government Accountability Office, the General Accounting Office, that it was too close to the majority. The majority had long been Democrats. And when Republicans took the majority in 1994, GAO suffered a 25% budget cut. So, again, that was a very smart, foresighted move by Alice Rivlin.

Now, let’s get down to the nitty gritty. How does CBO interface with Congress and the budget process? What is its role or roles?

Philip Joyce:

Well, there are three main things I would point to. The first is that twice a year, CBO does a baseline economic and budget forecast. And what is that? It's a projection of what would happen if you let current laws continue. It's basically trying to give the Congress an idea of where they are starting from. Before they begin to make policy in a given Congress, what would happen if you did nothing, or what would happen if you just let current laws continue? That usually goes out 10 years, and it's based on an independent economic forecast that is done by CBO.

So, again, CBO is not going to just rely on the economic forecast that's coming out of a given administration, because that administration often has an incentive to say that whatever policies they're going to pursue are going to make the economy much better. And that's not really CBO's job. CBO's job is to basically say — What they tend to do is gravitate toward the average of what private sector economists would say is going to happen, without regard to saying that the president's policies are going to make things much better. And then once a year, actually, as a part of that general role, they do a long term, and when I say long term, I mean 30 to 40 year budget projection. That's important given the continued imbalance of revenues and spending, and given the fact that over time, that's likely to get worse. For example, the latest one of these showed the deficit growing to more than 200% of GDP by 2040. Now, that is not a prediction that that is going to happen. That is simply a projection that if you didn't do anything, then this is what we see as the future. And then it is up to the Congress to decide, do they want to do anything or not? For better or worse, the answer is often no, but what they are doing is they're taking that CBO analysis as a starting point.

The second big thing that CBO does is policy analyses of particular policies that are of long run interest to the Congress. So you can imagine, for example, something like, what would happen if we went to a single payer health system, or what is the future trajectory of the defense budget in terms of military preparedness? And they're answering questions like, what is the effect of those things on the budget and the economy? Another good example is climate change. You take climate change and you say, okay, based on what people say is going to happen or is likely to happen in climate change, what does that mean in terms of the future for the budget and the economy?

Then finally, and I'm leaving this for last, but I think it's probably the most important one, and it's the one that gets the most attention, is that CBO is required by law to do cost estimates of every bill that is reported out of a congressional committee. It does not do cost estimates of every bill that is introduced, because that is way too much work. And as you know, most of those bills don't go anywhere. But once a bill actually has enough traction that it has actually come out of a committee, the idea is that before the House or the Senate would vote on such a bill on the floor of House or the Senate, they ought to know how much someone thinks it's going to cost. And that someone is CBO.

Before CBO, it's not that there weren't any cost estimates, it's that there weren't any objective cost estimates. A committee that reported a bill out that thought that bill was the greatest thing since sliced bread would have every incentive to downplay the cost of that bill. And if you looked at the cost estimates coming out of the administration, lo and behold, if the administration liked an idea, it said the cost was low, and if it didn't like an idea, it said the cost was high. So the idea of having CBO do this is to have somebody that has no real dog in that fight giving some kind of an objective estimate of what the bill would cost.

Kevin Kosar:

Speaking of CBO's scoring of bills, it's sometimes controversial. For example, there's a bill that was scored recently, a purportedly postal reform bill to help the Postal Service’s finances. And there are folks carping at the calculations there of what the score is.

Why is it that CBO scores are sometimes controversial? And as a follow-up, has the method, whatever that is, for scoring — has it evolved over time, or is that just written down in formulaic or set in stone somewhere?

Philip Joyce:

Well, it's not that hard to understand why CBO’s cost estimates are controversial. People have strong views on these bills, and a CBO cost estimate can actually make it harder or easier to pass a bill. People complain about the CBO cost estimates — I equate it to a batter who strikes out who decides to blame the umpire. I mean, the umpire might be wrong, but also, you might have actually taken strike three. So, I think that you have to take with a grain of salt and you have to ask yourself the question, What's the motivation of the people who are criticizing CBO over a particular bill? Now, if they start to get into the specific methodology — there are certainly times when people have a point when they say, Look, CBO made the following assumptions and we think these assumptions are wrong, and we have data that backs up why we think that they're wrong. That to me is more credible than just effectively saying, They said this costs money and I don't think it does. Well, okay. But if you don't have any evidence, then basically you're just saying you didn't like the answer.

CBO cost assessments can be quite influential. When CBO said, for example, back in 1993, that the Clinton health plan would add to the deficit, when the Clinton administration said that it would cut the deficit — that was viewed as one of the main reasons that the Clinton health plan ended up not going anywhere. Now the truth is, given the magnitude of something like a healthcare reform, the difference between those two estimates was not actually that great. But it was very important politically that the administration had said, This is going to cut the deficit, and then CBO said, No, it's going to add to the deficit.

Now, on your question on the methodology, I think the methodology has changed over time in ways that make it more sophisticated. There are many more and many better models for projecting spending on things like Social Security, Medicare, farm programs, and the like, and CBO is always looking at how it can refine its estimating strategies. One specific thing that happened is that since 1995, CBO has actually provided estimates of the cost of legislation on state, local, and tribal governments under the Unfunded Mandates Reform Act.

The final thing I'll mention in terms of CBO’s methodology — and I don't think this is well understood — is that it is as important to CBO to be consistent as it is to be right, in the sense that they don't want to use different assumptions for scoring bills that basically try to do the same thing that are introduced by different people. They want to make it clear what their assumptions are, and then they want to make sure that when they are scoring bills, all bills that would affect healthcare, for example, that they're using a common set of assumptions so that they're not disadvantaging one bill versus another simply because they're using different assumptions.

Kevin Kosar:

Right. I've also heard from congressional staff that I've worked with that CBO scores can be doubted just because they can be difficult to understand. A score on a particular bill may only be two pages, and it has a whole bunch of numbers, but where those numbers came from is not immediately clear. But the other reason is that if it's a piece of legislation dealing with mandatory spending, it can have consequences for the probability of whether the legislation can make it through the House and the Senate. It's not just, oh, there's a bit of red ink attached to this proposal. It actually triggers parliamentary hurdles of sorts. Is that correct?

Philip Joyce:

Yes, it is correct. One of the things that CBO cost estimates do is that they can trigger, for example, in certain cases, and it's probably too arcane to go into all the specifics, but I think it's important to note that there are points of order that can be raised in both the House and the Senate that are triggered by the fact that a CBO cost estimate might cause a provision, for example, of the budget resolution to be exceeded. So it really is true that the Congress in many cases, for either political or procedural reasons, is trying to hit a particular target. And if it misses that target, even by a little bit, according to the CBO cost estimate, that can cause the bill to have to at a minimum go back and be redone.

Kevin Kosar:

That of course, unfortunately, would pull this third-party umpire-type figure, the CBO, into controversies, because it's viewed because of these parliamentary procedures that it's the CBO’s fault that the bill is going to face a higher climb through the legislature.

All right, one last question. CBO has been around for about 50 years. Does it need any alterations or updates?

Philip Joyce:

Well, it’s kind of useful to talk about a couple of things that CBO has been criticized for. First, there are some people, and I think this is sort of implied by the end of your last question, who think that CBO is not very transparent about how it does its estimates. Now, I think CBO is probably more transparent than a lot of people think that it is, but CBO has actually spent a lot more time and effort over I would say the last 10 years trying to be more transparent about its cost estimates, the methodology that goes into its cost estimates, and publishing separate reports that say, this is how we go about doing estimates for, for example, healthcare programs. So I think that's a place where CBO is continuing to work.

The second criticism is that CBO pays too much attention to costs and not enough to benefits. That...

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The topic of this episode is, “What does the Congressional Budget Office do?”

My guest is Professor Philip Joyce. He is the senior associate dean at the University of Maryland School of Public Policy, where he also is a professor of public policy. There, Philip Joyce teaches and researches public budgeting, performance measurement, and intergovernmental relations. He's the author of many publications — far too many to recite, but I will mention one that is germane to today's podcast. Phil is the author of the book The Congressional Budget Office: Honest Numbers, Power, and Policymaking (2011), which makes him an ideal guest to answer the question, “What does the Congressional Budget Office do?”

Kevin Kosar:

Welcome to Understanding Congress, a podcast about the first branch of government. Congress is a notoriously complex institution, and few Americans think well of it, but Congress is essential to our republic. It’s a place where our pluralistic society is supposed to work out its differences and come to agreement about what our laws should be. And that is why we are here: to discuss our national legislature and to think about ways to upgrade it so it can better serve our nation.

I’m your host, Kevin Kosar, and I’m a resident scholar at the American Enterprise Institute, a think tank in Washington, DC.

Professor Joyce, welcome to the podcast.

Philip Joyce:

It's great to be with you.

Kevin Kosar:

Let's start simply. The Congressional Budget Office, AKA, “CBO.” When did Congress create it and why?

Philip Joyce:

CBO was created in 1974. You have to sort of go back in time if you can. Well, probably a lot of people can't go back that far in time that are listening to this podcast, but I can. As you recall, in 1974, at least early 1974, Richard Nixon was president. There was something that became referred to as the imperial presidency, and it essentially involved President Nixon being viewed at least by many people in the Congress as overstepping his bounds, doing things like withholding funds that the Congress had appropriated. So the Congress was trying to reassert its role in the budget process. And it did this by passing something called the Congressional Budget and Empowerment Control Act of 1974, which did basically three things. It created the budget committees; it created the budget resolution, which is the blueprint that the Congress establishes for the budget; and it created CBO.

Why did it create CBO? It created CBO in particular to provide the Congress with its own source of information on the budget and the economy. And why did it need to do that? Because the alternative was to rely on the Office of Management and Budget, which was attached to the president — and not just any president, but Richard Nixon. So the idea that the Congress was going to reassert its role in budgeting, but have to rely on Richard Nixon's OMB for information, just didn't make a lot of sense to a lot of people in the Congress.

The other thing I think it's important to note up front is that according to the law, this was all to be done on a nonpartisan basis, which means that CBO doesn't work for the party in control of the Congress. It works for the Congress as a whole, and tries very hard to make sure that it is responsive to both political parties.

Kevin Kosar:

Yes, I should elaborate a touch further for listeners who are not familiar with this period of time, the early ’70s. After being pushed around and eclipsed by a burgeoning executive branch, one that often didn't play straight and sometimes transcended the law in its activities, Congress decided to reassert itself. It took the Legislative Reference Service and beefed it up into the Congressional Research Service. They created the Office of Technology Assessment. It wrote a new law on budgeting, and of course it created Congressional Budget Office, all as part of a means for it to reassert itself as the first branch.

Now, you started to mention the nature of the agency as nonpartisan, which leads to the next question: The people who work at CBO, are they civil servants or political appointees, or do you have some of both?

Philip Joyce:

Well, this is really an interesting question, because they are not technically civil servants. In fact, this makes them different from many of the employees of the Government Accountability Office, who are actually federal civil servants. The way I describe CBO staff is that CBO staff are to the CBO director as congressional staff are to a member of Congress or a congressional committee. That is, the director of CBO is actually appointed by the Congress. The director of CBO has the power to hire and fire all CBO staff. So, theoretically, a new director of CBO could come in and wipe out the whole place and start over. Now, nobody has ever done that, because it's not in their interest to do that, because you'd be losing a lot of institutional knowledge. But the fact is, they are not technically civil servants. They have their own personnel system. But they very much behave as nonpartisan civil servants would behave. So I would say in that sense, you can think of them as being the equivalent of civil servants, but they're not technically civil servants.

Now, in terms of where they come from, it depends on where you look in CBO. I think there is an impression that CBO must be chock-full of economists, and that there's nobody else but economists in CBO. But that's not really true. It depends on where you look in CBO. The directors of CBO — there have been 10 of them — have almost exclusively been economists. Many of the people in CBO's policy divisions — these are divisions that are organized around long-term economic and budget issues — are PhD economists. But on the other hand, the Budget Analysis Division (and we'll talk more I think in a little while about what they do), which is the largest in CBO and the main division supporting the annual budget process — that's mostly made up of staff who have master's degrees in fields like public policy or public administration, or sometimes are people that have significant experience in the executive branch and then move to CBO.

Kevin Kosar:

Just to paint a contrast for our listeners, when you think about the individuals who staff, say, an individual member of the House of Representatives' personal office, those are folks who frequently get their jobs because they are members of the political party, and they are individuals who've worked on that member's campaign or perhaps worked in other congressional offices — frequently for a member of the same party. So their skillsets are much more in the political realm. CBO, that's not the basis for hiring people there, whether you are good at politics, right?

Philip Joyce:

Yeah, that's right. Well, not only that, it's probably a detriment if you're really good at politics. Or, I would say, to put it differently, if you have a sort of strong political bent — CBO is not the place to go if you're a policy advocate, because you're not really there to advocate policy. You're really there to think objectively about what the effects of policy are.

As you know, I wrote a book on CBO, and one of the interesting things that I found was that early on, when Alice Rivlin, who was the first director, who is a giant of public service, was setting the place up — and I think the way the place behaves today is very much still in her image — they had to make a decision early on: Were they going to accept references from members of Congress for CBO staff? Were they going to accept members of Congress basically saying, There's this great guy in my district or this great woman in my district, I think you should hire them? They decided that they were not going to refuse to accept those, but they also were not going to be driven by them. They wanted to communicate very clearly to the Congress that they got to decide who worked at CBO based on merit and qualifications, not based on whether they happen to be attached to some important member of Congress or not.

Kevin Kosar:

Yeah. I think that was a really prescient, smart insight by Alice Rivlin, because ultimately CBO is funded by Congress. And if the impression spreads in Congress that it's basically a tool of the majority, well, that pretty much throws into doubt anything that CBO publishes, and invites retribution. And I should add as little footnote, in the early 1990s, there was an accusation leveled at the Government Accountability Office, the General Accounting Office, that it was too close to the majority. The majority had long been Democrats. And when Republicans took the majority in 1994, GAO suffered a 25% budget cut. So, again, that was a very smart, foresighted move by Alice Rivlin.

Now, let’s get down to the nitty gritty. How does CBO interface with Congress and the budget process? What is its role or roles?

Philip Joyce:

Well, there are three main things I would point to. The first is that twice a year, CBO does a baseline economic and budget forecast. And what is that? It's a projection of what would happen if you let current laws continue. It's basically trying to give the Congress an idea of where they are starting from. Before they begin to make policy in a given Congress, what would happen if you did nothing, or what would happen if you just let current laws continue? That usually goes out 10 years, and it's based on an independent economic forecast that is done by CBO.

So, again, CBO is not going to just rely on the economic forecast that's coming out of a given administration, because that administration often has an incentive to say that whatever policies they're going to pursue are going to make the economy much better. And that's not really CBO's job. CBO's job is to basically say — What they tend to do is gravitate toward the average of what private sector economists would say is going to happen, without regard to saying that the president's policies are going to make things much better. And then once a year, actually, as a part of that general role, they do a long term, and when I say long term, I mean 30 to 40 year budget projection. That's important given the continued imbalance of revenues and spending, and given the fact that over time, that's likely to get worse. For example, the latest one of these showed the deficit growing to more than 200% of GDP by 2040. Now, that is not a prediction that that is going to happen. That is simply a projection that if you didn't do anything, then this is what we see as the future. And then it is up to the Congress to decide, do they want to do anything or not? For better or worse, the answer is often no, but what they are doing is they're taking that CBO analysis as a starting point.

The second big thing that CBO does is policy analyses of particular policies that are of long run interest to the Congress. So you can imagine, for example, something like, what would happen if we went to a single payer health system, or what is the future trajectory of the defense budget in terms of military preparedness? And they're answering questions like, what is the effect of those things on the budget and the economy? Another good example is climate change. You take climate change and you say, okay, based on what people say is going to happen or is likely to happen in climate change, what does that mean in terms of the future for the budget and the economy?

Then finally, and I'm leaving this for last, but I think it's probably the most important one, and it's the one that gets the most attention, is that CBO is required by law to do cost estimates of every bill that is reported out of a congressional committee. It does not do cost estimates of every bill that is introduced, because that is way too much work. And as you know, most of those bills don't go anywhere. But once a bill actually has enough traction that it has actually come out of a committee, the idea is that before the House or the Senate would vote on such a bill on the floor of House or the Senate, they ought to know how much someone thinks it's going to cost. And that someone is CBO.

Before CBO, it's not that there weren't any cost estimates, it's that there weren't any objective cost estimates. A committee that reported a bill out that thought that bill was the greatest thing since sliced bread would have every incentive to downplay the cost of that bill. And if you looked at the cost estimates coming out of the administration, lo and behold, if the administration liked an idea, it said the cost was low, and if it didn't like an idea, it said the cost was high. So the idea of having CBO do this is to have somebody that has no real dog in that fight giving some kind of an objective estimate of what the bill would cost.

Kevin Kosar:

Speaking of CBO's scoring of bills, it's sometimes controversial. For example, there's a bill that was scored recently, a purportedly postal reform bill to help the Postal Service’s finances. And there are folks carping at the calculations there of what the score is.

Why is it that CBO scores are sometimes controversial? And as a follow-up, has the method, whatever that is, for scoring — has it evolved over time, or is that just written down in formulaic or set in stone somewhere?

Philip Joyce:

Well, it's not that hard to understand why CBO’s cost estimates are controversial. People have strong views on these bills, and a CBO cost estimate can actually make it harder or easier to pass a bill. People complain about the CBO cost estimates — I equate it to a batter who strikes out who decides to blame the umpire. I mean, the umpire might be wrong, but also, you might have actually taken strike three. So, I think that you have to take with a grain of salt and you have to ask yourself the question, What's the motivation of the people who are criticizing CBO over a particular bill? Now, if they start to get into the specific methodology — there are certainly times when people have a point when they say, Look, CBO made the following assumptions and we think these assumptions are wrong, and we have data that backs up why we think that they're wrong. That to me is more credible than just effectively saying, They said this costs money and I don't think it does. Well, okay. But if you don't have any evidence, then basically you're just saying you didn't like the answer.

CBO cost assessments can be quite influential. When CBO said, for example, back in 1993, that the Clinton health plan would add to the deficit, when the Clinton administration said that it would cut the deficit — that was viewed as one of the main reasons that the Clinton health plan ended up not going anywhere. Now the truth is, given the magnitude of something like a healthcare reform, the difference between those two estimates was not actually that great. But it was very important politically that the administration had said, This is going to cut the deficit, and then CBO said, No, it's going to add to the deficit.

Now, on your question on the methodology, I think the methodology has changed over time in ways that make it more sophisticated. There are many more and many better models for projecting spending on things like Social Security, Medicare, farm programs, and the like, and CBO is always looking at how it can refine its estimating strategies. One specific thing that happened is that since 1995, CBO has actually provided estimates of the cost of legislation on state, local, and tribal governments under the Unfunded Mandates Reform Act.

The final thing I'll mention in terms of CBO’s methodology — and I don't think this is well understood — is that it is as important to CBO to be consistent as it is to be right, in the sense that they don't want to use different assumptions for scoring bills that basically try to do the same thing that are introduced by different people. They want to make it clear what their assumptions are, and then they want to make sure that when they are scoring bills, all bills that would affect healthcare, for example, that they're using a common set of assumptions so that they're not disadvantaging one bill versus another simply because they're using different assumptions.

Kevin Kosar:

Right. I've also heard from congressional staff that I've worked with that CBO scores can be doubted just because they can be difficult to understand. A score on a particular bill may only be two pages, and it has a whole bunch of numbers, but where those numbers came from is not immediately clear. But the other reason is that if it's a piece of legislation dealing with mandatory spending, it can have consequences for the probability of whether the legislation can make it through the House and the Senate. It's not just, oh, there's a bit of red ink attached to this proposal. It actually triggers parliamentary hurdles of sorts. Is that correct?

Philip Joyce:

Yes, it is correct. One of the things that CBO cost estimates do is that they can trigger, for example, in certain cases, and it's probably too arcane to go into all the specifics, but I think it's important to note that there are points of order that can be raised in both the House and the Senate that are triggered by the fact that a CBO cost estimate might cause a provision, for example, of the budget resolution to be exceeded. So it really is true that the Congress in many cases, for either political or procedural reasons, is trying to hit a particular target. And if it misses that target, even by a little bit, according to the CBO cost estimate, that can cause the bill to have to at a minimum go back and be redone.

Kevin Kosar:

That of course, unfortunately, would pull this third-party umpire-type figure, the CBO, into controversies, because it's viewed because of these parliamentary procedures that it's the CBO’s fault that the bill is going to face a higher climb through the legislature.

All right, one last question. CBO has been around for about 50 years. Does it need any alterations or updates?

Philip Joyce:

Well, it’s kind of useful to talk about a couple of things that CBO has been criticized for. First, there are some people, and I think this is sort of implied by the end of your last question, who think that CBO is not very transparent about how it does its estimates. Now, I think CBO is probably more transparent than a lot of people think that it is, but CBO has actually spent a lot more time and effort over I would say the last 10 years trying to be more transparent about its cost estimates, the methodology that goes into its cost estimates, and publishing separate reports that say, this is how we go about doing estimates for, for example, healthcare programs. So I think that's a place where CBO is continuing to work.

The second criticism is that CBO pays too much attention to costs and not enough to benefits. That...

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