There’s been a lot of talk lately about the CBO and its projections. The CBO stands for the Congressional Budget Office. This department of congress was enacted back in 1974. You can imagine the discussions leading up to the creation of this department:
Senator A: “Say, friend and colleague, I’ve got a dandy bill we should all vote for.”
Senator B: “Sounds, peachy. What’s it gonna cost us?”
Senator A: “Geepers, I have no idea.”
Senator B: “Too bad we don’t have some sort of congressional budget office to figure these things out.”
Senator A: “That is too bad. Say, wait a minute! We’ve got the power. Let’s make one! We’ll call it the congressional budget office.”
Senator B: “You call it that. I’m gonna call it the CBO!”
Senator A: “Swell. Let’s shake on it!”
Okay, so maybe that wasn’t exactly the conversation that took place. The director of the CBO is appointed by the Speaker of the House of Representatives and the President pro tempore of the Senator after their respective budget committees have made recommendations. The CBO staff is made up of economists and public policy analysts. Most of these folks have advanced degrees in economics. That’s gotta be some wild Christmas party, huh?
For the record, here is the CBO’s official mission statement: “Under the Congressional Budget and Impoundment Control Act of 1974 the annual Congressional budget process begins with adopting a concurrent resolution on the budget that sets forth total levels of spending and revenues, and broad spending priorities, for several fiscal years. As a concurrent resolution, it is approved by the House and Senate but does not become law. No funds are spent or revenues raised under the budget resolution. Instead, it serves as an enforceable blueprint for Congressional action on spending and revenue legislation. CBO assists the House and Senate Budget Committees, and the Congress more generally, by preparing reports and analyses. In accordance with the CBO’s mandate to provide objective and impartial analysis, CBO’s reports contain no policy recommendations.”
So that basically means any bill that is going cost the taxpayers money has to be scored by the CBO. Before it can be voted on, the bill is sent over to the CBO offices (which are open for visitors) where the gaggle of accountant number crunching wonks over there get busy to put forth their projections. Those numbers are delivered back to congress and met with either cheers or jeers depending on which side of the proposed bill you are on.
The real issue comes with accuracy. Can the CBO numbers be trusted? For the most part, the CBO has maintained a fairly decent record as a non-partisan organization which is pretty hard to do when you’re actually working inside the government. Most of their estimates err on the side of caution by under estimating the costs. That’s got to be good all around, right?
Not every projection the CBO put forth has withstood the test of time, especially with those ten year projections that congress members love to embrace. Imagine were we were in 2000 versus where we are today. Could anyone actually predict all the wars, the natural disasters and the stock market tanking and factor that into estimates? Nothing would ever get done in congress that way (all evidence to the contrary).
This doesn’t mean that the CBO estimates should be taken with a grain of salt. But as a fairly representative forecast they are still a decent foundation upon which to build a consensus. Unless of course you don’t like the numbers. Then it’s Katy bar the door!
— Meyer
