The Congressional Budget Act of 1974 established the Congressional Budget Office, an agency designed to provide lawmakers with objective information about the budgetary impacts of proposed bills. Up until that point, the scorekeeping within the government came from the executive branch.
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As Senate Republicans get to work on making changes to the massive bill filled with top GOP priorities that recently passed the House, you’ve probably heard a lot of criticism lobbed at the Congressional Budget Office, also known as the CBO.
The CBO, which analyzes the budgetary impacts of bills, projected that Congressional Republicans’ signature legislation would increase federal deficits by about $2.4 trillion over a decade.
That eye-popping figure is drawing a lot of ire from Republicans, from President Trump to top lawmakers in Congress.
“We’re not buying the CBO’s estimates,” House Speaker Mike Johnson, R-La., said earlier this week.
Sen. Rand Paul, R-Ky., told Fox Business the CBO is “government bean counters based on government rules, not market rules. Never heard of economic growth.”
President Trump referred to the agency as “Democrat controlled” in a post on his social media site, Truth Social.
But the CBO’s work is nonpartisan. So…what gives?
Let’s take a closer look at the agency in the hot seat.
What goes in and what goes out?
The CBO was established when Congress passed the Congressional Budget Act of 1974, after increasing tensions between the legislative and executive branches.
Up until that point, scorekeeping within the government had come from the executive branch, which by nature has a partisan tilt.
Jessica Riedl, a senior fellow at the right-leaning Manhattan Institute, said the CBO was designed to provide lawmakers with objective information about the budgetary impacts of proposed bills.
“It is important as a separation of powers for Congress to have their own scorekeeping agency so that they’re not dependent on the White House to tell them what the budget looks like and how much legislation will cost,” Riedl said.
A spokesperson for the CBO declined to comment for this story.
The CBO acts as a counterbalance to the executive branch’s Office of Management and Budget. Its job is to calculate how much bills would increase or decrease revenues to the U.S. Treasury and how much spending would go out of the Treasury.
Think of it like your own household budget, but on steroids.
“You go to the store and they tell you what the prices are. CBO’s telling [Congress] what the prices are,” explained Douglas Holtz-Eakin, who served as director of the CBO from 2003 to 2005.
“What’s the food? What’s the gasoline? How much is the rent going to be? How does this add up? Do we make our budget or not?”
Importantly, CBO cost estimates are only advisory. The agency makes no policy recommendations. It’s up to lawmakers to decide what to do with the information they receive.
The Congressional Budget Office analyzes the budgetary impact of Congressional bills.
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‘Predicting the future is really, really hard’
Sometimes, scoring a bill is fairly easy. Say Congress wants to rename a post office. That’s pretty straightforward — not something that will keep CBO analysts working overtime.
But others are extremely complicated.
Holtz-Eakin recalls having to score terrorism risk insurance during his tenure.
“It’s a federal backstop to the private property casualty insurance company for losses in the event of an unknown terrorist attack at an unknown time in the future, in an unknown location using an unknown weapon,” he said. “How much will that cost? Well, that’s just incredibly hard.”
He said a common misconception is that there’s already a model for everything.
“Like you just drop the bill into a slot and out comes the answer,” he said. “And the problem is the CBO went to the wrong model shop and bought the wrong model — that’s not at all what we’re doing.”
Around 275 people work at the CBO, including economists, budget analysts, demographers and other experts. Each year, the CBO publishes around a thousand cost estimates. The CBO will at times incorporate tax figures provided by another nonpartisan arm of Congress, the Joint Committee on Taxation.
Holtz-Eakin, who runs the center-right group, American Action Forum, said CBO reports are “as fair as they can make it,” given that “predicting the future is really, really hard.”
CBO critics point to the agency underestimating revenues following the passage of the 2017 tax bill by roughly $1.5 trillion. Scorekeeping watchers note that gap is due to the unanticipated COVID-19 pandemic and resulting high inflation.
Riedl, who previously worked as chief economist to Sen. Rob Portman, R-Ohio, said the CBO is more accurate than critics suggest.
“It’s easy to beat up on the CBO and their projections certainly are not perfect but projecting how new tax changes will affect the economic decisions of 330 million Americans is extraordinarily complicated, and there’s always going to be a margin of error,” Riedl said.
House Majority Leader Steve Scalise (R-La.) speaks at a press conference following a House Republican caucus meeting at the U.S. Capitol on Wednesday.
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Allegations of partisanship
Although Republicans are currently the party criticizing the CBO, digs at the agency have come from both sides of the aisle. Democrats pushed back at CBO’s scores during the legislative efforts of the Affordable Care Act and Build Back Better.
“The only new thing here is the involvement of the White House so explicitly,” Holtz-Eakin said, nodding to public criticism from the president and the White House press secretary. “The White House has often let their congressional allies fight that fight.”
He said while there are “reasonable criticisms” on the timeliness of some of the CBO estimates over the years, concerns about partisanship are misplaced.
“[The CBO] has nonpartisanship in its DNA,” he said.
The agency, which has sections on its website about objectivity and transparency, said it enforces strict rules that limit employees’ political activities.
Riedl compares the agency to the civil service, where nonpartisan staff stay regardless of whether the president is a Democrat or Republican.
“Congress doesn’t have a lot of neutral, nonpartisan staffers that stick around regardless of the party in power,” she said. “CBO is one of those few offices.”
But in Washington, no one is immune from gripes about partisanship.
“Congress gets to hide behind you and they get to vent at you. Sometimes they’re just very frustrated and they scream at the CBO director, and that’s just the role you play,” Holtz-Eakin said. “It’s not personal.”
But eventually, you’d think lawmakers get a score they’re happy with and then heap praise on the CBO, right?
Holtz-Eakin laughs.
“When they’re really happy, they say, ‘We did a great job,'” he said. “When they’re really unhappy, they say, ‘CBO screwed this up.’ That’s how that works.”
