When Congressional legislative battles heat up, Members of Congress, outside interests, and the media often focus on whether policy proposals will increase the federal deficit or save taxpayers money. While data from all sides are used to inform these debates, budget estimates from the Congressional Budget Office (CBO) become the final, authoritative word. This role of budget scorekeeper makes CBO a lightning rod for criticism, at least until the next debate. Few organizations influence the federal policymaking process more than the CBO.
What is the CBO?
Following the Watergate scandal, Congress began a concerted effort to recapture various authorities and responsibilities that, over time, had been delegated to the Executive Branch. In order to break Congress’s reliance on the White House’s Office of Management & Budget (OMB), the 1974 Congressional Budget & Impoundment Control Act created the CBO. Organized within the Legislative Branch, the CBO would provide Congress with objective, nonpartisan analysis of federal budget issues and the impact of new policy proposals. Congress established a formal process for appointing a CBO Director—who would serve a four-year term once appointed—and giving the Director independent authority to hire a professional staff of budget analysts insulated from the political process.
What does the CBO do?
CBO supports Congress by providing budget analysis and information throughout the legislative process. CBO releases periodic reports that examine key budget issues and project federal spending and deficits. In addition to these regular publications, CBO provides spending and savings estimates, called “scores”, for legislation under consideration by Congress. CBO works closely with the Joint Committee on Taxation, which is responsible for estimating the impact of tax policy changes, to provide comprehensive estimates for large legislative packages.
What role will the CBO have in solving our big issues?
A negative score from CBO—for instance, finding that a bill will add substantially to the federal deficit or increase other costs for the public—can effectively kill a piece of legislation. As a result, policymakers consult informally with CBO before legislative packages are ever released to the public. Congressional committees and bill authors use these informal conversations to make adjustments that ensure their bills will receive a positive formal score. This informal process significantly shapes major legislative efforts. At the same time, although CBO does not make recommendations to Congress, in recent years it has released volumes of “policy options” that highlight policy proposals from across the political spectrum along with estimates of their budget impact. Similarly, policies stalled in Congress but scored by CBO during the process are filed away for future use. Congressional reliance on this process often leads policymakers to reject new, innovative budget ideas, in favor of “off-the-shelf” items that have already received a positive score.
Links to Other Resources
- Congressional Budget Office (CBO) – Overview
- Congressional Budget Office (CBO) – CBO’s Economic Forecasting Record: 2010 Update
- Congressional Research Service (CRS) – CBO: Appointment & Tenure of the Director & Deputy Director (RL31880)
- The Public Manager – Review of “Congressional Budget Office”, by Philip G. Joyce
- Federal Reserve Bank of St. Louis – How Good Are the Government’s Deficit and Debt Projections and Should We Care?
- The Commonwealth Fund — Does the CBO Underestimate Savings from Reform?