House Budget Committee Concludes CBO Oversight Series

Mar 29, 2018 | Budget Process

The House Budget Committee held its final hearing in its series on oversight of the Congressional Budget Office (CBO) on March 14. Committee for a Responsible Federal Budget president Maya MacGuineas testified alongside Sandy Davis, former CBO Associate Director for Legislative Affairs and current Senior Advisor at the Bipartisan Policy Center. Their testimonies were preceded by a panel consisting of former CBO directors Alice Rivlin (also a CRFB board member) and Doug Holtz-Eakin.

The hearing, titled "CBO Oversight: Perspectives from Outside Experts,” solicited input from non-governmental experts on the role of CBO in the budget process, including exploring ways to increase transparency and accountability for the agency. The witnesses noted the importance of CBO’s role as a nonpartisan entity scoring legislation and providing economic information for Congress, how CBO's mission has evolved, the increase in responsibilities CBO has experienced, and the need for more staff and resources if CBO is to expand its operational capacity.

Watch the hearing below:

Chairman Steve Womack (R-AR) began the hearing stating that the two themes that had emerged from the committee’s previous CBO oversight hearings were the desire to improve CBO’s accuracy and its transparency. Ranking Member John Yarmuth (D-KY) expressed his continued support for CBO and the importance of its role as an unbiased independent source of budget projections and analysis.

In the first panel, Alice Rivlin and Doug Holtz-Eakin provided insight on the history and role of CBO. Rivlin said that as the first director of CBO, she had worked to create a strong, nonpartisan agency and recruit talented, impartial staff. She felt that her most important contribution to the nonpartisan credibility of CBO was insisting that CBO not make policy recommendations. CBO is still performing at a high level after 43 years, Rivlin noted, because Congress recognizes its need for neutral estimates and has protected CBO from attacks.

Rivlin stressed that while CBO needs to be as transparent as possible to maintain its credibility, providing detailed information on all of CBO's methods and models is time consuming and would require more staff. CBO also faces a constant dilemma of "responsibility creep" – where new responsibilities risk overtaking existing ones. She noted that if the budget committees want CBO to take on more responsibilities, then they should work with the agency to make sure it has the necessary resources.

Holtz-Eakin said that CBO is "a gem" among federal agencies, and he hoped that Congress would have more regular CBO oversight hearings if only to help Members better understand what CBO does. He outlined what he saw as two different approaches for increasing CBO's transparency: under one approach, CBO could publicly share all of the models and data they use in developing scores, but this would miss the important fact that scoring legislation is not simply a matter of plugging numbers into a model. CBO's job is ultimately to provide a score based not only on model results, but also on sound judgement and past experiences. A superior approach for improving transparency, according to Holtz-Eakin, is to improve explanations of how CBO arrives at certain estimates. Holtz-Eakin focused on the fact that CBO is not primarily trying to forecast – rather, scoring inherently ranks different effects and involves tradeoffs in different directions. Finally, he said that communication is one of the most important aspects of Congress working with CBO because Congress should feel that it understands what goes into every CBO score and estimate.

Much of the question and answer portion focused on improving communication between lawmakers and CBO as well as how to improve CBO's transparency. Both Rivlin and Holtz-Eakin expressed support for continued oversight hearings to hold CBO accountable and ensure it is fulfilling its duties, but they also cautioned lawmakers against getting frustrated when CBO's analyses had different results than they desired. In response to a question on how accurate CBO's past scores have been, Rivlin stressed that it is important for lawmakers to understand CBO's role as a scorekeeper rather than a forecaster – it is not CBO's job to predict the future, but rather to provide a neutral benchmark for comparing policy choices. Holtz-Eakin concurred with this sentiment, noting that it is important for Congress to figure out which issues they would like CBO to analyze so that it can do so effectively and efficiently. Both witnesses agreed that requiring CBO to publish more information on its estimating approaches and modeling efforts would require more resources, as otherwise doing so could take away time from CBO's other functions.

The hearing's second panel featured Maya MacGuineas and Sandy Davis. MacGuineas's testimony focused on how CBO has done an admirable job as Congress's independent referee and how CBO can improve its transparency without undermining its function. She pointed to several recent CBO reports that have increased transparency by providing insight into CBO's processes. At a time when the debt is at a post-war record high and rising unsustainably, MacGuineas said, an impartial budget scorekeeper is more important than ever. She commended CBO for its work and urged lawmakers to consider the tradeoffs of increasing transparency and how it would likely require more resources that are paid for appropriately.

Sandy Davis's testimony focused on his perspective from years of work at CBO. He stressed how important the agency's independence is, how effective communication is its largest challenge, how CBO could provide more transparency with more resources, and that the budget committees can be a key ally in increasing CBO's effectiveness. He concluded with a reminder that CBO works for Congress and does its best to fulfill its mission.

Chairman Womack asked the panel what suggestions they had for the new Joint Select Committee on Budget and Appropriations Process Reform. MacGuineas suggested many budget process reform options, ranging from more incremental to structural changes in the process. She gave examples like automatic continuing resolutions, passing a rule that no bill with a net cost could be enacted without a budget in place, or putting in place a joint budget resolution agreed to by the President and both chambers of Congress. Davis concurred with many of those ideas, adding that perhaps they should look at biennial budgeting or ideas to strengthen the budget committee. Ranking Member Yarmuth gave the panelists the opportunity to talk about anything they'd like to add to the conversation, to which MacGuineas responded that the fiscal challenges we face come from Congress and should not be blamed on CBO. Davis said that Congress should know that CBO would welcome the opportunity to communicate with lawmakers and explain the thinking behind its analysis.

Representatives Jim Renacci (R-OH) and Jodey Arrington (R-TX) asked the panel about how well CBO does at accurately providing analysis in a timely manner, and both Davis and MacGuineas responded that they are quite successful at doing this. Davis remarked that all things considered, CBO has done a good job under its time constraints and ability to give a midpoint of a range of estimates; MacGuineas mentioned how CBO is working on providing an "analysis of actuals" and seeking further outside input to help guide their technical processes. Representative Gary Palmer (R-AL) asked MacGuineas about whether CBO's rules lead to gimmicks, to which MacGuineas responded that lawmakers have come up with various things to get around the rules they set for themselves (read about them here). Representative Jack Bergman (R-MI) asked whether Congress constantly changing hands presents challenges to CBO's job, and Davis responded that new policy agendas and new ideas will always present uncharted territory for CBO to have to figure out how to navigate.

With this final oversight hearing, the budget committees provided a great opportunity for the public and lawmakers to better understand how CBO fulfills its important job. We hope that this reinforces the strong support the agency receives from many lawmakers and enables CBO to do its job even better.