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Wonkology: Congressional Budget Office

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June 6, 2017

A nonpartisan legislative branch agency that provides independent economic analysis of proposed legislation.

You Better Work!

The Congressional Budget Office (CBO) was created in 1974 as part of the Congressional Budget and Impoundment Act, which also modernized the overall budgetary process in Congress. The creation of the CBO stemmed from conflict between the Nixon Administration and the Democratic-led Congress. It was meant to counter over-reliance on the White House’s Office of Management and Budget (OMB). The CBO serves to protect Congress’s “power of the purse” from executive branch encroachment and to be a neutral scorekeeper on legislation.

Lipsync for Your Life

The CBO provides a multitude of analyses, including cost estimates of bills, long-term budget projections, and “reestimates” of the President’s budget based on CBO’s own economic forecast. The CBO has a series of economic models for different programs. Health insurance legislative models, for example, are based on data sets and assumptions about the way people respond to incentives. To ensure the analysis is nonpartisan, CBO estimates do not include policy recommendations.

The CBO’s director is appointed by the Speaker of the House and the Senate president pro tempore, with input from the chairs of the budget committees. In 2015, House and Senate Republicans appointed Keith Hall, the CBO’s current director, to a four-year renewable term. Because the director is appointed by political leaders, the CBO is not immune to politics. Politicians from both parties have criticized CBO estimates when they interfere with their priorities. President Reagan criticized the CBO’s deficit projections by calling them “phony.” President Clinton lobbied the CBO director to change the scoring of his 1993 healthcare proposal. As a candidate, President Trump used the CBO scoring of the Affordable Care Act to criticize the law.

Sashay… Away

CBO scores are very influential in the legislative process. Legislators are often forced to rewrite or abandon legislative proposals based on CBO scores and projections. Following the release of the CBO’s initial March scoring of the American Health Care Act (AHCA), which estimated nearly 24 million people would lose coverage under the legislation, House Republicans were forced to revise the bill to attract support from the more moderate members of the GOP caucus. Upon securing a deal with those moderates, House GOP leadership moved the revised bill through the House without a CBO score. The CBO subsequently found that a similar number of Americans would lose coverage despite those subsequent revisions to the law. In response, the Trump Administration questioned the accuracy and necessity of the CBO. But GOP leaders in the House emphasized CBO’s findings that the legislation would lower healthcare premiums and cut the federal budget deficit. Once again, this time with the ACHA, a CBO score has become political, with each side using CBO’s conclusions to find political advantage.