Maybe It Is Best the CBO Is Now Partisan

Doug ElmendorfPreviously, I’ve been concerned about what the Republicans were doing to the Congressional Budget Office (CBO). It has long been known that they wanted to turn the nonpartisan organization into something akin to the Heritage Foundation — something that would simply parrot back to them whatever they wanted to hear. And mostly what they wanted to hear was that if you cut taxes on the rich, they will act like the Great Pumpkin and reward the economy with loads of jobs. So in December, I wrote, How Republicans Intend to Destroy Congress. That was in reference to the effective firing of the CBO chief Doug Elmendorf.

Now, Jonathan Chait sounds the next alarm, Why the Republican Congress’s First Act Was to Declare War on Math. The Republicans changed the rules of CBO analysis so that “dynamic scoring” must be used in the analysis of budgetary proposals that are larger than one quarter of a percent of the size of the GDP. Chait is correct that the Republicans are just turning the CBO into a partisan organization. Its good reputation for nonpartisan analysis will be destroyed. And who then will Congress and the rest of the country look to for “the straight dope” on matters economic?

But is it really such a big deal? I’ve really been questioning that. Chait is right that the CBO analyses are “necessarily imperfect” but “arrived at fairly.” But he downplays just now imperfect the CBO is. Here’s an example from his own article:

The CBO forecast that the unemployment rate would fall to 7.6 percent by the end of 2014. If the conservative analysis [with dynamic scoring] was correct, and higher tax rates on job creators were depressing job growth, we might expect the unemployment rate today to be higher than the CBO forecast. Instead it is much lower. Unemployment fell below 6 percent by the third quarter of last year.

So with dynamic scoring, the CBO would have been even further off. But given that it was off by 27%, does it really matter? Would being off by 35% have been significantly worse? I think what this illustrates is that the CBO already has a conservative bias — a much bigger one than dynamic scoring. So the status quo has been that Democrats have dutifully followed the conservative analyses of the CBO, which has forced them to create worse legislation than they normally would have. I’m thinking specifically of the stimulus. If the Democrats had changed the way the CBO operated, we would have gotten a bill with more infrastructure spending and less tax cutting. But because of the way the “objective” CBO scores things, tax cuts for the rich and highway building improve the economy equally. And that’s dead wrong.

The problem with the very notion of anything “nonpartisan” is that people think it means that it is objective. But clearly that is never the case. The CBO is biased in ways that I think are demonstrably wrong. This change by the Republican Congress will make the work of the CBO even worse. But at least everyone will recognize that. People won’t talk about the CBO as though it were some hallowed organization. And it means when the Democrats have control of the CBO, they can change it to something that does a better job of analyzing than it did in the “good old days” when it simply assumed (against all evidence) that infrastructure spending didn’t stimulate growth.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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