Evidence-based public policy and cost-benefit analysis are essential to efficient government. Given the complexity of the modern economy, policymakers have come to rely on the impartial analysis of highly-trained professionals to assess the effects of their decisions.
Without such analysis, policymakers would be flying blind, acting without reliable knowledge of different policies’ effects. Since its founding in 1975, the Congressional Budget Office (CBO) has been one of the most important institutions for illuminating the policy choices facing the nation.
Recently, one of CBO’s primary functions has come under attack. House Freedom Caucus Chairman Mark Meadows (R-N.C.) proposed to eliminate CBO’s Budget Analysis Division, which provides “scores” of legislative proposals, outlining their likely budgetary effects. Instead of issuing its own scores, CBO would simply aggregate the projections of a number of think tanks, including the Brookings Institution, the American Enterprise Institute, the Urban Institute and the Heritage Foundation.
Cutting the CBO’s resources and responsibilities would be profoundly unwise. The CBO has a unique role in our democracy, bringing high-quality evidence to bear on important public policy questions. Although the CBO’s projections have not been perfect — no forecasts ever are — the CBO has provided vital information to policymakers who would otherwise lack an understanding of the probable costs and benefits of their actions.
The agency’s Budget Analysis Division performs the work of producing cost estimates for congressional bills. The statutory Pay-As-You-Go Act of 2010 generally requires that laws affecting revenues or direct spending do not increase budget deficits, so having accurate cost estimates is essential.
The 89 employees of the Budget Analysis Division are experts in the details of the legislative process and budgetary analysis, allowing them to evaluate intricate legislative proposals in real-time. They are subject to strict rules that eliminate conflicts of interest and limit their political activities, reinforcing CBO’s reputation for objective analysis.
Evaluating complex legislative proposals and projecting their costs is meticulous, unglamorous work that no think tank has the resources or the motivation to perform comprehensively. CBO scorekeepers often work on tight time schedules and interact intensively with congressional committees as they refine their legislative proposals. Think tanks often rely on the results of CBO analyses, but typically do not employ staff with the specialized skill or experience to estimate a bill’s cost or likely impact.
CBO’s budgetary analysis has, at times, drawn criticism from both Republicans and Democrats. Some Republicans have recently lambastedthe agency’s scoring of efforts to repeal and replace the Affordable Care Act. But in other instances, CBO’s analysis has been criticized by Democrats. For example, during the debate preceding passage of the Affordable Care Act, several prominent Democrats questioned the reliability of CBO analysis showing higher-than-expected costs of Democratic healthcare reform proposals.
To be sure, many think tanks produce high-quality analyses of policy ideas, and that analysis is an important part of our policy discussion. But CBO is different in that it does not make policy recommendations and maintains strict neutrality. Without a single, impartial arbiter to score the budgetary implications of policy options, there is likely to be substantial confusion about these implications. Individual policymakers would have strong incentives to cherry-pick forecasts that portray their proposals in the most positive light.
The Congressional Budget Office has a valuable tradition of independence and professionalism. Eliminating CBO’s Budget Analysis Division would deal a serious blow to nonpartisan, evidence-based public policy.
Gabriel Ehrlich is the director of the University of Michigan’s Research Seminar in Quantitative Economics and formerly an employee of the Congressional Budget Office. Ryan Nunn is the policy director of The Hamilton Project at the Brookings Institution.