Give the CBO long-range tools


Congressional Budget Office (CBO) Director Douglas Elmendorf addresses The Atlantic's Economy Summit during an onstage interview in Washington March 18, 2014.

Article Highlights

  • It’s time to give the CBO the resources it needs to present long-term budget projections to Capitol Hill.

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  • CBO makes only 10-year projections for official score keeping purposes.

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  • Under the Ribble-Pocan bill, CBO would be able to inform Congress about the impact a proposal would have on the economy over the long term.

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  • This would ensure that policymakers have the nonpartisan budget analyses they need to make good decisions.

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Congress regularly weighs policy reforms that affect our national economic mooring for decades, but the Congressional Budget Office (CBO) is limited in its official scoring to a 10-year budget horizon. It’s time to give the agency tasked with estimating the cost of congressional policy proposals the resources it needs to present long-term budget projections to Capitol Hill.

A bill introduced this week by Representatives Reid Ribble (R-WI) and Mark Pocan (D-WI) would do just that by creating a new division within CBO tasked solely with long-term budget scoring. The bill is particularly timely as the House of Representatives recently passed budget-reform proposals that would require CBO to undertake additional long-term analyses.

CBO’s mission is critical. It produces independent and nonpartisan analyses of budget and economic policies and estimates the fiscal impact of legislation considered by Congress. Essentially, the agency tells Congress how much money is required to implement a given policy change and often also estimates the economic consequence of that change. For example, CBO’s assessment of a minimum wage increase to $10.10—that it would increase wages for 16.5 million low-income workers but also cost 500,000 jobs—captured national headlines and steered debate on the issue. Likewise, when Congress was considering the Affordable Care Act, CBO’s forecasts of changes in the number of uninsured and estimates of the bill’s budgetary consequence had tremendous impact on the final legislation.

CBO operates according to rules established by the Congressional Budget and Impoundment Act of 1974, and the agency has long made only 10-year projections for official scorekeeping purposes. But Congress often needs information about the long-term impact of a policy change. Policies that were adopted (or not adopted) decades ago certainly affected the economy and the federal budget today in profound ways. 

For example, the Hatch-Waxman legislation that created the modern generic drug industry in 1984 saved purchasers $8 billion–$10 billion in 1994; by 2012, annual savings had ballooned to $217 billion. The 10-year budget window certainly did not capture savings of this magnitude. Likewise, policies ranging from the Federal Aid Highway Act of 1956 to welfare reform in 1996 have had significant budget and economic impacts well beyond the conventional 10-year budget window. Looking forward, CBO projects that federal health care spending will rise from 4.9 percent of the economy this year to 13.8 percent in 2088. A long-range budget analysis of any reform proposal would allow policymakers to consider how legislation might affect this projection in the coming decades.

Under the Ribble-Pocan bill, if the data exist to guide the work, CBO would be able to inform Congress about the impact a proposal would have on the economy over the long term. While this certainly won’t fix the partisan gridlock over economic policy decisions, it can go a long way toward ensuring that policymakers have the clear, long-term, nonpartisan budget analyses they need to make good decisions. Given how this longer view might have affected the choices made, or not made, on Capitol Hill in the 40 years since CBO was created, this is a proposal worth considering.

Alex Brill is a research fellow at the American Enterprise Institute. He was formerly the chief economist and policy director to the House Ways and Means Committee.

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