Recently, the Congressional Budget Office (CBO) has been in the news because of its analysis of the House Republicans plan to replace the Affordable Care Act. SPP Professor and Senior Associate Dean Phil Joyce, as the author of the history of CBO (The Congressional Budget Office: Honest Numbers, Power, and Policymaking—Georgetown University Press, 2011) has been in some demand by reporters seeking to understand more about the office and to provide some context for this estimate. We asked Professor Joyce to answer some questions about CBO, and links to stories including his recent interviews on the topic appear below.
Why does CBO exist?
In 1974 the Congress passed a bill, called the Congressional Budget and Impoundment Control Act, designed to strengthen the role of Congress in the budget process. It created CBO as a nonpartisan source of information on the budget and economy.
Why does CBO’s analysis of this bill matter?
The first thing to understand is that the law that created CBO requires it to prepare an analysis, called a cost estimate, of any bill that is reported out of a Congressional committee. This is so Congress will know how much a given bill will cost, or save, relative to the baseline, or what would happen under current law. In this case, there are additional factors being analyzed as well, including the number of people who will have health insurance and the effect of changes in legislation on insurance premiums.
Why does anyone pay any attention to CBO?
Because it is nonpartisan, and therefore has developed a reputation for objectivity over its history, many in the press and the public regard CBO as a credible source of information on these matters. They believe that CBO is not trying to either help a bill get passed or to kill it, but rather to inform the process of making policy.
Does this mean that CBO “scores” are accurate?
No. These cost estimates typically extend 10 years into the future, and the only thing that we know with certainty is that they will be wrong. The probability of error is even greater in an area like health care, and the further out that the analysis is extended. CBO was found to have been more accurate on the cost and coverage of the Affordable Care Act than other organizations, but no one came very close.
What effect does all of this have on the average American?
First, people should care whether future policy is made based on credible, unbiased information. Second, these CBO estimates have a history of influencing the way legislation is eventually drafted. For better or worse, the Affordable Care Act would not look the way it does today if not for the analysis of CBO, which led to many changes in the law.
I don’t really believe that anyone is unbiased. Why should I believe that CBO is?
First, the agency hires very able staff who take seriously the job of coming up with the best estimates they can. Second, the first director, Alice Rivlin, instilled a culture of nonpartisanship that is just part of the culture. Finally, the only thing that CBO has going for it is its credibility. If it became viewed as just another source of partisan information, no one would pay any attention to it. So its ability to be influential is joined at the hip with its credibility.