What is the Purpose of the Congressional Budget Office?
The Congressional Budget Office analyzes the budget and the economy for Congress. It is an independent, nonpartisan group, created by Congress, for Congress. It acts as a legislative counterweight to the President’s Office of Management and Budget (OMB). The agency’s role is purely analytical, meaning the CBO doesn’t write bills, enforce budget rules, implement regulations, lobby Congress, or conduct audits.
When and Why was the CBO created?
Congress created the CBO in 1974 by the Congressional Budget and Impoundment Control Act (P.L. 93-344; July 12, 1974; 2 U.S.C. 601-603) – a bill designed to reassert congressional authority over the budget process.
The CBO was created to provide Congress with budget information independent of the Executive Branch. Beginning in the 1920s, the Executive Branch began to expand its authority over setting and advancing budget priorities. The 1921 Budget and Accounting Act gave the President overall responsibility for budget planning and created a federal agency that reports directly to the President on budget analysis, planning, and implementation – the OMB. During the New Deal era, the Executive Branch used the OMB to inform the President on funding for new programs. While the President had this in-house team to focus on the administration’s budget priorities, Congress remained a fragmented body without a means of coordinating clear budget goals or developing budget information outside of the Executive Branch.
The need for a congressional budget agency peaked in 1974. The budget debate that year was a difficult battle between the Executive and Legislative branches. President Richard Nixon threatened impoundment over policies he opposed – an action that would have withheld congressional appropriations for programs contrary to his policies. The standoff led congressional leaders to enact the 1974 Congressional Budget and Impoundment Control Act, which reasserted congressional budget authority by establishing 1) procedures to control impoundment; 2) budget committees in the House and Senate; 3) a timeline for a regular, annual budget process; and 4) the CBO – an institution created by Congress, for Congress, to inform its own budget process with independent economic analyses.
CBO Evolution: Then and Now
The role of the CBO has not changed over time, even though policies, programs, and budget baselines continually evolve. The organization has remained nonpartisan and draws the raw data for its analyses from a wide variety of sources, including the Treasury and Labor Departments, the Census Bureau, state and local governments, the OMB, industries, think tanks, and academic research. The processes specified in the Congressional Budget and Impoundment Control Act of 1974 are still used today. The CBO currently has about 220 staff, and an approximately $45 million budget (FY 2013). According to the CBO, most of its staff members are economists or public policy analysts. The organization is organized into eight divisions: Budget Analysis; Financial Analysis; Health, Retirement, and Long-Term Analysis; the Macroeconomic Analysis; Management, Business, and Information Services; Microeconomic Studies; National Security; and Tax Analysis.
CBO Leadership: Who’s in Charge?
According to its statutory mission, CBO is an independent, nonpartisan agency. Unlike Executive Branch agencies, there are no political appointments for CBO leadership positions. The CBO director must be chosen “without regard to political affiliation and solely on the basis of his fitness to perform his duties” (2 U.S.C. 601(a)). Directors are appointed to four-year terms and may be reappointed. The organization has had eight directors since its establishment in 1974. The current director is Douglas Elmendorf, who has been acting since 2009.
CBO Functions: Key Operations
The CBO’s primary function is to project the costs of legislation and federal programs to Congress, and to provide a counterweight to the President’s Budget. The CBO reports directly to the Joint Committee on Taxation. Among its most significant routine reports are:
Cost Estimates for Individual Bills –These estimates demonstrate a bill’s impact on spending or revenues over the next 5 to 10 years. In a given year, CBO analyzes anywhere from 500 to 700 bills.
Budget Baseline & Economic Forecast Products - These reports provide spending and revenue forecasts for expenditures already authorized and cover the 10-year Congressional budget process. Congress uses these projections as a baseline for developing and reauthorizing legislation. As a result, CBO’s projections are closely watched and are, at times, controversial The projections are typically released annually in January and updated in August.
Analysis of the President's Proposed Budget – Released every March, this report serves as an alternative cost estimate of the White House’s proposed budget.
Scorekeeping Reports –These reports update Congress on whether legislative actions match the budget’s spending and revenue levels.
The CBO’s conclusions are generally not challenged. However, many of the CBO’s cost estimates of bills involve highly complex analytical methods. These methods are often scrutinized and used by members of Congress to advance or hinder progress of sensitive legislation. For example, the legislation to overhaul the U.S. immigration system (S. 744) was improved in June 2013 when the CBO estimated the bill would reduce the deficit by $200B over the first 10 years and $700B over the second 10 years, using a “dynamic scoring” method. This analysis deviated from many CBO reports in that it took behavioral change factors into account that could impact the U.S. economy, such as any changes in labor supply. This method was contentious, and the CBO noted that assuming such macroeconomic effects were “highly uncertain.” However, the CBO is required by law to lay out its analytical process so its approach can be scrutinized. The CBO states that its assumptions aim for the “middle of the distribution of possible outcomes” and that the agency strives “to communicate clearly the basis for those estimates and the uncertainty surrounding them.”
Engagement: Citizen Participation
CBO reports are available to the public and accessible through CBO’s website. Users can create online accounts to track and receive automatic updates when CBO reports are made publicly available.
Location: Where is the CBO Located?
The CBO is located on the fourth floor of the Ford House Office Building in Washington, DC.
Congressional Budget Office: www.cbo.gov
Recent CBO Reports:
Economic Effects in 2014 of Eliminating the Automatic Spending Reductions Specified in the Budget Control Act: http://www.cbo.gov/publication/44630
Federal Debt and the Statutory Limit, September 2013: http://www.cbo.gov/publication/44608
H.R. 3204, the Drug Quality and Security Act: http://www.cbo.gov/publication/44631