The need for CBO reform

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During the past week, the House voted to direct the Congressional Budget Office (CBO) to use ???dynamic scoring??? of legislation. I???ll wait while you yawn, but this is actually an important development.

CBO has used dynamic scoring in the past on multiple pieces of legislation ??? it???s an attempt to score not just the obvious impact of a piece of legislation but also what will happen to the economy because of the changes that are made. This is a logical thing to do, from my perspective and the perspective of many analysts who are serious about reforming government, because government policy has such a massive impact on today???s economy. People respond to incentives and to penalties, and to pretend otherwise is foolish and ignores the impact of tax cuts and tax hikes, as well as myriad other policies.

But dynamic scoring is also a liberal bogeyman, particularly for Jonathan Chait, who claimed the CBO reform was a ???war on math???.

CBO is a 40-year-old institution that has acquired enormous clout within Washington, DC by virtue of its reputation for ideological neutrality. It furnishes Congress and the public with budgetary estimates that, if necessarily imperfect (as all predictions must be), are arrived at fairly. It is also a perfect modern expression of an old Progressive Era???ideal: that policymakers should be informed by the work of impartial experts. That the conservative majority has set out to corrupt this institution as one of its first major acts is, therefore, perfectly fitting.

Unbiased. Unprejudiced. Fair. The ???perfect modern expression of a Progressive Era ideal.??? Wait, what? See, that???s the problem with CBO as currently constructed: It???s an entity built on the progressive idea that an ???impartial expert??? can actually exist when it comes to assessing the impacts of policy. How can the unbiased, impartial experts possibly act as if tax changes don???t affect people???s behavior, and therefore the broader economy, when every bit of practical evidence indicates people respond to such impacts? The whole basis of Obamacare was dependent on an assumption. That???s how the notion new health care tax laws should be passed so people will behave differently transforms into, ???Ugh, these idiots want to pretend new tax laws make people behave differently!???

There are all sorts of detail-based critiques one can lodge against dynamic scoring, challenging the assumptions involved or making the case that it reaches the wrong conclusions. But revulsion at the basic concept just doesn???t make sense.

Reform of CBO shouldn???t stop at dynamic scoring. The revelation someone like Jonathan Gruber played a critical role in both the creation and scoring of Obamacare revealed a long-running problem: a serious lack of transparency on the part of CBO. Consider this report from The Morning Consult:

Unlike most federal and congressional agencies, Congress??? nonpartisan budget scorekeeper appears to have no policy on conflicts of interest for their outside advisers. CBO has two groups of external consultants ??? the Panel of Health Advisers and the Panel of Economic Advisers ??? made up of more than three dozen people, mostly economists with Ph.D.???s, who operate as a sounding board for CBO. While their functions and purpose differ, both are influential in their own right, and it appears that neither panel is required to let CBO know about other projects they may be working on, either on behalf of private industries that could have a financial interest in how CBO views federal spending or the executive branch, which CBO was set up to act as a counterweight against.

When asked if the agency has ethics requirements for advisers related to potential conflicts of interest, a CBO spokesperson said she was unable to comment on the record. She was also unable to comment on whether CBO???s counsel reviews the activities of panel members to determine if any conflicts of interest exist, or if there are any policies that require members to notify CBO should conflicts arise during their time on the panels.

Senator Chuck Grassley (R) is following up on this subject. As Chris Jacobs notes, the lack of transparency has led to a number of problems, including the multi-billion-dollar mistakes associated with the CLASS program.

Regardless of what comes from the requirement to deploy dynamic scoring, the real issue with CBO is the black-box nature of many of its assumptions. Employing a more open source method, as Yuval Levin and others have argued, would ensure more accountability and help ensure the conclusions the experts reach go through a more diligent process of assessment. It might be a Progressive Era ideal to have impartial experts hand a number down from the mountaintop, but in the days of open source, the people should have more access to information in order to understand where that number came from.