What does the Congressional Budget Office do?

The Congressional Budget Office is a scorekeeper suddenly in the spotlight. The obscure but respected agency, established under the 1974 budget act, provides cost estimates of legislation, baseline projections of the federal budget and its components, an

Respected, not infallible

The CBO is respected for the nonpartisan rigor its 200plus employees put into the 600 or so official cost estimates it performs each year — and the thousands of informal estimates it provides as committees draft legislation. But it’s hardly infallible, especially when considering large, complex and far-ranging legislation like the Affordable Care Act and the proposed Republican replacement legislation.

The agency’s estimates, for instance, significantly overstated the number of people who would buy insurance on state and federal exchanges under the ACA, in part because it thought the individual mandate and accompanying tax penalties would be more effective in forcing people to buy insurance.

“Predicting the effects of large policy changes is always difficult, but CBO’s predictions for the (ACA) in 2010 were much more accurate than the predictions of many Republican opponents of the law,” said former agency chief Doug Elmendorf, who was appointed by Democrats.

The agency also was way off in the early 2000s when it predicted large long-term budget surpluses that eased the way for large tax cuts in the George W. Bush era.

A new sheriff in town

Even as Republicans attack the referee, it should be remembered that they hired the referee. CBO Director Keith Hall, a conservative economist, was selected two years ago by Republican Tom Price, then the chairman of the House Budget Committee and now the secretary of the Department of Health and Human Services.

Hall had been a critic of the Affordable Care Act and increasing the minimum wage. He has overseen an increase, long-sought by Republicans, in the use of “dynamic scoring” — in which the economic effects of tax changes and other policies are incorporated into CBO analyses. The CBO, for instance, has said Obama’s health law has had a dampening effect on labor force participation and would slightly reduce growth.

But the CBO also disagrees with those who characterize so-called “Obamacare” as being in a “death spiral” and predicts that this year’s big jumps in insurance premiums — averaging 21 percent nationwide — are actually likely to stabilize going forward, with increases of 5 to 6 percent. That’s because companies have been getting better information about the demographic traits of their customers.

In Monday’s report, the CBO said the insurance market “would probably be stable in most areas under either current law or the legislation.”

‘Strong reputation’

Criticism of the CBO is hardly new, but it is unusual to be coming from top officials like White House budget director Mick Mulvaney, who said Sunday on ABC’s “This Week” that “estimating the impact of a bill of this size probably isn’t the best use of (the CBO’s) time.” That remark sparked criticism from agency defenders on social media sites, where Peter Orszag, a former director of both the CBO and the Office of Management and Budget under President Barack Obama, wrote, “The former OMB and CBO director in me is speechless.”

But complaining about bad scores is nothing new. Democrats complained when drafting the Affordable Care Act; Republicans are carping now.

“For more than 40 years, we’ve produced independent analysis of budgetary and economic issues,” Hall said at a news conference in January. “The feedback I’ve always gotten is that we in general have a very strong reputation for our work. We try very, very hard to be independent and nonpartisan.”