It's common for the Congressional Budget Office (CBO) to come under fire for the cost estimates that it produces. Usually it's when CBO is under fire that you see legislative reactions calling for transparency or budget cuts to the agency.
There are lots of reasons for why folks should be frustrated with CBO's cost estimates and ways they can be improved. Exploring this is worthy of its own set of posts. But cutting CBO's budget (and especially the division that prepares the cost estimates) is generally a bad idea.
However, CBO could be improved through additional transparency.
A well-functioning CBO is critical to maintaining an effective check on the administration. We cannot expect the legislative branch responsible for maintaining the "power of the purse" to rely totally on budget information from the executive.
CBO's existence is derived, in part, from the need for Congress to have access to independent analyses of budget information so as not to rely on the administration's Office of Management and Budget (OMB). Therefore, faith in the efficacy of CBO's estimates is not only critical, but core to the agency's very being.
CBO can improve faith by increasing the transparency of how its estimates are produced. Below are a number of ways that CBO can increase transparency.
- We essentially want to encourage the replication of CBO's estimates by independent sources. Therefore, CBO should publish detailed descriptions of how it arrived at the published cost estimates (e.g., what assumptions were made and what weights were put on those assumptions). Divulging models is less important than publishing how the agency arrived at an assessment of the costs of legislation considered by Congress.
- CBO should provide a formal assessment of how comfortable it is with the cost estimates produced. For instance, is CBO very comfortable with a cost estimate or does the agency think it's just a shot in the dark?
- CBO should provide some qualitative assessment of how important the baseline was in developing its cost estimates. Some cost estimates are entirely driven by baseline assumptions. Others are less constrained. For instance, CBO often acknowledges that the policy world has changed when new information becomes available. But cost estimates for new legislation are often provided against an outdated baseline to remain consistent in evaluating all proposals over the course of a legislative session. The difference is important to policymakers.
- The House and Senate Budget Committees are responsible for providing oversight of CBO and reviewing its activities. Budget Committee staff are routinely invited to sit down with analysts, ask detailed questions about the estimates CBO has produced, and are invited to the meetings with outside advisers. The Budget Committees should be required to produce a report every year (or two) with a review of CBO's models, activities, staffing, etc. In that report, the Budget Committees can publicly highlight weaknesses or concerns in advance of the consideration of major legislative initiatives.
CBO would likely argue that transparency would make their job more difficult. Transparency requires resources. And CBO worries that transparency will cause people on the outside to question its analyses. Sometimes the agency is under significant pressure by Members of Congress to produce cost estimates quickly and without all the necessary information needed to be absolutely comfortable. Other times CBO is asked to provide a cost estimate for a new program that fundamentally changes the policy environment -- an inherently difficult task. However, this is exactly why we should have a more transparent CBO.
Senator Lee has a proposal that would take an important step with increasing transparency in the CBO Show Your Work Act of 2017 (S. 1746 with H.R. 3822 as the House counterpart). Specifically, it would require CBO to publish their models for the purpose of replication. This is largely based on the American Economic Association's (AEA) Data Availability Policy that requires authors of accepted papers to provide "the data, programs, and other details of the computations sufficient to permit replication." This data and other information is published online when the paper is published by an AEA journal.
More transparency is needed to improve the confidence in expert agencies like CBO. CBO can and should take steps to increase transparency of its estimates. These moves would only help to further solidify the importance of the institution within the budget process.